Texas Electric Rate Survey, 2026

Texas Households to Face Evolving Electricity Rate Challenges

Texas Households to Face Evolving Electricity Rate Challenges

Survey Finds Home Electric Use Steady; AC Needs and Energy Rates Likely to Rise


Texans are no strangers to heat. But this spring, hot, summer-like temperatures forced many Texas electricity consumers to run their air conditioning sooner than normal. This kind of weather serves as an unwelcome reminder that residential customers face daunting challenges when it comes to power bills and shopping for cheap electricity rates.

While the news is full of the large load data center boom in the state, the residential sector (for now) remains the largest energy user in the state. For that reason, it's important for consumers to understand how the challenges of population, weather, usage, and costs change over time and how they currently affect monthly bills.

To help consumers better cope with these challenges, Texas Electricity Ratings analysts undertook a survey focusing on what these factors mean for Texas consumers. Analysts reviewed data from the Energy Information Agency (EIA) to identify residential usage patterns through annual weather cycles. They also reviewed TDU pricing information for the past decade from the Public Utility Commission of Texas to see how population growth intersected with rising distribution charges.



Key Takeaways

  • Between 2015 and 2025, Texas residential electricity customers increased by 2.73 million or about 27% and resulted in a median load growth of roughly 2.25 GW per month.
  • Annual residential electricity usage for the same 10 year period remained fairly constant, with a median of 1,142 kWh per month. Better energy efficiency at home may be helping Texas consumers keep bills low.
  • As the air conditioning season creeps earlier into spring and persists longer into fall, consumers will pay more in annual energy costs.
  • Shopping for cheap electricity deals during the spring and fall shoulder months may get more challenging. Shorter mild periods with less usage may exert less downward pressure on retail energy prices.
  • Texas electric utilities will need to spend more to upgrade, expand, and maintain their local grids. They will also file for more frequent returns on investment. Recent rate increases suggest future hikes may happen every 2 years.
  • Residential energy supply prices will likely go up. And though high voltage transmission projects may slow the rate of climb, consumers will pay for these upgrades in their bills.

Challenges Facing Residential Customers

1.   Growing Population and Energy Demand

Between 2015 and 2025, the number of residential electricity customers in Texas grew by about 27%; roughly 2.73 million people. In 2015, monthly electricity sales to residential customers in Texas ranged from a median of 11.32 gigawatts to a maximum of 17.14 gigawatts (1 GW = 1,000 MW). Over the past decade, this increase in demand for Texas power has forced transmission and distribution utilities to upgrade, expand, and maintain their local power grids to deliver more power each month to new homes throughout the state. By 2025, monthly sales had grown to range from a median usage of 13.57 gigawatts to a maximum of 19.76 gigawatts. Not surprisingly, all this new demand from new arrivals to the state is showing up in monthly bills.

While population growth has raised Texas electricity demand, it's also important to point out that annual electricity usage in the average home has remained fairly constant. While heating and cooling naturally varied each month, data shows that monthly usage stayed within 50 kWh of the median 1,142 kWh per month. This also suggests that improvement in energy efficient appliances and products may be helping consumers lower their usage — in spite of the state's weather.

2.   Changes in Texas Weather and Texas Electric Usage

Heating and cooling systems consume the most energy in most Texas homes at different times of the year. While monthly averages provide a fast snap shot on how much consumers use each year, monthly data suggested a pattern that has been evolving over the course of ten years. To confirm this, we examined the annual number of heating and cooling degree days to see how hot or cold a particular summer or winter was and how much energy was used. To that end, the combination of electricity usage and degree day data reinforced what many residential customers are already experiencing:

  • Usage data suggests the summer cooling season appears to start sooner (May) and last longer (October).
  • From 2015 to 2025, the number of Cooling Degree Days for the summer months of May to September in Texas inched up from 2,397°Df to 2,461°Df.
  • Similarly, the winter heating season appears to start later (late-December to January) and fade out in March.
  • The number of Heating Degree Days for the winter months of October to March has decreased, dropping from a 10 year average of about 1,705°Df in 2018 to 1,168°Df in 2026.
  • December and March appear to see more volatile and extreme weather changes. Energy usage fluctuates yearly during these periods.


