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Fixed vs. Variable Rate Electricity Plans in Texas: Which Is Right for You?
Variable looks cheaper on paper — but usually costs more over a year. Here’s the honest comparison, and how to decide.
Updated: 4/24/2026
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Fixed vs. Variable at a Glance
Updated: June 30, 2026
The tradeoff in four numbers. Benchmarks for orientation, not a quote — confirm any plan on its EFL.
- AVG FIXED RATE~14.7¢/ kWh
12-mo plan, at 1,000 kWh
- AVG VARIABLE RATE~11.7¢/ kWh
lower — this mild month
- VARIABLE SUMMER PEAK20–30¢/ kWh
Jun–Aug — erases the savings
Why summer spikes ↗ - OVER A FULL YEAR+10–20%
what variable typically costs
Note: Rounded market benchmarks for orientation (early-2026 averages), not a quote. Your rate depends on your ZIP code, plan, and usage — confirm on the EFL.
What Fixed and Variable Plans Actually Are
A fixed-rate plan locks your price per kWh for the length of a contract — usually 12, 24, or 36 months (12 is the most common). Your rate won’t move no matter what the market does, which makes your bill predictable. The trade for that certainty is a contract: almost all fixed plans charge an early termination fee if you leave early, on the plan’s Electricity Facts Label.
A variable-rate plan is month-to-month. There’s no contract and no early termination fee — you can switch whenever you like — but the rate can change every billing cycle. In Texas, a variable rate is set by your provider each month (with email notice), not pegged to the live wholesale market: after Winter Storm Uri in 2021, the state restricted wholesale-indexed residential plans, the kind that once passed raw market prices straight through to customers. Today’s variable rate is calmer than that — but it’s still uncapped and free to climb in summer.
The Honest Tradeoff: Cheaper This Month vs. Cheaper This Year
On paper, variable wins. In early 2026 a variable plan averaged about 11.7¢/kWh at 1,000 kWh, versus roughly 14.7¢ for a typical fixed plan — about 3¢ cheaper, or ~$30 a month. That gap is real in mild spring and fall months, and it’s what makes variable tempting.
Then summer arrives. When demand peaks in June through August, variable rates commonly climb to 20–30¢/kWh — 50 to 100% above a fixed rate — and those few expensive months wipe out a year of small savings. The result: across a full year, variable customers typically pay about 10–20% MORE than they would have on a competitive fixed plan. Fixed rates even build in a small “risk premium” because the provider is hedging your future price — and with ERCOT forecasting higher 2026 Summer prices, locking that hedge during a shoulder season looks especially smart. The takeaway: cheaper this month is not the same as cheaper this year. To find the genuinely lowest all-in cost for your home, see How to find the cheapest rate.
The holdover trap: how fixed customers end up on variable by accident
Here’s the sneaky one. When a fixed contract expires and you don’t act, your provider doesn’t just cancel your service — it automatically rolls you onto a default month-to-month “holdover” rate, a variable rate that often runs 30–50% higher than a competitive fixed plan. Plenty of “variable” customers never chose variable at all; they simply let a contract lapse. The fix is a calendar reminder: providers must send an expiration notice 30–45 days out, so shop and Lock a new fixed plan before that holdover rate kicks in.
How to Decide
The right answer isn’t fixed or variable in the abstract — it’s whichever costs you less given how long you’ll stay and how your home uses power. Five quick checks settle it.
- 1
Know your monthly usage
Pull a recent bill and note your kWh, especially your summer high. Heavy summer usage tilts the math toward a fixed rate, because that’s exactly when variable spikes.
- 2
Read the average price on the EFL
For any plan, the Electricity Facts Label shows the average price at 500, 1,000, and 2,000 kWh, plus the term and any early termination fee. Compare at your usage, not the headline. Deep dive: How to read your EFL
- 3
Weigh the ETF against how long you’ll stay
Staying a year or more? A fixed plan’s early termination fee rarely matters, and the locked rate usually wins. Leaving within a few months? Variable’s no-ETF flexibility may be worth a slightly higher monthly rate.
- 4
Factor in the season
Locking a fixed rate in the mild spring or fall shoulder season, before summer prices arrive, is the highest-value timing move — especially with ERCOT forecasting higher 2026 summer prices. Deep dive: Texas summer rates & timing
- 5
Lock a fixed plan — or bridge on variable
For most homes, lock a 12-month fixed rate and you’re done. If you truly need flexibility, take a variable plan as a short bridge and set a reminder to re-lock fixed before summer.
The smart hybrid (for hands-on shoppers)
If you genuinely enjoy managing this, there’s a middle path: ride a variable plan through the mild spring and fall to capture its low rate, then lock a fixed plan before summer to sidestep the spikes. Done consistently, it can beat a straight fixed plan — but it only works if you actually re-lock on time. Miss the window and you’re paying peak variable rates. See How to prepare for summer rates for the timing.
So, Which Should You Choose?
For the large majority of Texas homes, the answer is a fixed-rate plan — ideally a 12-month term locked in during a mild shoulder season. It’s predictable, it shields you from summer spikes, and over a full year it usually costs less. Variable earns its place only when you truly need flexibility or will actively work the market.
Whichever way you lean, decide it on the numbers: pull up a plan’s Electricity Facts Label, read the average price at your real usage, and weigh the term against how long you’ll stay. For the full framework, see How to choose the best plan; to hunt the lowest all-in price, see How to find the cheapest rate; or browse everything in our Texas electricity guides hub.
Frequently Asked Questions
Variable is usually cheaper in a single mild month — around 11–12¢ per kWh in early 2026 versus about 14–15¢ for a typical fixed plan. But over a full year, variable customers typically pay about 10–20% more, because Summer spikes of 20–30¢ per kWh erase the mild-month savings. Cheaper this month is not the same as cheaper this year.
For most Texas households, a fixed-rate plan is the safer default: it locks your price for the term and shields you from summer spikes. Variable makes sense only if you need short-term flexibility — a renter staying under six months, someone between homes, or an active shopper who watches the market and re-locks before summer. If you will stay 12 months or more, fixed usually wins. See How to choose the right plan.
Yes. Variable plans are month-to-month with no contract and no early termination fee, so you can Switch to a fixed-rate plan whenever you want. That flexibility is variable’s main advantage — but it only helps if you actually act before summer prices arrive.
If you do nothing, your provider automatically rolls you onto a default month-to-month holdover rate, which is often 30–50% higher than a competitive fixed plan. Providers must send an expiration notice 30–45 days out. Treat it as your cue to shop and lock a new plan before you get moved onto the holdover rate.
Not directly, anymore. After Winter Storm Uri in 2021, Texas restricted wholesale-indexed residential plans — the kind that passed raw market prices straight to customers and produced bills over $5,000 during that storm. Today’s variable rate is set by your provider each month, not pegged to the live market, but it is still uncapped and can rise sharply in summer.
Almost all do. Fixed-rate early termination fees in Texas commonly run from about $50 to a few hundred dollars, with a median near $180, and they are disclosed on the plan’s Electricity Facts Label. A handful of no-ETF fixed plans exist but usually charge a slightly higher rate. Variable plans have no early termination fee.
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