Fixed-rate products
Under PUCT rule 25.475, a fixed-rate product is a product with a term of at least three months for which the price, including all recurring charges, is the same in every billing period of the term. There is a narrow exception: the price may change solely to reflect actual changes in delivery-company (TDU) charges, changes in ERCOT or Texas Regional Entity administrative fees charged to loads, or new or modified fees or costs imposed on the provider by federal, state or local law that are beyond its control.
In practice that means the energy part of your price is locked and the pass-through part is not. A provider also may not change the price or the term of a term contract during its term for its own reasons. The rule even lists as a prohibited communication the use of the word "fixed" to market a product that does not meet this definition.
Variable-price products
A variable-price product is one whose price may vary by a method the provider determines. For residential customers, the rule says a variable-price product can be only a month-to-month contract. The Electricity Facts Label for such a product must carry a bold notice that, apart from price changes allowed by law or regulatory action, the price shown is the price for your first billing cycle and may change in later months at the provider's sole discretion. Some variable products cap increases at a defined percentage as indexed to the previous month's price, and then the notice states that percentage.
Residential bills for variable products must also say how to get the price that will apply on the next bill, and the EFL tells you where to find the product's historical prices. The practical reading: a variable plan is a bet that the provider will keep its price competitive. You can leave without a fee, because a month-to-month contract may not carry a termination fee.
Indexed and wholesale indexed products
The rule defines an indexed product as one whose price varies according to a pre-defined formula based on publicly available indices or information that is disclosed to the customer. A wholesale indexed product passes through real-time settlement point prices set by the independent grid organization. Both exist in the rule, but the rule also forbids offering them to residential and small commercial customers: an indexed product on or after February 1, 2022, and a wholesale indexed product on or after September 1, 2021. If an advertisement offers one to a household, that is a sign to read the label with care and, if the claim looks wrong, to contact the PUCT.
| Type | Price during the term | Residential term | Fee to leave |
|---|---|---|---|
| Fixed rate | Same price each billing period, except for pass-through changes | At least 3 months | May apply; read the EFL |
| Variable price | Set by the provider, or capped by a stated percentage | Month-to-month only | None allowed |
| Indexed | Follows a disclosed public formula | Not sold to residential customers since 2022-02-01 | Not applicable |
| Wholesale indexed | Passes through real-time market prices | Not sold to residential customers since 2021-09-01 | Not applicable |
Month-to-month contracts
The rule defines a month-to-month contract as one with a term of 31 days or less and says it may not contain a termination fee or penalty. That is the safety valve of the system: whatever the plan, a month-to-month product lets you walk away.
What happens when a fixed term ends
For fixed-rate contracts the provider must send at least three written notices of the expiration date during the last third of the term, spaced as evenly as practicable. For contracts longer than four months the final notice must go out at least 30 days before the end date. The notices go by mail to your billing address unless you chose electronic delivery. If a provider fails to send proper notice and you have not picked another plan, the rule says it must keep serving you on the fixed-rate contract's terms until it does. If you do nothing after proper notice, the rule says the terms of service must state that you will be served under a default renewal product, and that default is month-to-month and may be canceled at any time with no fee. The final notice must say this.
The default renewal product is set by the provider, and it is not the price you signed up for. Treat the notices as a prompt to shop, using the label's average price at your usage level, as the Electricity Facts Label guide explains.
Which one fits which household
- You want a predictable energy rate. A fixed-rate product for as long as you expect to stay at the address. Check the termination fee before the price.
- You may move soon or want flexibility. A month-to-month product costs nothing to leave, which is the trade for a price the provider can change.
- You have rooftop solar. The plan type matters less than the buyback line on the label. See the buyback guide.
Questions
Does a fixed rate mean my whole bill is fixed?
No. It means the plan's price is fixed apart from the pass-through changes the rule allows, and your bill still scales with your usage. Delivery charges are covered in the TDU guide.
Can I be switched without noticing?
A fixed-term plan that ends moves you to a month-to-month default under the rule unless you pick another plan, which is why the expiration notices exist.
This page is general information, not advice for your situation. Plan terms vary by provider; the label and terms of service control.