Fixed rate plans
A fixed rate plan has a term of at least three months, and the provider may not change the price or the term during it. The price can move only to reflect changes in the delivery company's charges, certain fees that grid operators and the commission charge to loads, and new government fees or costs beyond the provider's control. Taxes are not part of the price definition.
If a pass-through changes your price, your bill must show it as a separate line or with a clear notice. A provider does not need to give the usual 14 days' advance notice for those changes.
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.
Variable plans
A variable plan can change by a method the provider sets, including a cap on how far the price can rise above the previous month. For residential customers it must be month to month, and a month-to-month plan may not carry a termination fee. The provider must show its current price and its price history on its website and through a toll-free number.
The upside is freedom: you can leave at any time without a fee. The downside is that the price can rise from one month to the next, and you may not notice until the bill comes.
Why indexed and wholesale plans are gone
An indexed plan follows a formula tied to a public index. A wholesale indexed plan passes through the real-time wholesale price of power on the Texas grid. In February 2021 a severe winter storm sent wholesale prices to the market cap for days, and some customers on plans that passed wholesale prices through received very large bills.
The rules now bar wholesale indexed plans for residential and small commercial customers and bar indexed plans too. The commission set the cutoff dates in its rule: wholesale indexed plans could not be offered after September 1, 2021, and indexed plans could not be offered to residential or small commercial customers after February 1, 2022. If a plan today offers a price that follows the wholesale market for a home, it should be a red flag, so check the label and ask the commission.
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.
How to choose between them
| Fixed rate | Variable | |
|---|---|---|
| Price risk | Low during the term | Changes can come any month |
| Leaving early | May carry an early termination fee | Month to month, no termination fee |
| Best when | You want a steady bill and plan to stay | You expect to move soon or want to leave at will |
| Watch for | The renewal price at term end | Price history and changes |
Most households that stay put do better with a fixed rate plan they chose on purpose than with a variable plan they ended up on by default. If you must pick a variable plan for flexibility, check the price history to see how often the provider changes it.
Sources and rules
Frequently asked questions
Can my Texas electricity price change during a fixed rate plan?
Only for a short list of reasons: changes in delivery company charges, certain grid and commission fees, and new government fees or costs outside the provider’s control. Otherwise the price and the term cannot change during the contract.
Are variable rate electricity plans allowed for residential customers?
Yes, but a residential variable plan must be month to month, and a month-to-month plan cannot carry a termination fee.
Why are indexed plans banned in Texas?
After wholesale prices spiked in a February 2021 winter storm, the commission barred wholesale indexed plans and then indexed plans for residential and small commercial customers.
Which is better, fixed or variable?
For most households that plan to stay, a fixed rate plan gives more certainty. A variable plan suits people who need the freedom to leave at any time.