Texas electricity rates in 2022 continue to show the greatest value with long terms plans. The other big trend? More green energy electricity plans as Texas moves generation to renewable energy.
(In a hurry? Jump right to our recommendations on the best residential Texas electricity plan for 2022.)
This article contains the following sections on the Texas electricity market for 2022.
- What is ERCOT Reserve Margin
- Texas Electricity Reserve Margin for 2022
- How Reserve Margins, Winter Storm Uri and Weather Impact Electricity Rates
- Long Term Texas Electricity Rates
- Short Term Texas Electricity Rates
- Green Energy Plans
- Best TX Electricity Plan
- Best Time to Shop
- Texas Business Electricity Rates in 2022
- How to Get the Best Rates for Your Business
You can also check our May 2022 article on Why are Texas Electricity Rates so High Right Now?
Section 1: Economics of Texas Electricity
What is “ERCOT Reserve Margin?”
Before we get too deep into this, let’s define a term that you will hear in the Texas electricity market — Reserve Margin.
ERCOT reserve margin is the difference between the amount of power generation capacity that is available, versus the amount of power demand that is expected. ERCOT uses reserve margin as a planning tool to assess what additional resources or demand reduction may be needed.
To ensure system reliability, ERCOT, the Electricity Reliability Council of Texas, likes to maintain a 13.75% reserve margin. That means they like to have 13.75% more generation capacity than projected demand. It’s the “just in case” margin that we have.
The “just in case” allows for the impact of hotter than expected temperatures, which would spike demand. And it allows for the risk of unexpected generation shut downs, which would reduce supply. It also factors in the chance the wind doesn’t blow and the sun doesn’t shine when it’s expected to.
But most of all, reserve margin is a signal to the wholesale electricity market regarding supply and demand.
What is the (Texas) ERCOT Reserve Margin for Summer 2022?
The Texas (ERCOT) Reserve Margin projection for summer 2022 is 22.8%. That’s based on the May 2022 Capacity, Demand and Reserves Report from ERCOT. That’s well above the ERCOT target reserve margin of 13.75%, and is a positive sign of system adequacy, or sufficient supply, for summer 2022.
ERCOT releases three resource adequacy projections each year.
- December: ERCOT releases its Capacity, Demand and Reserves (CDR) report with initial projections for summer of the following year.
- March: ERCOT releases its preliminary Seasonal Assessment of Resource Adequacy for the ERCOT Region (SARA). They use historical projections for the summer weather.
- May: ERCOT releases its final SARA for Summer 2022 and CDR for Summer 2022, taking into account the Texas weather forecasts for the summer months.
>Reserve margin for Texas summer 2022 looks very positive for Texas electricity rates. But…
Here are the ERCOT reserve margins for 2022-2029 according to the May 2022 Capacity, Demand and Reserves Report:
How Do Reserve Margin Forecasts Impact TX Electricity Prices?
ERCOT’s projections of Texas electricity supply and demand have an impact on how wholesale energy gets traded on the open markets.
Each Retail Electricity Provider has an expert supply team that’s evaluating all this data. And, their counterparties, energy traders at large wholesale firms or companies that manage generation assets, are also evaluating all this data.
ERCOT’s reserve margin projections assume an “average” or typical weather pattern. Each REP and their energy trading counterparts must determine how much power they want to buy ahead of time (called hedging) and how much power they may want to buy on the open markets.
The reserve margin is sending a fabulous signal to the market, that we have plenty of power. So Texas electricity prices should be low in 2022, right?
Maybe. The wholesale markets sometimes behave irrationally. That’s exactly what’s happening now. And it’s why rates for electricity in 2022 look worse than in 2008, when we were having an economic crisis.
How Does Texas Winter Storm Uri Affect 2022 Texas Electricity Rates?
Let’s talk about Winter Storm Uri and the Texas blackout of February 2021 for a bit.
This winter storm slammed into Texas, dropping temperatures below freezing for much of the state. We experienced massive rolling blackouts. And in some cases, the blackouts weren’t rolling, it was just cold and dark for days. The result was hundreds of deaths and millions in property damage.