To determine when the heating or cooling season began, we correlated usage estimates with past weather data. Winter heating (from late December through March) and summer cooling (from May through October) was likely indicated when monthly usage rose significantly above a point when temperatures were likely more mild. The 950 kWh threshold was more than 100 kWh higher compared to milder months, such as April, when usage came in at 850 kWh or less.

On the whole, Texas electricity consumers appear to be using an average of roughly 1100 kWh per month over the past decade. However, over the course of a year usage data suggests customers are turning on their air conditioners earlier in the spring and using them well into fall. Air conditioning typically consumes more energy than heating in Texas. So, as consumers run their air conditioning for more months, they wind up spending more on their annual energy costs.

3.   Changes in Supply and Distribution Prices

A.) Rising Supply Prices

Between 2016 and 2024, the average price per kWh charged by retail electricity providers in ERCOT rose from 9.62 cents per kWh to 14.79 cents per kWh; an increase of about 53.69%. The increase stems from the confluence of volatile natural gas prices, rising transmission costs for wind and solar power, and the rush to build power-hungry crypto currency mines.



While the Texas electric industry continues to juggle the jiggling cost of dispatchable thermal plants with cheaper-but-distant renewable sources, ERCOT is bracing itself for an exponential growth in data centers. These threaten to potentially bring in 367,790 MW of new demand by 2032.

Part of the solution to this lies in building higher capacity transmission lines. In 2025, the PUC approved ERCOT's Texas Strategic Transmission Expansion Plan. This project features three new high voltage transmission projects to move even more power with less line-loss along the eastern and central part of the state as well as send more power to the Permian Basin region. This new project may provide about 3000 MW of transfer capacity that keeps the power flowing where it's needed and save consumers about $230 million in energy costs.

But while this transmission project may help keep residential rates down, it does come with a $32.99 billion price tag that Texas ratepayers will see added to their monthly bill.

B.) Rising Distribution Costs

TDUs are investor-owned utilities that own most of the poles and wires in Texas. By law, TDUs are allowed to profit by recouping their investment on upgrades and storm repairs to their grids upon approval by the Texas PUC. However, because power demand is expanding so fast, TDUs are increasingly spending more on their upgrade programs and filing for rate hikes to include returns on those big investments. All of which means, Texas ratepayers are seeing these increases raising their monthly bills more sharply. Between 2016 and 2026, TDU rates on an average residential bill rose by 44%.



For example, Oncor is one of the biggest TDUs in the state, serving more than 13 million customers. In 2023, Oncor's net income was $864 million. In 2024, that increased to $968 million and in 2025 it rose to $1.07 billion. Oncor's 2023 rate case to adjust their revenue for their investments raised customer bills by 3% or about $4.33 per month. In 2026, their PUC-approved rate will hike bills by another 3% and add another $4.64 per month. Between 2026 to 2030, Oncor is planning to invest $47.5 billion in its grid. While these will be important and substantial improvements, customers will see their bills rise.

According to Texas PUC data, the average Oncor customer using 1000 kWh per month now pays a total of $60 in TDU distribution charges each month. If Oncor files just two 3% rate increases during the 2026–2030 period, distribution charges on an average customer bill could increase by another $9 to nearly $70 a month by 2031. Shoppers comparing Dallas electricity rates will want to factor in these rising Oncor distribution charges when evaluating plans. CenterPoint Energy, which serves the Houston area, has similarly pursued rate increases to fund storm hardening and grid modernization projects in recent years. Consumers shopping for Houston electricity rates should expect CenterPoint's ongoing grid investment program to continue putting upward pressure on distribution costs.

