Texas Electricity Glossary

Understanding electricity terminology helps you make smarter decisions when shopping for a plan. Here are the key terms you'll encounter.

Average Price

The calculated cost per kWh at specific usage levels (500, 1000, and 2000 kWh), as required by the PUCT on all Electricity Facts Labels. This standardized metric helps consumers compare plans, though your effective rate may differ based on your real usage. Watt Owl calculates your estimated costs using your usage input, not just these three breakpoints.

Base Charge

A fixed monthly fee charged regardless of how much electricity you use. Also called a "customer charge" or "minimum charge." This covers administrative costs and is separate from your per-kWh energy charges. When comparing plans, factor in the base charge—a plan with a low rate but high base charge may cost more than one with a slightly higher rate and no base charge.

Bill Credit

A dollar amount subtracted from your bill when you meet certain conditions. Common types include usage credits (e.g., "$50 off when you use over 1,000 kWh") and autopay credits. Bill credits can make a plan very attractive at certain usage levels but less competitive at others. Watt Owl factors these into your estimated bill calculation.

Contract Term

The length of time you agree to stay with a plan, typically ranging from month-to-month to 36 months. Longer terms often offer more rate stability. Breaking a contract early usually triggers an early termination fee (ETF).

Delivery Charges

Fees charged by your TDSP (utility company) to deliver electricity over power lines to your home. These charges appear on your bill regardless of which REP you choose and are regulated by the PUCT. They typically include a fixed monthly charge plus a per-kWh rate.

See also: TDSP, Passthrough

Early Termination Fee (ETF)

A penalty charged if you cancel your electricity plan before the contract term ends. ETFs typically range from $50 to $300, often calculated as a flat fee or per remaining month (e.g., "$20 per month remaining"). Some plans have no ETF, offering more flexibility.

EFL (Electricity Facts Label)

A standardized disclosure document required by the PUCT for every electricity plan in Texas. The EFL shows the plan's average price at 500, 1000, and 2000 kWh, contract terms, fees, and other important details. Always review the EFL before signing up—it's the most complete official summary of a plan's pricing and terms. Watt Owl makes this easy by providing a link to every plan's EFL in our comparison tools.

Energy Charge

The per-kWh rate you pay for the electricity you actually consume. This is the main variable component of your bill and what most people think of as their "electricity rate." Energy charges may be fixed, variable, or tiered depending on your plan type.

ERCOT

The Electric Reliability Council of Texas—the organization that operates Texas's independent power grid and manages the wholesale electricity market. ERCOT covers about 90% of Texas's electrical load. Because Texas has its own grid (separate from the rest of the U.S.), Texans have the unique ability to choose their electricity provider in deregulated areas.

Fixed Rate Plan

A plan where your energy rate stays the same for the entire contract term, regardless of market fluctuations. Fixed rate plans offer predictability and protection from price spikes. They're ideal if you prefer budget certainty or expect market rates to rise.

Green Energy Plan

An electricity plan backed by 100% renewable energy sources, typically Texas wind and solar. Your electrons still come from the same grid, but your REP purchases renewable energy certificates (RECs) to match your usage. Green plans can be competitively priced with conventional plans.

Indexed Rate Plan

A plan where your rate is tied to a published market index, such as the wholesale price of electricity. Your rate fluctuates based on the index, offering potential savings when market prices are low but exposure to price spikes. Best for customers comfortable with rate variability who want to track market conditions.

kWh (Kilowatt-hour)

The standard unit for measuring electricity consumption. One kWh equals using 1,000 watts for one hour—for example, running a 100-watt light bulb for 10 hours. The average Texas home uses about 1,000-1,200 kWh per month, though this varies significantly by home size, weather, and habits.

Passthrough

When a REP bills TDSP delivery charges separately at the actual regulated rate, rather than bundling them into a single rate. Passthrough plans show delivery charges as a separate line item on your bill. The alternative is a "bundled" plan where the advertised rate includes both energy and delivery charges.

See also: Delivery Charges, TDSP

Power to Choose

The official Texas electricity shopping website operated by the PUCT at powertochoose.org. REPs can list their plans on the site, making it a widely used resource for comparing options. The site shows rates at three standard usage levels (500, 1,000, and 2,000 kWh).

PUCT

The Public Utility Commission of Texas—the state agency that regulates electric and water utilities, oversees the deregulated electricity market, and protects consumers. The PUCT requires REPs to provide standardized disclosures (like the EFL) and operates Power to Choose.

REP (Retail Electric Provider)

The company that sells you electricity and handles billing. In deregulated Texas, you can choose from dozens of REPs (like TXU, Reliant, Gexa, etc.) competing for your business. Your REP buys electricity wholesale and sells it to you at retail prices. Switching REPs is free and doesn't affect your power delivery.

See also: TDSP

TDU

Transmission and Distribution Utility—another name for TDSP. The terms TDU and TDSP are used interchangeably in Texas.

See: TDSP

TDSP

Transmission and Distribution Service Provider—the utility company that owns and maintains the power lines, poles, and meters in your area. Your TDSP (such as Oncor, CenterPoint, or AEP Texas) delivers electricity to your home regardless of which REP you choose. You can't choose your TDSP—it's determined by your address. TDSP charges are regulated and appear on your bill as delivery charges.

See also: TDU, Delivery Charges, REP

Tiered Rates

A pricing structure where your rate changes based on how much electricity you use. For example, a plan might charge 8¢/kWh for the first 500 kWh and 12¢/kWh for usage above that. Tiered rates can work in your favor or against you depending on your usage level.

Time of Use (TOU) Plan

A plan with different rates depending on when you use electricity. TOU plans typically have higher rates during "peak" hours (usually weekday afternoons and evenings) and lower rates during "off-peak" times (nights and weekends). These plans reward customers who can shift usage to off-peak hours. Common examples include "Free Nights" or "Free Weekends" plans.

Usage Credit

A bill credit that's triggered when your usage exceeds a certain threshold. For example, "Get $50 back when you use more than 1,000 kWh." Usage credits can dramatically lower your effective rate at specific usage levels but may make a plan less competitive if your usage falls below the threshold. Watt Owl factors usage credits into your estimated costs calculation.

See also: Bill Credit

Variable Rate Plan

A plan where your energy rate can change from month to month at the REP's discretion. Variable plans often start with low introductory rates but can increase significantly. They offer flexibility (usually no contract or ETF) but less predictability. Best for short-term needs or if you're comfortable monitoring rates.

See also: Fixed Rate Plan, Indexed Rate Plan