Understand Your Choices
The Public Utility Commission (PUC) wants you to understand your choices when you are shopping for electricity service. Here are a few things you should know before you start shopping:
Contracts and Terms
Some Retail Electric Providers (REPs) offer plans with no minimum contract period ("month-to-month" plans) and others may offer plans with contract periods as long as three years or more. Contracts with a term of three months or more may have a penalty if you cancel before the contract period ends. Make sure you understand what happens at the end of the contract period with respect to the pricing of your service, and ask the Retail Electric Provider if you are unsure.
If you want a plan that is renewable, check the provider's Electricity Facts Label to see how much of the plan's electricity is generated from renewable resources, such as wind, solar, hydroelectric, geothermal, landfill gas, or biomass. REPs are also allowed to designate products that use electricity generated by natural gas, which is a relatively clean fuel, as "green." Make sure you understand these distinctions when researching your options.
Fixed, Variable, and Indexed Electricity Rates
A fixed electricity rate will generally remain the same throughout the term of a contract (with minor exceptions). A variable electricity rate can go up or down each month according to a method chosen by the Retail Electric Provider (REP). An indexed rate is tied to a specific pricing formula disclosed by the REP. If you choose a plan with a long contract period and a fixed rate, you will have certainty that your price will not change during that time. While this may help your household budgeting, if market prices fall you may have to wait until your contract expires to enjoy a lower price. Variable and indexed rate plans can provide the benefit of an immediate pass-through of falling market prices but will also rise if natural gas and electricity prices spike due to natural disasters, cold winters, or market conditions. Make sure you understand how and under what conditions your rate can change when selecting a plan, and pick the one that's right for your needs.
Generating and Selling Renewable Power
Many homeowners and small businesses have installed, or are considering installing, renewable electric generation devices such as solar panels and wind turbines to provide some of the electricity they use. Distributed Renewable Generation (DRG) is the term used to refer to equipment that generates electricity using a renewable energy source such as wind, solar power, or bio-mass, and has a maximum output capacity of no more than two megawatts. Learn more.
Electric Assistance Programs
There are several types of assistance programs for electric customers who are low-income, elderly, disabled, or victims of family violence. For more information, visit our section on low-income assistance.
Incentives for Energy Efficiency and Renewables
The Federal Government offers tax incentives for energy efficiency and renewable energy. Texas residents can also check with their local utility providers, as some have energy efficiency programs that offer low-cost loans/rebates and advice on renewable energy technologies.
Texas provides tax incentives for some businesses. For example, businesses that use, manufacture, or install solar or wind energy can receive franchise tax deductions and/or exemptions. There also exists a property tax exemption involving solar, wind, biomass, and anaerobic digestion for businesses that install or construct such systems.
Renewable Energy Credits (RECs)
In 2005, the Texas Legislature passed a "Renewable Portfolio Standard" that requires electric utilities and REPs to generate and sell specific target levels of renewable power over time, with a target of 10,000 MW in renewable energy capacity by 2025. With each megawatt hour of renewable power generated, a "renewable energy credit" (REC) is produced. Utilities and retailers are required to meet certain renewable generation targets and they can meet those targets by generating renewable power or by purchasing RECs, which are openly bought and sold in the environmental commodities market. Additionally, businesses and individuals may voluntarily purchase RECs to offset their carbon footprints and to support the development of clean energy sources.
If you are interested in buying or selling Texas RECs, please refer to this list of RECs marketers for their prices, terms, and conditions.