As a result, the Texas legislature, ERCOT and the Public Utility Commission of Texas issued a number of new regulations including:
- Weatherization of power plants
- Changes in the regulatory make-up of the Texas Energy Reliability Council and ERCOT
- Changes to the electric market structure to eliminate wholesale indexed electricity plans for residential and small commercial
These new rules also changed market rate caps on the wholesale electricity market and ancillary services.
>New regulations and the cost of compliance drive electricity contract prices higher.
How Does Weather Impact TX Electric Prices?
The big wild card in Texas electricity prices for the home? It’s the weather.
On a normal day, 20% of ERCOT load is residential electricity. But on a scorching hot day? Or a super cold day? Residential electricity jumps to almost 50% of the total ERCOT load.
That’s because homes in Texas use more than half of their electricity to heat or cool their homes. When it gets hot in Texas, everyone turns on their HVAC system to full blast.
Retailers and supply analysts can only buy power in blocks. They can never schedule to have 100% of what they need. They buy the rest on the open wholesale markets. When it’s hot and demand spikes higher than expected? They often get caught without enough power.
Retailers that sell electricity to residential consumers have a riskier load profile. They can plan and plan and plan. But if there’s a heat wave or a cold front, they get caught without enough supply and have to buy power on the open market.
>Weather risk results in higher risk factors being built into residential electricity prices. That pushes prices higher.
How Do Global Factors Impact TX Electric Prices?
The elephant in the room is the global economy. Texas wholesale electricity prices trade in lock-step with natural gas. Even thought natural gas now generates less than 50% of Texas electricity, the two are closely tied.
And natural gas prices are higher than they’ve been in over a decade.
We first started seeing natural gas prices increase in 2020, but prices started ramping as manufacturing processes restarted. Natural gas is increasingly a global market. With Liquified Natural Gas (LNG), gas can be transported around the world. Russia’s war against Ukraine has had an impact on natural gas prices internationally as European nations seek new sources of gas. (More on global economic impacts here.)
>Global economics are driving Texas electricity prices higher.
If you read no further, here’s your takeaway on Texas Electricity Rate Projections for 2022:
- Reserve margins in ERCOT for summer 2022 are a healthy 22.8%.
- ERCOT projects reserve margins of around 46% for 2023 and 2024.
- Because of that, wholesale electricity contracts for 2023 and 2024 are cheaper than wholesale electricity contracts for 2022.
- That means you can lock in a lower rate for electricity with a long term contract (24-36 months) vs. a short term contract (12 months).
- The costs of new regulatory compliance plus fears over summer weather plus the global economy/war are driving higher prices for 12-month electricity contracts.
- Short term electricity contracts (less than 12 months) may be available as retailers see pricing opportunities in the market. Look for seasonal opportunities in spring and fall.
Section 2: TX Residential Electricity Prices 2022
The Texas electricity market has been deregulated for over 20 years. Consumers can shop to get the best rates on their electricity. In this section, we’ll review where to find the best TX electricity deals in 2022.
>New to shopping? Use our guide on how to shop for Texas electricity.
Long Term Texas Electricity Rates – Best Rates for 2022
If you’ve read anything above, you already know why long-term electricity plans give you the best Texas electricity rates for your home or business. Contracts that are longer than 12 months will give you the cheapest prices in 2022. Look for 24-36 month contract terms.
Here are our Top 10 Cheapest Long Term Electricity Plans in Texas, updated daily. These prices are for Oncor/Dallas-Ft. Worth. Enter your zip code to see rates in your area.
