The headline rate on a Texas electricity plan is the number the REP wants you to remember. It is rarely the number that lands on your bill. Six structural fee categories account for the gap, and understanding each one is the difference between shopping on cents-per-kWh and shopping on what the plan actually costs you.
Here is the working field guide.
1) Base Charge or Monthly Service Fee
A flat dollar amount added every month regardless of usage. Texas REPs commonly charge $4.95, $9.95, or $14.95. A few plans waive the base charge entirely. A handful go as high as $30 per month.
Why it matters: Base charges don't scale with usage. The fee is the same whether you use 100 kWh or 3,000 kWh. On a 500 kWh small apartment, a $9.95 fee adds 2.0 cents per kWh to your effective rate. On a 2,000 kWh large home, the same fee adds only 0.5 cents per kWh.
The math: Divide the monthly fee by your average monthly kWh. Add that to the headline rate before comparing across plans. A "9 cents/kWh" plan with a $9.95 base charge costs 11 cents/kWh for a 500 kWh apartment but only 9.5 cents/kWh for a 2,000 kWh home.
2) Minimum Usage Fee
A penalty applied when monthly usage falls below a defined threshold. Common structures: $9.95 penalty if you use less than 1,000 kWh. Sometimes the "base charge" is waived above the threshold — so the penalty looks like a credit that you lose.
Why it matters in Texas: Texas has wide swings in seasonal usage. A 1,400 kWh summer month flips to 600 kWh in March. Plans with minimum usage fees punish that variability. Small apartments, snowbirds, vacation homes, and seasonal users get hit hardest.
Where to spot it: The EFL under "Special Pricing Features." Look for the specific kWh threshold and the dollar penalty. Power to Choose's three-tier rate display will reveal this — if the 500 kWh column shows a rate 2+ cents higher than the 1,000 kWh column, a minimum usage fee or comparable penalty is in play.
3) Bill Credit Cliffs
The flip side of minimum usage fees. The REP offers a flat credit ($50, $75, $100) when monthly usage lands in a specific kWh band — for example, 1,000 to 2,000 kWh. Use 999 kWh and you lose the credit. Use 2,001 and you lose it again.
Why it matters: Bill credit plans dominate the cheap headline rates on Power to Choose. A "5 cents per kWh!" headline is often a 13 cents rate with a $75 credit at 1,000-2,000 kWh. The published headline assumes you nail the credit band. If your usage swings outside the band even once, you pay the unmasked rate that month plus the structural premium.
The math: Pull your last 12 months of usage. Count how many months you'd have hit the credit band, miss it low, or miss it high. Run the rate-with-credit and rate-without-credit on each month. Average. That's the plan's true cost for your house.
4) TDU Delivery Charges
Charges from your Transmission and Distribution Utility — Oncor, CenterPoint, AEP Texas, or TNMP. These are the wires-and-poles charges for delivering electricity to your meter, regardless of which REP you've contracted with.
Why it matters: TDU charges are roughly half the total cost of Texas electricity for a typical household. They are not negotiable, not shoppable, and not REP-set. PUCT regulates TDU rates and approves changes through formal rate cases (the most recent Oncor and CenterPoint cases reset rates in 2023-2024).
Typical breakdown (varies by TDU):
- Per-kWh delivery charge: 3.5 to 4.5 cents per kWh
- Monthly customer charge: $4 to $9
- Transmission cost recovery factor: small per-kWh adder, updated periodically
- Distribution cost recovery factor: small per-kWh adder
The trap: Some REPs market "energy only" rates that quietly exclude TDU charges. Compare apples to apples. Power to Choose's posted rates include TDU charges by default, but a few REPs publish supply-only rates in their own marketing. Confirm the all-in rate on the EFL.
5) Late Payment Fees and Disconnect Fees
PUCT rule allows a late fee up to 5% of the past-due amount, applied after the due date plus a grace period. Most REPs charge exactly this. A few use flat fees ($5 to $10).
If your bill goes unpaid long enough to trigger disconnection, expect a disconnect notice 10 days before service is cut (PUCT rule §25.483 requires written notice); disconnect fee of $20 to $30 (REP) + $25 to $50 (TDU); reconnect fee of $20 to $75 (TDU); and possible deposit increase or pre-payment requirement to restore service.
Avoid by setting auto-pay or text/email bill alerts. PUCT's "moratorium on disconnect" rules apply during extreme weather (above 100°F or below freezing) — service can't be cut during those events, but the unpaid balance still accrues.
6) Regulatory Pass-Throughs and Riders
Small per-kWh adders for state regulatory programs. Examples: PUCT Assessment Fee (~$0.0006 per kWh, funds PUCT operations); Texas Renewable Energy Credit (~$0.0003 per kWh, required minimum renewable content); System Benefit Fund (suspended) and similar; Reliability programs (post-Uri reliability cost recovery riders, ~$0.001 to $0.003 per kWh).
These add 0.1 to 0.5 cents per kWh total. Small in absolute terms, but they're built into the all-in rate the REP quotes you. If a competitor REP excludes them in marketing, your apples-to-apples comparison will be off.
How to Calculate Your True Effective Rate
For any plan you're considering, do this calculation on your real annual usage:
Annual Supply Cost = (Energy Rate × Annual kWh) + (12 × Monthly Base Charge) - (Annual Bill Credits Earned) + (Annual Minimum Usage Penalties Incurred). Annual TDU Cost = (TDU Per-kWh Rate × Annual kWh) + (12 × TDU Customer Charge). Total Annual Cost = Annual Supply Cost + Annual TDU Cost. Effective Rate = Total Annual Cost ÷ Annual kWh.
This single number — your effective rate in cents per kWh for your actual usage — is what to compare across plans. The headline rate is marketing. The effective rate is reality.
The Effective Rate Test Across Two Plans
Same household, 14,400 kWh per year (1,200 kWh/month average), Oncor service territory.
Plan A (Power to Choose all-in): 11.2¢/kWh at 1,500 kWh tier. Base $9.95. $75 credit at 1,000-2,000 kWh (hits 10 of 12 months).
- Energy: 14,400 × $0.112 = $1,612.80
- Base: 12 × $9.95 = $119.40
- Credits: -10 × $75 = -$750.00
- Total: $982.20 → effective rate 6.82 cents per kWh (heavily dependent on hitting the credit band)
Plan B (Power to Choose all-in): 12.0¢/kWh at 1,500 kWh tier. Base $0. No credits.
- 14,400 × $0.120 = $1,728
- Total: $1,728 → effective rate 12.0 cents per kWh
Plan A saves $746 per year IF the household hits the credit band 10 of 12 months. If they only hit it 6 months, Plan A still beats Plan B by $446. If they hit it just 3 months, Plan A's margin shrinks to a small win. The variance is the point. Plan A is great for predictable usage, dangerous for variable usage. Plan B is boring but doesn't have a cliff.
How to Read the EFL in 90 Seconds
Open the EFL for any plan and check, in order: three usage-tier rates at 500, 1,000, 2,000 kWh (spread should be under 1 cent for a clean plan); monthly base charge (under $10 ideal, over $15 aggressive); minimum usage fee / bill credit structure (threshold, dollar amount, band); ETF (under $200 reasonable, over $295 aggressive); term length and renewable content percentage; contract type (fixed, variable, indexed).
If any of those fields are missing or vague, pick a different REP. The PUCT requires disclosure. Good REPs comply cleanly.
The Bottom Line
Texas REPs compete on headline rates that don't translate to real bills. The discipline is to ignore the headline and compute your effective rate on your actual usage with the actual fee structure. Five minutes with the EFL and a calculator beats five months of paying a plan you didn't understand.