Low Usage Homes: Why Cheap Texas Plans Cost You More

The number at the top of an electricity shopping page — 8.9¢, 10.4¢, whatever it reads this week — is not the price of electricity. It is an average, calculated at a usage level somebody else picked for you. If your home doesn't land on that usage level, the number is wrong, and for households that use less power than average it is wrong in the expensive direction.

Call it the low-usage penalty. It hits apartments, empty nesters, homes with gas heat and gas water heating, snowbirds, houses with rooftop solar, and small storefronts and offices — anyone whose meter turns slower than the customer profile the plan was designed around. The mechanics aren't hidden, exactly. They're printed on a state-mandated disclosure that almost nobody reads to the end. This is a guide to reading it, and to running the twenty lines of arithmetic that tell you what a plan actually costs at your usage.

The cheapest rate on the screen is priced for somebody else's house

Start with the benchmark everything gets built around. The average Texas residential customer used 1,096 kWh per month in 2024 at an average price of 14.94¢ per kWh, which worked out to a $163.72 monthly bill, according to ¹. The national average household used 863 kWh a month. Texas runs hot, and Texas homes run big, so roughly 1,000 kWh became the industry's mental default.

That default has been shaping how plans are marketed for at least a decade. In 2016, then-chair of the Public Utility Commission of Texas Donna Nelson told the Texas Tribune that "the average Texan uses about 1,000 to 1,200 kilowatts of electricity a month," and described the commission's response to gamesmanship on the state shopping site: "Now, we require up-front postings for 500, 1,000 and 2,000 kilowatt-hours," she said in ². Earlier that year she had been blunter about what providers were doing with those price points: "They've got all these tricky little things in their prices, and whatever the fact sheets are called — the nutrition label — that makes it really difficult for customers," she said at ³.

Here's the part that gets lost. An "average" household is a statistical artifact, not a description of your house. Plenty of Texas homes use half the state average, every month, all year. When a plan is engineered to look cheapest at exactly 1,000 kWh, every one of those homes is shopping in a store where the price tags were written for a different customer.

What you pay before you use a single kilowatt-hour

Your bill has more moving parts than the advertised rate suggests. In deregulated Texas, it's built from three things: what your retail electric provider (REP) charges per kilowatt-hour for the energy itself, what your transmission and distribution utility (TDU) — Oncor, CenterPoint, AEP Texas, or TNMP — charges to physically deliver it, and any flat monthly fees either one tacks on. You choose the REP. You don't choose the TDU; it's assigned by address, and its rates are set by regulators, not by the retailer.

The TDU piece is where fixed costs start to bite. As of July 2026, ⁴ show Oncor charging a $1.48 customer charge plus a $2.58 metering charge every month, then 6.1196¢ for each kWh delivered. CenterPoint charges $2.11 plus $2.79 monthly and 5.1461¢ per kWh. TNMP's fixed monthly piece is much larger — $1.13 plus a $6.72 metering charge — on top of 6.4665¢ per kWh.

Those flat dollars don't care how much electricity you use, which means their weight per kilowatt-hour depends entirely on your consumption. The PUCT's own table makes the effect visible: an Oncor residential customer's delivery charges total $34.66 at 500 kWh, $65.26 at 1,000 kWh, and $126.45 at 2,000 kWh. Divide it out and the delivery cost is about 6.9¢ per kWh for the 500-kWh home and about 6.3¢ per kWh for the 2,000-kWh home. In TNMP territory, where the fixed metering charge is heavier, the same comparison runs roughly 8.0¢ against 6.9¢.

That's the whole low-usage penalty in miniature, and it exists before any retailer adds a fee. A flat charge spread across fewer kilowatt-hours is a bigger charge per kilowatt-hour. Retailers know this, and some of them lean into it hard.

Three prices, one plan: read the label as a shape, not a number

Texas requires every retailer to publish an Electricity Facts Label — an EFL — for every product it sells. Under ⁵, the EFL must state the total average price for electric service "reflecting all recurring charges," expressed in cents per kilowatt-hour and rounded to the nearest tenth of a cent, at three specific usage levels: 500, 1,000, and 2,000 kWh per month for residential customers, and 1,500, 2,500, and 3,500 kWh per month for small commercial customers. The same rule requires "a listing of all fees assessed by the REP that may be charged to the customer," and it prohibits communications that are "misleading, fraudulent, unfair, deceptive, or anti-competitive."

Three numbers, not one. That's the single most useful thing about the document, and most shoppers still look only at the middle column. Read all three together and the plan's structure gives itself away:

• Roughly flat across all three. A straightforward energy charge with no games. Your usage barely changes your effective rate.
• Sharply lower as usage rises. Fixed monthly charges are being diluted, or there's a bill credit waiting at a threshold you may or may not reach.
• A big gap between 500 and 1,000, then a small one between 1,000 and 2,000. That's the signature of a minimum usage fee or a credit that switches on around 1,000 kWh. If you're a low-usage home, this is the shape to walk away from.

