Your electricity will not shut off when your contract expires in Texas. State rules require your retail electric provider to keep serving you after your fixed-rate term ends, but you’ll move onto a month-to-month plan with a rate the provider sets, often well above what you were paying.
That default rate can run 30% to 50% higher than your locked-in price, turning a quiet contract expiration into a nasty hit on your electricity bill. Texas electricity customers who don’t act before their contract expiration date often miss the jump until a much larger bill arrives. Knowing what happens next, and when you can switch without a penalty, puts you back in control before that happens.
What Changes When Your Fixed-Rate Plan Ends
Your service stays connected, but your pricing structure changes automatically once your contract end date passes. Your retail electric provider (REP) shifts your account to a default renewal product, usually a month-to-month variable-rate plan, and the provider can reset that holdover rate at any time.
Why Your Electricity Service Continues
Texas rules require your REP to keep supplying power after a fixed-rate plan expires. The physical delivery of electricity comes from your transmission and distribution utility (TDU), which has nothing to do with your contract status.
Your lights stay on because the TDU’s wires and poles keep working regardless of which pricing plan you have with your REP. The Public Utility Commission of Texas (PUCT) requires this continuity so customers aren’t left without power just because a contract term ended.
What Is a Default Month-to-Month Plan?
A default month-to-month plan is the rate your provider sets when you take no action. It’s usually a variable-rate plan, meaning the price can change from month to month based on the provider’s own pricing decisions.
Unlike your old fixed-rate plan, there’s no cap and no advance notice required for each rate adjustment. That’s the biggest reason electricity bills spike right after a contract quietly rolls over.
How to Read the Contract-Expiration Notice
PUCT rules require your REP to send a contract-expiration notice before your term ends, usually with your renewal options and the deadline to act. Look for the exact contract end date, the default variable rate you’ll be moved to if you do nothing, and the terms of any renewal offer.
This notice is your clearest signal to start comparing plans before the switch to a holdover rate happens automatically.
How to Renew or Switch Before the Rollover Rate Applies
You can avoid the holdover rate by comparing plans before your contract expiration date and switching or renewing before the deadline. Texas gives you a short window near the end of your term to do this without paying an early termination fee (ETF), so timing your move matters just as much as picking the right plan.
When Can You Switch Without an Early Termination Fee?
Most Texas electricity plans allow you to switch providers during the final 14 days before your contract expiration date without triggering an ETF. This ETF-free window exists so customers aren’t stuck paying to leave a plan that’s about to end anyway.
Outside that window, breaking a fixed-rate contract early usually means paying the ETF listed in your Terms of Service. Depending on the plan, that fee can range from $50 to several hundred dollars.
Mark your calendar two to three weeks before your contract end date. That gives you time to shop, compare offers, and lock in a new plan before the free-switch window closes or you roll onto the default variable rate.
How to Compare a Renewal Offer With Other Plans
Your current provider will likely send a renewal offer, but it may not be the cheapest option available. Renewal offers often run 15% to 25% above rates offered to new customers, so treat that offer as a starting point, not the final answer.
Use these steps to compare fairly:
- Check your ZIP code on Power to Choose or a comparison site to see current electricity plans available at your address.
- Pull the Electricity Facts Label (EFL) for both your renewal offer and any new plan you’re considering.
- Compare the price at your actual usage level, ideally close to 1,000 kWh or 1,500 kWh depending on your household size.
- Check for bill credits, minimum-usage fees, base charges, and energy charges separately, not just the headline rate.
- Confirm contract length and whether the plan is fixed-rate or variable-rate.
| Factor | Renewal Offer | New Plan (Shopped) |
|---|---|---|
| Typical price vs. new-customer rate | 15-25% higher | Market rate |
| Rate type | Often fixed | Fixed or variable, your choice |
| ETF risk | None (staying with same REP) | Check new plan’s terms of service |
| Switching effort | Minimal | Requires comparing and enrolling |
Once you’ve reviewed the numbers, compare electricity rates for your address to see whether staying with your provider or switching makes more financial sense for your usage.
What to Check on Your First Bill After a Change
Your first bill after switching or renewing should confirm that the new energy rates took effect on the correct date. Check that the energy charge, base charge, and any bill credits match the EFL for the plan you selected.
Confirm your TDU delivery charges are listed separately, since those don’t change no matter which REP you choose. If anything looks off, especially a rate that still reflects the old holdover pricing, contact your provider immediately. Billing errors during a plan transition aren’t unusual.
If you’re moving into deregulated territory served by ERCOT for the first time, this is also a good moment to check current electricity plans and rates before your service date arrives, rather than waiting until after your first bill lands.
Conclusion
Your electricity in Texas doesn’t shut off just because a contract expires. What changes is the price, since providers move you to a variable holdover rate that can cost significantly more than your old fixed-rate plan.
The fix is simple: track your contract end date, use the 14-day ETF-free window to shop around, and compare any renewal offer with current market plans using your actual usage. A few minutes of comparison before your contract expiration date can save you from months of paying an inflated rate you never agreed to.