Top 10 Cheapest Long Term Electricity Plans in Texas
|Energy Texas||36 Inflation Fix||36||13.5 ¢||Details|
|Pulse Power||Free Energy Nights 36||36||14.2 ¢||Details|
|OhmConnect Energy||TexasConnect 36||36||14.3 ¢||Details|
|Energy Texas||Bigger Than Texas 24||24||14.5 ¢||Details|
|Pulse Power||Texas Fixed 36||36||14.6 ¢||Details|
|Frontier Utilities||Smart Budget 36||36||14.9 ¢||Details|
|Pulse Power||Free Energy Nights 24||24||15.1 ¢||Details|
|Champion Energy Services||Champ Silver 24||24||15.3 ¢||Details|
|Champion Energy Services||Champ Saver 24||24||15.4 ¢||Details|
|Discount Power||Value Plus 36||36||15.5 ¢||Details|
Shop Texas Electricity Rates by Zip
Short Term Texas Electricity Rates – When to Go Short Term
Even though the cheapest Texas electricity rates for 2022 are 24 or 36 month plans? The 12 month electricity contract continues to be the most popular contract term for residential electricity.
Why? Our guess is that people who are switching want to check out a new company before they over commit. If that’s an issue for you, take a look at our list of electricity companies with a satisfaction guarantee. That way if you don’t like them, you can switch away with no early termination penalty in the first 60-90 days, depending on the REP.
Some consumers want to shop for a 3-month electricity plan or a 6-month electricity plan. But watch out for these plans! While they will look really cheap, you could expire close to the summer. And your next electricity plan will be more expensive.
The chart below shows some of the cheapest short term electricity rates in the Oncor / Dallas area of Texas. Enter your zip code to see rates in your area.
Top 10 Cheapest Short Term Electricity Plans in Texas
|TXU Energy||TXU Energy Simple Rate 12||12||14.9 ¢||Details|
|MP2 Energy||Solar Buyback 12||12||17.7 ¢||Details|
|Frontier Utilities||Frontier No Hidden Fees 12||12||17.8 ¢||Details|
|4Change Energy||One Rate 12||12||18.1 ¢||Details|
|Champion Energy Services||Champ Saver 12||12||18.3 ¢||Details|
|Energy Texas||Come and Take It 12||12||18.3 ¢||Details|
|XOOM Energy||SureLock 12||12||19.1 ¢||Details|
|Pulse Power||Texas Fixed 12||12||19.1 ¢||Details|
|XOOM Energy||RescueLock 12||12||19.2 ¢||Details|
|Rhythm||Rooftop Solar BuyBack 12||12||19.4 ¢||Details|
You can receive the best price for your Texas electricity when you shop on ElectricityPlans.com. We’ve negotiated discounted rates with promo code from multiple providers. When you shop using our links, these codes are automatically applied to get your discount. You’ll often get a discount off their published rates or even a different set of electricity plans.
Green Energy Plans in Texas
Renewable energy from solar and wind installations is on the rise. For example, regulatory filings with ERCOT show that solar and utility-scale battery projects will nearly double in power capacity by December 2022.
Increased supply of renewable energy creates more Renewable Energy Certificates in Texas. And that means renewable electricity rates are getting cheaper.
Here are just some of the options for choosing a green energy plan in Texas:
- If you want to reduce your carbon footprint, you can purchase a 100% renewable electricity plan, or an electricity plan from Texas wind or Texas solar.
- Have solar panels? You’ll want a solar buyback electricity plan to sell your excess power back to the grid.
- Have an EV? Select an EV charging plan.
The chart below shows some of the cheapest green energy electricity rates in the Oncor / Dallas area of Texas. Enter your zip code to see rates in your area.
Top 10 Cheapest Green Energy Electricity Plans in Texas
|Energy Texas||36 Inflation Fix||36||13.5 ¢||Details|
|Energy Texas||Bigger Than Texas 24||24||14.5 ¢||Details|
|Gexa Energy||Gexa Saver Premium 12||12||14.9 ¢||Details|
|Chariot Energy||Solarize 36||36||15.8 ¢||Details|
|Gexa Energy||Gexa Energy Saver 36||36||15.9 ¢||Details|
|Champion Energy Services||Green Energy 24||24||16.0 ¢||Details|
|Rhythm||Rhythm TX Breeze 36||36||16.2 ¢||Details|
|MP2 Energy||EV Free Charging Plan 24||24||16.2 ¢||Details|
|Gexa Energy||Gexa Energy Saver 24||24||16.4 ¢||Details|
|MP2 Energy||Electricity Plans 24||24||17.1 ¢||Details|
According to the Electricity Reliability Council of Texas (ERCOT), in 2021 renewable energy accounted for 29% of all electricity generated in Texas. Most new generation planned in Texas is renewable. This graph shows the Texas 2021 electricity generation by fuel type. Source: ERCOT Fuel Mix Report 2021
Best Electricity Plan for Most Texans
We’ve been in this business since the start of Texas deregulation. And we continue to say, the best electricity plan for most Texans is a long term fixed rate electricity plan with basic electricity (no gimmicks).