Comparison marketplaces have started building the same logic into their interfaces — ⁶, displays each plan's rate at 500, 1,000, and 2,000 kWh side by side and makes the point directly: "The same plan costs more at 500 kWh than at 1,000 kWh." Whether you use a marketplace or the state site, the discipline is the same. Find the column nearest your actual usage, then ignore the others.

The two cliffs: minimum usage fees and bill credits

Two plan features do most of the damage to low-usage homes, and they're mirror images of each other.

A minimum usage fee is a flat dollar amount added to your bill in any billing cycle where you use less than a stated threshold. The arithmetic is unforgiving because the fee is fixed and your usage is not. Suppose the fee is $10, triggered below 1,000 kWh. In a 500-kWh month that's an extra 2.0¢ per kWh on everything you bought; in a 400-kWh month, 2.5¢. A plan that advertised 9.9¢ is now charging you well over 12¢ before delivery charges, and it will do it again every mild month.

A bill credit runs the other way: a flat credit applied only when your usage lands inside a defined band. The 1,000-kWh threshold shows up again and again in the designs regulators have scrutinized. Miss the band by one kilowatt-hour and the credit vanishes, taking the plan's whole value proposition with it. Regulators have described exactly this: when the PUCT reworked its shopping site in 2016, it began filtering out offers with built-in usage credits, because, as the Tribune noted at the time, "in some of those cases, customers can be dinged for using too little electricity."

The consequences aren't theoretical. In 2018, the Houston Chronicle reported on a PUCT study that took three plans prominently displayed on the first page of Power to Choose and calculated what a typical household would really pay once normal seasonal swings were factored in. The advertised figure was 2.3 cents per kWh. The ⁷ — more than four times the headline. The same reporting documented specific "spending cliff" designs then on the market: one NRG-owned retailer's plan cost $26 a month at 1,000 kWh but added a $226 monthly fee at 1,001 kWh; another retailer's plan charged $26 at 1,000 kWh but jumped to 15.5 cents per kWh if usage dipped below 500. Commissioner Arthur D'Andrea's assessment of the category: "It doesn't reflect any economic reality."

Individual plans come and go, but the incentive that produced them is structural. Shopping sites sort by advertised price, and the advertised price is quoted at fixed usage levels — so the fastest route to the top of the list is a structure that looks brilliant at one usage level and mediocre-to-terrible everywhere else.

Who actually gets hit

The households most exposed to all of this are the ones least likely to be watching for it.

Apartments and small units. Nationally, a household in an apartment building with five or more units used about 4,230 kWh of electricity a year, against 10,220 kWh for a single-family detached home, per ⁸. That's roughly 350 kWh a month versus 850. Apartments are smaller and partly insulated by the units around them; ⁹, the average household in a single-family detached home consumed nearly three times more energy than one in a building with five or more apartments. A 350-kWh household evaluating plans at the 1,000-kWh column is reading fiction.

Anyone with mild months. Even big houses have low-usage cycles. Space heating and air conditioning together accounted for 52% of the average U.S. household's annual energy consumption in 2020, and ¹⁰, with monthly consumption typically peaking in July and August. Those seasonal swings are why a home averaging 1,100 kWh across the year can still drop under 800 kWh in April and October — and pay a minimum usage fee, or lose a bill credit, twice a year on the same contract.

Snowbirds, second homes, and part-year residents. A house that's mostly closed up for four months isn't an edge case to a retailer's billing system; it's four guaranteed fee months.

Solar homes. Rooftop generation reduces the kilowatt-hours a household buys from the grid, which is the point — but it also drops billed usage straight into minimum-fee territory. There were 5,077,543 residential photovoltaic net-metering customers in the U.S. in 2024, up from 4,549,601 the year before, per ¹¹. A solar household on a plan with a below-threshold penalty is being fined for the exact behavior it paid five figures to enable.

Small businesses. The structure is identical, just with different reference points. PUCT rule 25.475 sets small commercial EFL disclosure at 1,500, 2,500, and 3,500 kWh per month. A two-person office, a small salon, or a storefront running 900 kWh a month sits below all three published price points, which means none of the numbers on the label describe that business's actual cost.

Run your own numbers: a method that takes ten minutes

Skip the effective-rate comparisons entirely and compare total dollars. Rates are the marketing layer; dollars are what leaves your account.

1. Pull twelve months of usage. Your bills have it, and so does your utility's usage portal. Write down all twelve months, then circle two: your lowest month and your highest month. The average is the least useful number in the set, because fees and credits trigger on individual billing cycles, not on annual averages.

2. Build the total for each candidate plan at both extremes. The formula is short:

(energy rate × kWh) + (TDU volumetric rate × kWh) + TDU fixed charges + any REP base charge + any minimum usage fee − any bill credit earned

The TDU numbers are public and identical for every retailer in your territory — for Oncor, that's 6.1196¢ per kWh plus $4.06 a month, per ⁴. Everything else comes off the EFL.

