When a 12 month term makes sense
A one-year term spans every season, so you pay one price through a hot summer and a cold winter. That suits households with big seasonal swings and a plan to stay in the home. Shorter terms give you a faster exit and less certainty, and longer terms such as 24 months can carry a lower price and a higher cost to leave.
| Term | Good for | Watch for |
|---|---|---|
| Month to month | Flexibility, moving soon | Prices can change every month |
| 3 to 6 months | A short lock, testing a provider | More renewals to manage |
| 12 months | A full year of a steady price | Early termination fee if you leave |
| 24 months or more | Long stays, a lower advertised price | A larger fee and a longer commitment |
Leaving early: what the rules say
- Moving. No early termination fee applies if you move, give a forwarding address and, if asked, show evidence of the move.
- The last 14 days. No termination penalty applies in the 14 days before the stated expiration date for residential and small commercial customers.
- Changes you do not accept. If a provider changes terms and the change is not acceptable to you, a termination penalty generally may not apply for 14 days after the notice is sent.
- Month to month. These contracts may not carry a termination fee.
Any other early exit can cost the fee listed on the Electricity Facts Label, so read that number before you sign.
Source: 16 Tex. Admin. Code § 25.475, information disclosures to residential and small commercial customers. Rule text checked October 9, 2026. Rules can change, so confirm on the Public Utility Commission of Texas site before you rely on a detail.
What happens when the term ends
For a fixed rate plan, the provider must send at least three written notices during the last third of the term. The final notice must arrive at least 30 days before expiration for a term longer than four months, and at least 15 days before for a term of four months or less. The envelope or subject line must read "Contract Expiration Notice. See Enclosed."
The notice must show the expiration date in bold, underlined text, any termination penalty, any renewal offers and how to accept them, and a statement that you move to the default plan if you do nothing. The default is month to month, and you can cancel it at any time without a fee.
Do not ignore these letters
Source: 16 Tex. Admin. Code § 25.475, information disclosures to residential and small commercial customers. Rule text checked October 9, 2026. Rules can change, so confirm on the Public Utility Commission of Texas site before you rely on a detail.
Before you sign a 12 month plan
- Read the early termination fee on the label.
- Check the price at your usage for the summer and the winter, not only the average.
- Note the expiration date and set a reminder for a month earlier.
- Remember the right to cancel a switch within three federal business days after you receive the Terms of Service.
Sources and rules
Frequently asked questions
Is a 12 month electricity plan a good idea in Texas?
It is a good idea if you plan to stay for the year and want a steady price. Shorter terms suit people who may move, and longer terms can add a bigger fee for leaving.
Do I pay a fee if I move during a 12 month plan?
Texas rules say no early termination fee applies if you move, provide a forwarding address and show evidence of the move if asked.
What happens at the end of a 12 month plan?
The provider sends written expiration notices. If you do nothing, you move to a default month-to-month plan that you can cancel at any time without a fee.
Can I switch in the last month of my plan without a fee?
Yes. No termination penalty applies in the 14 days before the stated expiration date for residential customers.