Texas Electricity Plan Switching Guide: When to Break Your Contract

Most Texans assume that once they sign an electricity contract, they are locked in until it expires. That is not always the best financial decision. Early termination fees (ETFs) exist, but they are not always as expensive as staying on a bad plan. Here is how to know when switching makes sense, even mid-contract.

How Early Termination Fees Work in Texas

Texas REPs (Retail Electric Providers) charge an ETF if you cancel your contract before the term ends. There are two common structures:

Flat ETF

A single fixed amount regardless of when you cancel. Common values are $100–$200, though some plans go up to $300. If your ETF is $150 and you cancel with 2 months left or 10 months left, you pay the same $150.

Per-Month ETF

A fee multiplied by the number of months remaining on your contract. Typical rates are $10–$20 per remaining month. If your ETF is $15/month and you have 8 months left, your fee is $120. If you have 2 months left, it is only $30.

The Math of Switching Mid-Contract

The decision to switch is straightforward arithmetic. Compare two scenarios:

1. Stay on your current plan: Monthly cost × months remaining.
2. Switch now: ETF + (new plan monthly cost × months remaining).

If the switch-now cost is less than the stay cost, switching saves money even after paying the ETF.

Real Example

Let's say you signed a 12-month fixed-rate plan at 14¢/kWh seven months ago. You have 5 months remaining and a $150 flat ETF. A new plan is available at 10.5¢/kWh. You use about 1,300 kWh/month.

Switching saves $77.50 over 5 months, even after the $150 ETF. The monthly savings of $45.50 pay off the ETF in about 3.3 months, the break-even point.

The rate in the "switch" column is the part you have to supply yourself — it is whatever is actually on offer on your utility today, not the number in this example. Your area page carries the current range and a sample of what is listed: Flower Mound (75028) or Dallas (75217) for Oncor, Houston (77036) for CenterPoint, Corpus Christi (78401) for AEP Texas.

When Staying Makes Sense

Using the same scenario but with only 2 months remaining:

Now staying saves $59. There is not enough time for the monthly savings to overcome the ETF.

Key Factors That Affect the Decision

1. The Rate Difference

The bigger the gap between your current rate and the best available rate, the faster the ETF pays for itself. A 1¢/kWh difference on 1,200 kWh saves $12/month. A 4¢ difference saves $48/month. At $48/month savings, even a $200 ETF pays for itself in just over 4 months.

2. Your Usage Level

High-usage homes benefit more from rate improvements. If you use 2,000 kWh/month, a 3¢/kWh improvement saves $60/month. At 800 kWh, the same rate improvement saves only $24/month. High-usage homes should check switching economics more frequently.

3. ETF Structure

Per-month ETFs naturally decline as your contract winds down, making mid-to-late contract switches more attractive. Flat ETFs are the opposite: they hurt most when you have few months left.

4. Seasonal Timing

If you are heading into summer (May–September), your usage will spike. A rate improvement of 3¢/kWh that saves $30/month in March might save $60–$75/month in July and August. Switching before summer amplifies savings — and the cooling season starts earlier and ends later the further south you live, so the window to act ahead of it is shorter in McAllen (78501) or Corpus Christi (78415) than in Killeen (76549).

Your Rights Under Texas Law (PUCT Rules)

The Public Utility Commission of Texas (PUCT) provides specific consumer protections:

• Penalty-free switching window: You can switch providers without paying an ETF starting 14 days before your contract expiration date. The actual transition takes 1–2 billing cycles (or as fast as same-day with a smart meter). Your old provider should not charge you beyond your final meter read date.
• Contract expiration notices: Your REP must send at least three written notices as your contract nears expiration, with the final notice at least 30 days before the end date. If they do not and you roll to a month-to-month rate, you may have grounds to dispute.
• No double-billing: You should never be billed by two REPs for the same time period. If this happens, file a complaint with the PUCT.
• Dispute rights: If you believe your ETF was incorrectly applied, you can file a complaint at puc.texas.gov or call 1-888-782-8477.
• Move exception: If you are moving to an area outside your REP's service territory, most contracts allow penalty-free cancellation. Check your EFL for details. Worth knowing before you move: a move that crosses utilities changes the entire menu you shop from. Katy (77449) is CenterPoint and McKinney (75070) is Oncor, so the plan you liked in one may simply not exist in the other.

The Month-to-Month Trap

When your contract expires without renewing, most providers roll you onto a month-to-month variable rate. These rates are almost always higher than contract rates, sometimes significantly. I have seen rollover rates of 16–20¢/kWh when contract rates in the same zip code are 11–14¢/kWh.

Set a calendar reminder 30 days before your contract expires. Even if you stay with the same provider, you will likely get a better rate by actively renewing or switching to a new plan.

Step-by-Step Switching Process

1. Check your current plan details: Rate, contract end date, ETF amount and type.
2. Compare available plans using your actual usage data, not just advertised tier rates.
3. Calculate break-even: Will the savings overcome the ETF before your old contract would have ended?
4. If switching makes sense, sign up with the new provider. They handle the transfer with your old provider.
5. Verify the final bill from your old provider. Confirm the ETF matches what was disclosed in your EFL.

The entire process usually takes 1–2 billing cycles (2–4 weeks). You will not lose power during the transition; your wires company (TDU) maintains continuous delivery regardless of which REP you are paying.