Are Tiered Rate Electricity Plans Better Than Bill Credit Plans in Texas?


Get the most savings for your summer electricity usage. Learn how you can enjoy more savings with tiered rate electricity in Texas.

Are tiered pricing and bill credits a Texas electricity rate trend

Retail electricity providers in Texas compete for your business. You have the power to choose which company services your home. To win your business, companies compete predominantly on price. This competition has caused retail power companies to develop a wide range of pricing structures to woo your business.

Tiered pricing and bill credits have been available for years. However, tiered rate electricity pricing has garnered recent media attention. Last year, the Texas Public Utility Commission received many complaints about confusing information about tiered pricing plans on their own website.

Here at Texas Electricity Ratings, providing you with accurate and understandable information is what we do best. Tiered pricing and bill credits function similarly, but they're not the same thing. Let's demystify these concepts, so you can evaluate Texas electricity plans and pick the one that best meets your needs.

How do tiered electricity rates work

In tiered rate electricity pricing, a customer's bill is largely determined where in several pricing tiers that the customer's usage falls within. Regardless of whether the usage is near the top of a tier or near the bottom of that tier, the customer pays the same amount.

Here's an example. Excluding applicable TDU charges, the 12 Month Flat Tier plan from Constellation has the following tiers.

Tier Level Usage Price
Tier 1 Charge for using at least 1 kW $89 per billing cycl
Tier 2 Additional charge for using at least 501 kW $0 per billing cycl
Tier 3 Additional charge for using at least 1,001 kW $89 per billing cycl
Tier 4 Additional charge for using at least 1,501 kW $0 per billing cycl
Beyond 4 Additional charge for using over 2,000 kW 11.90¢ per kWh in excess of 2,000 kW

Under this pricing structure, a customer using 500 kWh pays the same price as another customer using 1,000 kWh despite one customer using half the amount of electricity as the other. At 1,001 kWh, the price doubles from $89 to $178.

As you evaluate any tiered rate electricity plan, you need to see where those price differences are. If your normal usage tends to push you into the low end of a higher tier, that plan probably isn't right for you. Conversely if your usage hovers in the high end of a tier without ever going over, that plan may be just what you need.

What are bill credits in Texas electricity rate plans

Bill credits are discounts that occur when your usage reaches a given threshold. Your usage goes up, but you receive a bill credit that reduces your cost drastically. While tiered plans encourage you to keep below a specific usage number, bill credits do the opposite. With a bill credit plan, you want to make sure your normal usage exceeds the bill credit threshold to make the plan's pricing structure work for you.

For example, the Gexa Saver Select 24 plan from Gexa Energy includes two bill credits in its pricing. If your usage exceeds 1,000 kWh, you are rewarded with a $60 bill credit. If your usage exceeds 2,000 kWh, you skip the $60 bill credit in favor of an $80 bill credit. In this particular plan, you can only take advantage of one or the other. It's easy to see you want your usage to be just above 1,000 kWh or just above 2,000 kWh to put the appropriate bill credit to optimum use.

2019 Texas electricity rate option

Tiered pricing and bill credits are just two choices for retail electricity plan. You can also find fixed rate plans with more straightforward pricing. Plenty of plans offer simple price per kWh plans. These simpler plans make predicting your bill much easier, and you don't have to worry about a small change in your usage resulting in a drastically different bill.

Sign up for fixed rate Texas electricity plan

Texas Electricity Ratings is your ultimate resource for choosing a Texas electricity plan. The most important information about each power plan is displayed in a user-friendly format. All the nitty-gritty details are just a click away from each plan's TER page. Compare electricity plans today to see which one will work best for your Texas household. You can sign up right from