Your Texas electricity contract expiring does not mean your power gets cut off. Your retail electric provider automatically shifts your account to a month-to-month plan, usually at a variable rate that runs well above what you were paying under contract.
That rate can climb during hot summer months when grid demand spikes, and it may keep climbing every billing cycle until you switch.
Deregulated energy customers who ignore their contract expiration notice often end up paying 30% to 50% more than their locked-in rate without realizing it. The good news is that once your term ends, you owe nothing to leave.
You can shop for a better electricity provider and switch with no early termination fee standing in your way.
What Happens When Your Fixed Term Ends?
Your electricity keeps flowing, but your pricing changes. When a fixed-rate plan reaches contract expiration, the retail electric provider does not disconnect service or leave you without a plan.
Instead, your account rolls onto a default month-to-month plan, sometimes called a holdover rate or default renewal product. This is almost always a month-to-month variable rate that the provider can adjust from one billing cycle to the next, and it tends to sit noticeably higher than competitive fixed rates.
Your Electricity Service Normally Continues
Your lights stay on. Texas rules require continuous service even when a contract lapses, so there is no gap in power and no need to call anyone to “keep” your electricity running.
The only thing that changes is the price you pay per kWh once the fixed term ends.
What Is a Default Month-to-Month Product?
It is the fallback plan your provider uses when you do not choose a new one. This default variable rate is not a competitive offer designed to win your business.
It is a holding pattern, and providers generally price it higher than what a new customer would get by shopping around.
When Will the New Rate Appear on Your Bill?
The holdover rate typically takes effect at your next meter read after the contract expiration date. That means you might not notice the change until you get a bill that reflects a full cycle under the new pricing.
That is why watching your renewal notice matters more than watching your bill.
What Must the Contract Expiration Notice Tell You?
Under Public Utility Commission of Texas rules (16 TAC §25.475), your retail electric provider must send a contract expiration notice, generally at least 30 days before your term ends. This renewal notice has to state your expiration date, the specific default renewal product and rate you will move to if you do nothing, and confirmation that you are free to shop for a different plan or provider without penalty once your term is up.
These notices often arrive folded into a regular bill or by email, so they are easy to miss if you are skimming.
How to Choose Your Next Plan Without Paying More Than Necessary
Compare your renewal offer against what else is available at your address before your fixed-rate plan lapses. Texas electricity customers who take five minutes to check current rates during the notice period usually avoid the holdover rate altogether.
A new fixed-rate or month-to-month energy plan can be lined up to start the moment the old one ends.
Compare Your Renewal Offer With Plans at Your Address
Your current provider’s renewal offer is only one option among many. Retail electric providers like TXU Energy and dozens of competitors list electricity rates by ZIP code, and rates vary by transmission and distribution utility (TDU) territory, whether that’s Oncor, CenterPoint, AEP Texas, or TNMP.
A renewal offer that looks reasonable on its own can still cost more than a fresh fixed-rate plan from a different company serving the same address. You can check plans on the state-run powertochoose.org or through comparison tools.
It is worth checking compare available Texas electricity plans for your specific address before accepting anything by default.
When Can You Switch Without an Early Termination Fee?
Once your contract term ends, there is no ETF for leaving. Many providers also build in a switch window, often around 14 days before or after the expiration date, during which you can lock in a new plan without owing a cancellation fee.
If you are still inside your term and want to leave early, check your terms of service first. An early termination fee can range widely depending on your contract length, and it is worth calculating whether the fee outweighs the savings from switching now versus waiting.
Read the EFL Before You Renew or Switch
The Electricity Facts Label is the one document that tells you the real story. Every plan, whether it’s a renewal offer or a new month-to-month electricity plan from a competitor, comes with an EFL showing the average price per kWh at 500, 1,000, and 2,000 kWh, base charges, and any bill credits tied to usage thresholds.
A plan that looks cheap at 1,000 kWh can turn expensive at 500 kWh if it depends on a credit you won’t hit. Comparing EFLs side by side, not just headline rates, is how you avoid a plan that punishes low usage or off-threshold months.
Is a Month-to-Month Plan Ever the Right Choice?
Yes, for renters and short-term stays, a month-to-month energy plan can make sense. If you know you’re moving in a few months, a short-term electricity plan avoids locking you into a contract you’ll need to break early.
The trade-off is that the variable-rate plan can shift with wholesale market conditions, so your bill isn’t as predictable as a fixed-rate agreement. Texas homeowners planning to stay put for a year or more generally get more price stability from a 12 – or 24-month fixed plan instead.
What Changes and What Stays the Same When You Switch?
Only your retail electric provider changes. Your TDU, the company that owns the poles, wires, and meter, such as Oncor, CenterPoint, AEP Texas, or Lubbock Power & Light, stays exactly the same regardless of which REP bills you.
Switching does not require a new meter, new wiring, or a service interruption. You will need to pass a credit check with the new provider unless you choose a no-deposit or prepaid option, and the switch itself typically completes within about a week without any gap in service.
| Factor | Holdover Month-to-Month Rate | New Fixed-Rate Plan | New Month-to-Month Plan |
|---|---|---|---|
| Rate stability | Variable, can rise monthly | Locked for contract term | Variable, can change monthly |
| Early termination fee | None | Applies if canceled early | None |
| Typical price level | Highest of the three | Competitive, often lowest | Moderate, market-dependent |
| Best for | Nobody, by default only | 12+ month stays | Short-term or uncertain stays |
Before you accept any renewal offer or sign a new contract, it’s worth taking a moment to check current electricity plans available at your exact address so you know whether your current provider’s offer is actually competitive.
Conclusion
Your contract expiring doesn’t put your electricity at risk, but it can put your wallet at risk if you let it lapse without taking action. The default month-to-month rate is a fallback, not a bargain, and it may climb with each billing cycle once you’re on it.
Keep an eye out for your contract expiration notice, read the EFL for any new offer, and compare plans by ZIP code before your term ends. That puts you back in control of what you pay. When you’re ready to see what’s available where you live, compare electricity rates for your address and lock in a plan that fits your usage before the holdover rate takes hold.