3. Watch what happens. Take a 600-kWh household in Oncor territory choosing between two illustrative plans. Plan A has a 13.9¢ energy charge with a $100 bill credit for usage of 1,000 kWh or more. Plan B has a flat 10.9¢ energy charge, no credit, no minimum usage fee.

At 1,000 kWh, Plan A costs $139.00 in energy plus $65.26 in delivery, minus the $100 credit — $104.26, or about 10.4¢ per kWh. Plan B at the same usage runs $109.00 plus $65.26, or $174.26. Plan A looks like a landslide, and on a shopping page sorted by price at 1,000 kWh, it would be.

Now run it at 600 kWh, where this household actually lives. Plan A: $83.40 in energy plus $40.78 in delivery, no credit, for $124.18 — an effective 20.7¢ per kWh. Plan B: $65.40 plus $40.78, or $106.18. The "expensive" plan is now $18 a month cheaper, about $216 over a year, and the gap widens every month the household stays under the threshold.

4. Multiply by twelve, honestly. Run each plan against all twelve of your real monthly usage figures, not one representative month. A plan that wins in July and loses in April may still lose on the year.

5. Check the exit. Early termination fees, auto-renewal terms, and the month-to-month rate you roll onto at contract expiration all belong in the same spreadsheet. A plan you'll want to leave in four months is not cheap.

Ohio, Maryland, and the regulated states: same trap, different label

None of this is unique to Texas — the vocabulary just changes.

Consider the usage baseline in the other big retail-choice states. Ohio's average residential customer used 846 kWh a month in 2024 and Maryland's used 929 kWh, ¹, both below the 863-kWh national average and well below Texas. In markets where the typical household sits under 1,000 kWh, any supplier offer whose economics depend on clearing 1,000 kWh is mispriced for the median customer, not just the small one. And if a supplier's contract summary lists a flat monthly service fee alongside the per-kWh rate, that fee dilutes exactly the way a Texas base charge does: nearly invisible at high usage, punishing at low usage.

The aggregate results are not flattering to shoppers. A June 2026 report covered by ¹² found that American households have paid at least $48 billion extra for electricity since 2003 by switching from regulated utilities to competitive suppliers, including $4 billion in 2024 alone across more than 11 million families. The report's state-by-state table put the average 2024 overpayment at $116 per shopping household in Ohio, $235 in Maryland, and $400 in Texas — though the report's own methodology note is worth keeping in view, since the Texas figure compares retail providers inside ERCOT against El Paso Electric and Entergy Texas rates, utilities in different regions. Treat the direction as instructive and the precise dollar figures as contested.

Regulated markets aren't exempt from the underlying math, either — they just remove the shopping decision. Austin Energy bills residential customers a $16.50 monthly customer charge on top of tiered energy rates that start at 4.640¢ per kWh for the first 300 kWh, according to ¹³. For a household using 300 kWh, that fixed charge alone works out to 5.5¢ per kWh — more than the tier-one energy charge it sits next to. In San Antonio, CPS Energy's residential tariff carries a $9.50 service availability charge, which is also the minimum bill: ¹⁴.

The difference is what you can do about it. In a choice market, a low-usage household can shop its way out of a badly matched plan structure. In a regulated one, the only available lever is usage itself — and the returns there are real but bounded. An ENERGY STAR certified smart thermostat saves ¹⁵ on average. Useful. Not the same as the $216 the Oncor household above saved by reading three columns instead of one.

A shopping checklist that survives contact with a marketing page

Print this, or keep it open in a tab while you shop.

• Know your low month, not your average. Your worst-case month is the one that triggers fees. Find it before you look at a single plan.
• Open the EFL every time. Not the ad, not the plan tile, not the phone quote. The label is the contract document, and it's required to list every recurring charge and fee.
• Search the label for three phrases: "minimum usage," "bill credit," and "base charge." If your usage routinely falls below a stated threshold, rule the plan out no matter how good the headline number looks.
• Read the price table as a shape. A steep drop from the 500-kWh column to the 1,000-kWh column means the plan is built for someone who uses more power than you do.
• Compare dollars, not cents. Total monthly cost at your real usage, for every plan, across all twelve months.
• Confirm the delivery charges are pass-through. They're set by regulators and identical across retailers in your territory; a plan can't beat a competitor on delivery, only on its own energy charge and fee structure.
• Diarize your contract end date. Shop 30 to 60 days ahead. Letting a fixed contract lapse into an open-ended month-to-month rate can quietly undo every dollar the rest of this list saves you.
• If you have solar, or you're gone half the year, say so up front. Your billed usage will be low by design. Plans that punish low usage are not "slightly worse" for you. They're disqualified.

The competitive market does work for people who do the arithmetic. Nelson's framing in 2016 was that "the burden is on them to shop around," and a decade later that's still the deal on offer: the disclosure is mandatory, the data is public, and the responsibility for matching a plan to a household sits with the household. Ten minutes with twelve months of usage and three EFLs is a genuinely high-return use of your time — and if you use less power than your neighbors, it's worth more to you than it is to them.