How Texas Energy Customers Can Prepare

Texas consumers can expect challenge and churn in the coming years as its electricity market continues to evolve:


  • Longer Cooling Seasons: Warmer temperatures may arrive earlier each spring and last longer through fall. As a result, consumers may turn on their AC systems sooner each spring and keep using them well into the fall. This longer seasonal use could gradually add more and more onto a family's yearly energy spending.
  • Higher Supply Prices: Residential energy supply prices will likely go up due to data center demand, volatile natural gas prices, and costs to connect renewable sources. But, the Texas power production market is always evolving. And it's likely that higher capacity bulk transmission projects could slow the climb of Texas electricity rates. However, consumers will pay part of the cost.
  • Rising TDU Rates: TDU rates will continue increasing. Setting aside data centers and other large load projects, Texas is attracting more and more people. Some state estimates show that another 2–3 million people will move to Texas by 2036 in time for the state's bicentennial. New residential demand alone could add $10 to $20 onto an average customer's bill.
  • Shorter Shopping Windows: For nearly 25 years, consumers shopping during the spring and fall “shoulder months” have been able to take advantage of nearly 2 months of mild temperatures and lower energy demand to cut energy rates. Unfortunately, shopping for cheap electricity deals in the spring and fall may get more challenging as these mild shoulder periods appear to be getting shorter. Generators and retailers would have less reason to lower electricity rates for such a short time.

In all these cases, the best ways for consumers to try to save on their Texas electric bills is to make their homes as energy efficient as possible and to adopt practices that help cut their usage. Similarly, it's important for consumers to stay informed about the Texas energy market and the things that can affect their monthly bills. And above all, consumers need to take the extra time to shop provider plans and compare electric rates that meet their needs.


Methodology

Our data for the number of Texas residential electricity customers, sales to those customers, and average monthly usage comes from the Energy Information Agency's Electric Power Monthly reports spanning monthly reports from 2016 to 2026. Usage data was compared with NOAA climate data to track heating and cooling usage.

Mindful that the Electric Power Monthly reports included residential electric customers outside of the ERCOT region, we used pricing data for retail electric customers from EIA's Electric Sales, Revenue, and Average Price Reports from 2016 to 2024 to chart the increase in average prices offered by retail energy providers then operating in ERCOT.

Lastly, we used Texas transmission and distribution utility (TDU) tariff information from the Public Utilities Commission of Texas to track the change in TDU costs to average residential customers. Customers pay a per kWh usage charge and a flat customer charge. Because TDUs changed both the rate per kWh and customer charge over time, we needed to calculate a total monthly TDU charge per kWh. To do that, we multiplied the TDU per kWh rate by 1000 kWh of usage and added on the monthly customer charge. We then divided that number by 1000 to estimate the total TDU cost per kWh.


Sources

EIA Electric Power Monthly
https://www.eia.gov/electricity/monthly/

EIA Electric Sales, Revenue, and Average Price Reports
https://www.eia.gov/electricity/sales_revenue_price/

Public Utility Commission of Texas, Transmission and Distribution Utility Rates
https://www.puc.texas.gov/industry/electric/rates/tdr/

Archived PUC TDU pages
https://web.archive.org/web/20150904151624/https://www.puc.texas.gov/industry/electric/rates/tdarchive.aspx

Historical TDU tariffs — CenterPoint
https://www.centerpointenergy.com/en-us/corp/pages/historical-retail-tariffs.aspx

Historical TDU tariffs — Oncor
https://www.oncor.com/content/dam/oncorwww/documents/partners/rep/Oncor%20Residential%20Rates.pdf.coredownload.pdf

NOAA, Climate at a Glance County Time Series
https://www.ncei.noaa.gov/access/monitoring/climate-at-a-glance/statewide/time-series

ERCOT says Texas power demand could quadruple, expert says grid can't keep up
https://www.nbcdfw.com/news/local/texas-news/ercot-forecasts-energy-demand-to-quadruple-by-2032/4012606/

New Oncor Rates Effective May 1
https://www.oncor.com/content/oncorwww/wire/en/home/newsroom/oncor-files-rate-case-to-recover-costs-of-significant-system-inv.html

Higher electric bills will be reality for Oncor customers now that rate hike OK'd
https://www.dallasnews.com/business/energy/article/oncor-rate-increase-approved-22215844.php

Oncor Reports 2025 Results; Announces $47.5 Billion 2026–2030 Base Capital Plan
https://www.oncor.com/content/oncorwww/wire/en/home/newsroom/ONCOR-REPORTS-2025-RESULTS---ANNOUNCES--47-5-BILLION-2026-2030-BASE-CAPITAL-PLAN.html

Understanding Texas: Population Growth
https://texas2036.org/populationgrowth/

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