Your electricity renewal rate is higher because your fixed-term contract ended and your provider moved you to a new price, usually its month-to-month or default renewal rate. That rate almost always runs above what new customers get on the same website.
Retail electric providers count on inertia. Most people don’t notice their contract expired until a bill arrives 20% to 50% higher than the month before.
The good news: you have options once you know why this happened. This guide breaks down the exact reasons renewal rates climb and gives you a step-by-step way to check your offer before you accept it, switch it, or let it ride.
Why a Renewal Offer Can Cost More
A renewal rate is usually higher because you left a locked-in fixed-rate plan and landed on pricing built for convenience, not competition. Retail electric providers set renewal pricing separately from the rates they use to win new customers, and the gap between the two can run 15% to 25% or more.
Your Fixed Term May Be Ending, Not Your Electricity Service
Your power never stops when a contract expires. What changes is the price you pay for it.
When a fixed-rate plan reaches its contract expiration date, your provider is required to notify you, but plenty of people miss the letter or email. Without action, you get moved automatically to a renewal offer or a month-to-month variable rate, often called a holdover rate.
Your electricity usage and service stay identical. Only the per-kWh rate changes, and it’s built into your next billing cycle before you notice.
New-Customer Pricing and Renewal Pricing Are Different Offers
REPs price new customers to win business and price renewals to retain it without competing.
A retail electricity provider’s website almost never shows your renewal rate. Sign-up pages are built to display the lowest advertised cents per kWh to attract switchers.
Your renewal notice comes from a separate pricing system, and it typically reflects wholesale costs, retention margins and the assumption that you won’t shop around. Auto-renewal into the same “Plan Name” at a new price is common enough that many bills look unchanged at a glance while the rate underneath has moved.
How Wholesale Market Conditions Affect New Contract Prices
Wholesale market conditions set the floor for what any new contract, renewal or otherwise, will cost.
ERCOT manages the grid, balancing supply and demand across most of Texas. Wholesale prices shift with natural gas costs, transmission congestion and extreme weather demand.
When a REP prices your renewal, it reflects current wholesale conditions at the time your contract ends, not the conditions that existed when you first signed up two or three years earlier. If wholesale costs rose since your original signing, your renewal will likely price in that increase.
Why the Displayed Rate May Not Match Your Expected Bill
The per-kWh rate quoted in a renewal offer is rarely the full story behind your bill.
Your total charge includes the energy charge from your REP plus TDU delivery charges set by your Transmission and Distribution Utility, and possibly bill credits tied to a specific usage threshold.
A renewal offer might show a headline rate similar to your old one while removing a bill credit you used to qualify for, or shifting you off a plan structure that fit your household. Taxes and TDU charges apply regardless of which REP you use.
When a Higher Bill Is Caused by Usage Rather Than the Renewal Rate
Sometimes the bill jump has nothing to do with the rate at all.
Texas summers push monthly kilowatt-hour consumption from around 900 kWh in mild months to over 2,000 kWh during peak heat. Before blaming the renewal rate, check whether your kWh usage rose compared to the same month last year.
If usage jumped and the rate stayed flat, the fix is different than if the rate itself increased.
How to Compare Your Renewal Offer Before You Decide
Comparing a renewal offer takes five minutes if you know which documents to pull. Check your contract end date, read the Electricity Facts Label side by side with alternatives, and run the math at your actual monthly usage before accepting anything.
Find the Contract End Date and Check the Expiration Notice
Your REP must send a notice before your fixed-rate contract ends, usually 30 to 60 days ahead.
Look at your most recent bill or account portal for the exact expiration date. PUCT rules require this notice, so if you can’t find it, contact your provider or check your online account.
Mark the date and give yourself at least two to three weeks to compare offers before it arrives.
Read the Electricity Facts Label and Terms of Service
The EFL is the one document that shows exactly what you’re being charged, and it applies to both your renewal offer and any competing plan.
Compare the average price per kWh listed at 500, 1,000 and 2,000 kWh, since these three numbers reveal how the plan behaves at different usage levels. Check the terms of service for the early termination fee, contract length and whether the plan is fixed-rate or variable-rate.
A renewal that looks like your old plan may quietly have shifted to a variable structure that changes monthly.
Compare Estimated Costs at Your Actual Monthly kWh
Don’t compare rates. Compare total estimated cost at the usage level you actually hit most months.
Pull your last 12 months of kWh from your provider’s app or Smart Meter Texas, which shows 15-minute interval data for most homes with a smart meter.
If you average 1,200 kWh in summer and 700 kWh in winter, calculate the renewal’s total cost at both levels, not just one. A rate that looks fine at 1,000 kWh can look very different at your real numbers.
Check Whether Bill Credits Work in Both Mild and High-Usage Months
Bill-credit plans reward one usage range and penalize everything outside it.
If your renewal offer includes a bill credit at, say, 1,000 kWh, check what happens at 600 kWh in a mild month and 2,000 kWh in August.
Some bill-credit plans lose the credit entirely below the threshold, pushing your effective per-kWh rate up sharply. Run both extremes before assuming the credit will apply every month.
Separate REP Pricing From TDU Delivery Costs
Your REP sets the energy charge. Your Transmission and Distribution Utility sets the delivery charge, and switching providers never changes it.
Oncor, CenterPoint Energy, AEP Texas and Texas-New Mexico Power (TNMP) each set their own per-kWh delivery rate and base charge. These are approved by the PUCT regardless of which REP you choose.
If your bill jumped and your REP rate stayed the same, check whether your TDU raised its delivery rate. This shows up as a separate line item and applies to every provider serving your area.
| Comparison Point | Staying on Renewal | Switching Providers |
|---|---|---|
| Rate source | Retention pricing | New-customer pricing |
| Typical rate gap | Higher, often 15-25% above new offers | Lower advertised rate |
| Contract type | Often reverts to variable/month-to-month | Usually fixed-term |
| Early termination fee | None if letting it expire | May apply if switching mid-term |
| Effort required | None | 10-15 minutes to compare and enroll |
| TDU delivery charge | Unchanged | Unchanged |
Once you’ve checked your EFL and run the numbers, you can compare electricity rates for your address to see how your renewal stacks up against current offers from providers like TXU Energy, Gexa and Rhythm.
Decide Whether to Renew, Switch, or Use a Shorter Term
Renew only if the offer matches or beats what’s currently available at your usage level. Otherwise, switch.
If a competing plan saves a meaningful amount and fits your usage pattern, switching usually makes sense. If your current provider’s renewal is close to market rate and you value staying with a familiar utility company, renewing can be reasonable.
A shorter-term plan, like 6 or 12 months, can also make sense if you expect rates to drop or if you’re unsure about your usage pattern changing soon.
Schedule a Switch Without Triggering an Early Termination Fee
Time your switch inside the protected window to avoid paying a fee for leaving early.
Most Texas providers allow customers to shop and switch within 14 days before their contract’s expiration date without an early termination fee. Confirm this window in your terms of service, then schedule your new plan’s start date to align with your old contract’s end date.
This avoids a gap in service and avoids paying twice for the same days of electricity.
Conclusion
A higher renewal rate almost always comes down to one thing: you moved off a locked-in fixed-rate plan and onto pricing designed to retain you rather than win you over. Check your contract expiration date, pull the EFL, and run your actual monthly kWh against both the renewal offer and current market plans before accepting anything.
Also, separate REP pricing from TDU delivery charges so you know exactly what changed and why. If the math favors a new plan, compare available Texas electricity plans for your ZIP code and switch inside your protected window to avoid an early termination fee.