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Not every electricity plan is as cheap as it looks. Behind a shiny “9.7¢ per kWh” headline there can be credits, fees and contract terms that change the math completely. Here are the five electricity plan red flags we see most often when reviewing Texas bills, and how to spot each one before you sign.
Key takeaways
- A rate that only works at one exact usage level is the most common trap.
- Base charges and minimum-usage fees hit small homes and efficient households hardest.
- Always check the early termination fee and what happens when the contract ends.
- The Electricity Facts Label is where every one of these red flags is disclosed.
Red flag #1: The too-good-to-be-true rate
If a plan’s 1,000 kWh price is dramatically lower than its 500 and 2,000 kWh prices, that’s usually a bill credit at work. Use a little less than the threshold and the credit disappears, sending your effective rate soaring. We explain exactly how bill credit plans work here.
How to spot it: Compare all three average prices on the EFL. A big gap between them is the tell.
Red flag #2: Comparing energy charges instead of the total price
Some plans show a low energy charge per kWh, but that’s only part of what you pay. Your utility’s TDU delivery charges and the provider’s base charge get added on top.
How to spot it: Use the EFL’s average price, which includes delivery charges, not the energy charge alone.
Red flag #3: Minimum-usage fees
Some plans add a fee (often around $10) in any month you use less than a set amount, commonly 1,000 kWh. That penalizes apartments, smaller homes and anyone who’s good at saving energy.
How to spot it: Search the EFL for “minimum usage” or “usage charge.”
Red flag #4: High base charges
A base charge is a flat fee you pay every month no matter what. On a low-usage month, a $9.95 base charge can add a couple of cents to every kWh you use.
How to spot it: Look for “base charge” on the EFL and compare it between plans.
Red flag #5: Unfriendly contract terms
- High early termination fees
- Introductory prices that expire early
- A pricey month-to-month rate once the contract ends
How to spot it: Read the contract term and early termination fee on the EFL, and put your contract end date on your calendar. Here’s when to start shopping for your next plan.
Quick reference
| The plan looks like… | It might actually mean… |
|---|---|
| A super-low 1,000 kWh price | A bill credit that disappears at other usage levels |
| A low energy charge | Delivery charges and base fees still to come |
| Great for small homes | A minimum-usage fee in low months |
| A great deal today | An expensive rate after month 12 |
Let Watt Panda check the fine print
We don’t sell electricity. We read the EFLs, compare plans against your real usage, and only recommend one that makes sense for your home.
Helpful official resources: Public Utility Commission of Texas · Power to Choose (official PUCT site)
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Frequently asked questions
What is the biggest red flag in a Texas electricity plan?
Pricing that only works at one usage level. If the plan’s average prices at 500, 1,000 and 2,000 kWh are wildly different, look closely before signing.
Are minimum-usage fees still common in Texas?
They show up on some plans. They’re always disclosed on the EFL, so check before you sign, especially if you live in an apartment or a smaller home.
Can I get out of a bad electricity plan?
Usually yes, but you may owe an early termination fee. Moving to a new address is generally an exception if you provide proof of the move. We can run the math on whether switching now is worth it.
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