Published in Learning Center • Regional Guides

Best Fixed-Rate Electricity Plans in Houston: 2025 Comparison and Savings Strategies

Houston residents in the ERCOT deregulated market can choose from 50+ electricity retailers, each offering different fixed-rate contracts. Fixed rates lock your electricity price for 12-60 months, protecting you from wholesale price spikes that occur during extreme weather (summer heat waves pushing demand to 80+ GW, winter freezes). In 2024-2025, Houston's fixed-rate options range from $0.108/kWh (lowest-cost providers) to $0.180+/kWh (premium brands with customer service guarantees), reflecting a 67% cost spread. For a typical Houston household using 1,200 kWh/month, choosing the lowest fixed rate vs. the highest saves $900-1,200 annually. This guide compares Houston's best fixed-rate plans, explains contract mechanics and hidden fees, and shows real households how to identify genuine savings.

Houston's ERCOT Deregulated Market: Why Fixed Rates Matter

Houston (Harris County and surrounding areas) falls within ERCOT's service territory, where retail electricity is fully deregulated. Unlike regulated utilities where the government sets rates, ERCOT retailers compete on price and service, and wholesale electricity prices fluctuate constantly based on supply/demand balance. Why wholesale prices spike: In summer, peak demand (air conditioning) can surge from 50 GW to 80+ GW within hours. Generators bid increasingly high prices to come online during these peaks. Wholesale prices that normally average $35-45/MWh can spike to $200-300/MWh during extreme heat (example: Aug 2023 ERCOT peak demand, rates approached $400/MWh). In winter, rare freezes dramatically reduce generation capacity (frozen natural gas pipelines) while demand surges, creating similar spikes. Fixed-rate contracts protect consumers by locking in an average rate that includes a retailer's wholesale cost hedging. A retailer offering $0.115/kWh fixed absorbs the risk that wholesale prices spike above that rate; consumers benefit from price stability at the cost of slightly higher rates during calm wholesale markets.

How fixed rates are calculated: A retailer purchasing power from ERCOT's day-ahead market pays an hourly clearing price (average $40-50/MWh in 2024). To offer a fixed retail rate to customers, the retailer must hedge against volatility—purchasing contracts that pay them if prices spike (insurance). The hedging cost, retailer profit margin (2-4¢/kWh), transmission charges (ERCOT infrastructure ~$0.02/kWh), and distribution charges (Centerpoint Energy ~$0.058/kWh) all add up to the fixed rate consumers see. A retail fixed rate of $0.115/kWh in Houston breaks down roughly as: $0.045/kWh wholesale + $0.012/kWh hedging/margin + $0.020/kWh transmission + $0.038/kWh distribution/taxes = $0.115/kWh.

Current Best Fixed-Rate Plans: January 2025 Comparison

Provider	Plan Name	Rate (¢/kWh)	Contract Length	Fees
Direct Energy	Fixed 12-Month	10.8¢	12 months	$125 early termination
Reliant Energy	12-Month Fixed	11.2¢	12 months	$150 early term.
Gexa Energy	12-Month Fixed	10.9¢	12 months	$0 early term. (no fee)
TXU Energy	12-Month Fixed	11.5¢	12 months	$200 early term.
Energy Ogre (Alight)	12-Month Fixed (varies)	10.5¢-11.2¢	12 months	Varies by plan
Frontier Utilities	Fixed 12-Month	12.3¢	12 months	$100 early term.

What these rates mean for a typical Houston household: 1,200 kWh/month × 12 months = 14,400 kWh/year. At Direct Energy's 10.8¢/kWh: 14,400 × $0.108 = $1,555.20/year. At Reliant's 11.2¢: $1,612.80/year = $57.60 more than Direct Energy. At TXU's 11.5¢: $1,656/year = $100.80 more than Direct Energy. Over 12 months, switching from TXU to Direct Energy saves $100/year—modest but meaningful. Over 5 years, the difference compounds: Direct Energy $7,776 total vs. TXU $8,280 = $504 total savings.

Key Takeaway: Houston's fixed-rate plans range 10.5¢-12.5¢/kWh (excluding premium brands), but the "best" plan depends on contract length priorities and early termination fee tolerance. Direct Energy and Gexa offer lowest rates ($0.108-0.109/kWh); Gexa has zero early termination fees (flexibility value); Reliant and TXU command 2-4¢/kWh premiums through brand recognition and customer service (but rates don't justify the cost difference).

Understanding Early Termination Fees and Hidden Costs

Early termination fees (ETF): Most Houston fixed-rate contracts charge $100-200 if you switch providers before the contract expires. This is the most commonly ignored cost. Example: Customer signs a 12-month plan with Reliant at 11.2¢/kWh. After 6 months, Direct Energy offers 10.8¢/kWh. Switching saves 0.4¢/kWh × 14,400 kWh × remaining 6 months = 0.4¢ × 7,200 = $288 savings. But Reliant charges $150 early termination fee, netting $288 - $150 = $138 actual savings. The ETF reduces incentive to chase lower rates mid-contract. Providers with zero ETF: Gexa Energy explicitly advertises $0 early termination fees, making them optimal if you anticipate rate changes. Most others charge $100-200.