- Easy to understand. Same fixed rate per kWh for the term of your contract.
- No tiered rates, bill credits, minimum or maximum usage thresholds to watch for.
- Set it and forget it (until your contract expiration).
There are 2 other types of plans that continue to be popular with consumers.
If you know your electricity usage by month, you may be able to get a cheaper rate by shopping the bill credit or tiered rate electricity plans. You can use our electricity bill calculator and select “Bill Credit/Tiered Rates/ Flat Fee” when looking at plans. You’ll be able to see your estimated bill and price per kWh each month, with each plan.
Free electricity plans are still some of the most popular electricity plans, especially free nights electricity. If you are willing to shift some of your electricity usage to the evening hours, these can be a good deal.
No matter what type of electricity plan you sign up for, don’t forget to shop when your contract expires. Sign up for our electricity contract expiration reminders (a free concierge electricity service). You’ll get a reminder to shop before your contract end date.
When’s the Best Time to Shop for Electricity in Texas?
The best time to shop for electricity in Texas is the shoulder seasons: spring, fall or winter. Prices are typically lower during these times. Regardless of the time of year you shop, start shopping 60 days before your current contract expires. And always compare your renewal offer vs. other providers to get the best electricity rate for your home.
We are often asked, when should I shop for electricity in Texas?
The best pricing opportunities are in the shoulder months, for contracts that expire between October and May. Contracts that expire in June through September are exposed to the pricing risk of summer weather.
But you can’t always pick your contract end date. It’s usually tied to whenever you first shopped for electricity, or perhaps when you moved into your most recent home or apartment.
When you are shopping for a new plan, you can choose your switch date with the new provider. Pick a switch date 7-10 ahead of your expiration date of your current contract. That way you avoid any early termination fee with your current provider.
Or, pick an electricity company that will pay your early termination fee with your current company. You can switch immediately without worrying about your contract expiration date. Rhythm will reimburse your contract early termination fee when you switch, up to $150.
Don’t. Forget. To. Shop. In fact, sign up for our electricity plan expiration reminder service right now while you’re thinking of it. We’ll remind you to come back and shop for electricity.
Section 3: Commercial TX Electricity Prices 2022
Commercial electricity is showing the same pattern as residential electricity in Texas. Long term electricity rates give a better value for Texas businesses as compared to short term plans.
Texas Electricity Rates for Commercial Energy in 2022
>For business owners, long term plans will offer you the best electricity rates.
And, unlike residential customers, you don’t have to wait for the 60-day window to shop for your electricity. That means business owners can compare electricity rates 6+ months in the future. That’s perfect if you have a contract expiring in June through September, which are typically the most expensive contract months.
If you spend less than $2500 a month on your electricity bill, you can shop business electricity rates online to compare commercial electricity prices. You can complete the entire contracting process online in less than 10 minutes.
If you spend more than that, call us for custom commercial electricity price quotes — 844-244-5559.
How to Get the Best Rates for Your Business in Texas
Working with an electricity broker can help you find the best rates. Here are some other ways to get the best electricity rates for your business:
- Shop 6-12 months in advance of your contract expiration date to get the best prices.
- Pay attention to your usage on the hottest days of the summer. That can help to keep your demand charges low.
- If you are a new business, work with a business electricity expert to get help establishing your service without a deposit.
- If you are moving to a new location, work with a business electricity expert to get help with the city permit process.