Hidden fees and charges: (1) Deferred recovery charges: Some retailers add $0.002-0.005/kWh to cover past shortfalls from previous customers who didn't pay. Not clearly advertised but appears on bills. (2) ERCOT fees: Retailers pass through ERCOT administrative charges (~$0.0015/kWh), technically part of the "fixed rate" but often not highlighted separately. (3) Cancellation/disconnection fees: If you move out of service area, expect $50-100 cancellation fee. (4) Late payment fees: Miss a payment by 15+ days, most retailers charge $10-15 per occurrence. None of these are mentioned in advertised rates.

Contract Length Strategy: 12-Month vs. 24-Month vs. 36-Month Plans

12-month fixed plans: Lock rate for 1 year, then flexible to switch. Rates typically 10.8¢-11.2¢/kWh (lowest available). Recommended for most Houston consumers because: (1) ERCOT prices are volatile; locking for only 1 year is manageable risk. (2) Flexibility to shop annually for lowest available rate. (3) If rates decline, you can switch within 12 months. Disadvantage: Must re-shop every year (administrative burden).

24-month fixed plans: Lock rate for 2 years. Typical premium: 0.2-0.4¢/kWh above equivalent 12-month plan (e.g., 11.0¢ vs. 10.8¢). Useful if: (1) You value certainty and stability. (2) Wholesale prices appear likely to rise (but this is speculative). (3) You plan to stay in home/address for 24+ months. Disadvantage: Locked into higher starting rate for 2 years; if prices decline, you're stuck with above-market rate.

36-60 month fixed plans: Very rarely used in Houston retail market because: (1) Premium is too high (0.5-1.0¢/kWh above 12-month plans). (2) Consumers move frequently (ERCOT service area spanning 90,000+ sq miles means many relocations). (3) Long-term rate direction is uncertain. Only useful in rare scenarios where you're absolutely certain about 5-year residency and want maximum price certainty.

Recommended strategy for most Houston households: Sign a 12-month fixed plan with lowest advertised rate (currently Direct Energy 10.8¢ or Gexa 10.9¢). Set phone reminder for 11-month mark. Re-shop rates at 12-month expiration. This approach ensures you're always close to market rates while locking protection against seasonal spikes.

Real Cost Scenarios for Houston Households

Scenario A: Typical household, 1,200 kWh/month (summer AC use) Location: Southwest Houston, Centerpoint Energy distribution. Contract: 12-month fixed with Direct Energy at 10.8¢/kWh. Annual bill: 14,400 kWh × $0.108 = $1,555.20. Breakdown: Generation/supply $680 (45% of bill), Transmission $288 (18.5%), Distribution $528 (34%), Taxes/fees $59 (3.5%). Total: $1,555.20. Compared to variable-rate plan (current ERCOT average 11.5¢): $1,656/year = $100.80 premium for certainty. Compared to highest available fixed rate (TXU 11.5¢): $100.80/year savings with Direct Energy.

Scenario B: Large household, 2,000 kWh/month (heavy AC, pool, electric heating) Contract: 12-month fixed with Gexa at 10.9¢/kWh (zero ETF appeals to this high-usage household). Annual bill: 24,000 kWh × $0.109 = $2,616. If switched to Direct Energy (10.8¢): 24,000 × $0.108 = $2,592 = $24 savings. The $24 savings barely justifies switching effort, demonstrating that for high-usage households, the choice between Direct Energy/Gexa/Reliant is minimal—pick the one with best service reputation or zero ETF.

Scenario C: Budget-conscious apartment dweller, 600 kWh/month Current variable-rate plan at 12.0¢/kWh = $864/year. Switching to Direct Energy fixed (10.8¢): 7,200 kWh × $0.108 = $777.60 = $86.40 savings. Valuable for budget-constrained household. ETF risk: If Direct Energy charges $125 early termination, customer needs to stay 17+ months to justify the switch over a constant variable plan.

Beyond Price: Renewable Energy and Green Plans

Most Houston fixed-rate providers offer renewable energy options at 0.5-1.5¢/kWh premium. Example: Direct Energy's "Renewable 100" plan = 11.3¢/kWh (vs. 10.8¢ standard). Premium: 0.5¢/kWh × 14,400 kWh/year = $72/year for 100% renewable energy. The renewable premium funds Renewable Energy Certificates (RECs) from wind farms in West Texas and solar installations. Texas has abundant wind (40% of state's generation is wind), making renewable premiums cheaper here than most US states.

Next Steps: Finding and Switching to Your Best Fixed-Rate Plan

Step 1: Check your current plan and costs. Look at your Centerpoint Energy or utility bill. Note current retailer and rate (¢/kWh). Calculate annual cost (rate × 12 months × average monthly kWh). This is your baseline to beat.

Step 2: Search comparison sites. Visit PowerToChoose.org (official ERCOT rate comparison), EnergyCurb.com, or Check.com. Enter your zip code and monthly usage (from recent bill). Sites list all available plans ranked by price. Screenshot top 5-10 options.

Step 3: Compare all-in costs, not just ¢/kWh rates. Plans vary in structure (some charge demand fees, others offer bill discounts). Many comparison sites show estimated annual cost—use this figure to rank plans, not just per-unit rates.

Step 4: Check early termination fee and contract terms. Don't ignore ETF. For 12-month plans, Gexa ($0 ETF) is worth considering even if 0.1¢/kWh higher than Direct Energy. ETF flexibility has value.

Step 5: Switch and set a 12-month reminder. Once you've selected your plan, switch through the provider's website (takes 5-10 business days to activate). Set a calendar reminder for 11 months from now to re-shop rates. Repeat annually to stay at or near market rates.