Fixed vs Variable Rate Light Plans — Which One Won't Surprise You

Texas light plans come in two main flavors: fixed rate (your price per unit is locked for the contract) and variable rate (your price can change every month). You’re comparing light plans and every one has a rate. But some say “fixed” and others say “variable.” One sounds safe. The other sounds like a gamble. And you’re not sure which one to pick or what the real difference is.

Here’s the plain English version of what each one means, how they actually affect your light bill, and which one makes more sense depending on your situation.

Fixed Rate: What It Actually Means

A fixed-rate plan locks in a per-unit price for the length of your contract. If your plan is 12.5 cents per unit for 12 months, you pay 12.5 cents per unit every single month for those 12 months. It doesn’t matter if it’s January or August. It doesn’t matter if wholesale power costs spike during a heat wave. Your rate stays the same.

What stays the same: The per-unit rate you pay for power.

What doesn’t stay the same: Your total bill. If you use more power in summer (and you will), your bill goes up because you’re using more units. But the price per unit is locked.

Example:

Winter: 800 units x 12.5 cents = $100/month
Summer: 1,500 units x 12.5 cents = $187.50/month

Your rate didn’t change. Your usage did. This confuses people sometimes. A fixed rate doesn’t mean a fixed bill.

The Catch With Fixed Rate Plans

Most fixed-rate plans come with a contract — usually 6, 12, or 24 months. If you cancel before the contract ends, you’ll pay an early termination fee. These fees range from $50 to $300 depending on the company and the plan.

You’re trading flexibility for price stability. If you’re planning to stay at your current address for the contract length, this tradeoff usually makes sense.

Variable Rate: What It Actually Means

A variable-rate plan means your per-unit price can change every month. The company sets a rate, and they can raise or lower it at any time (usually with notice on your bill or by email).

Some variable plans are based on wholesale market prices. Others are set at whatever the company decides. Either way, the price can move.

What changes: The per-unit rate you pay. It could go up, down, or stay the same month to month.

What’s unpredictable: Your total bill. You don’t know what rate you’ll pay next month, AND you don’t know exactly how much power you’ll use.

Example on a variable plan:

January: 800 units x 11 cents = $88 (nice, cheap month)
August: 1,500 units x 19 cents = $285 (rate AND usage both spiked)

That $197 swing between January and August isn’t unusual on a variable plan. The rate went from 11 to 19 cents AND usage nearly doubled. It’s a double hit.

The Appeal of Variable Rate Plans

Variable plans usually don’t have contracts or cancellation fees. You can leave any time, which gives you total flexibility. In cool months when power is cheap, you might actually pay less than fixed-rate customers.

Some people like variable plans because:

No commitment. If you’re not sure how long you’ll stay at your address, a variable plan means no termination fee if you move.
Sometimes cheaper in spring and fall. When demand is low, variable rates can drop below fixed rates.
Easy to switch. If rates go up, you just switch to a different plan without penalty.

Which One Costs Less Over a Year?

Here’s the honest answer: it depends on the year. In a mild summer, variable rates might be cheaper overall. In a brutal summer (like most Texas summers), fixed rates almost always win.

Let’s do the math on a typical year:

Fixed plan at 12.5 cents:

12,000 units/year x 12.5 cents = $1,500/year

Variable plan averaging 11 cents in cool months and 18 cents in summer:

8 cool months: 800 units x 11 cents = $704
4 summer months: 1,500 units x 18 cents = $1,080
Total: $1,784/year

The fixed plan saved $284 in this scenario. The variable plan was cheaper in some months, but the summer spike wiped out those savings and then some.

This is the pattern most years in Texas. Summer is expensive. Fixed rates protect you from the worst of it.

What About Pay-As-You-Go Plans?

Most pay-as-you-go plans work on a variable or semi-variable rate. Your per-unit cost might change monthly, and you don’t have a contract. This means you get the flexibility of variable pricing with the no-deposit, no-credit-check setup that pay-as-you-go is known for.

Some pay-as-you-go plans do offer a fixed per-unit rate for a set period. These are the best of both worlds if you can find them — no deposit, no credit check, and a locked rate. Check what’s available at your address by entering your ZIP.

How to Decide: A Quick Framework

Choose fixed rate if:

You’re staying at your address for 6+ months
You want predictable monthly costs
Summer savings matter to you (and in Texas, they should)
You can handle a cancellation fee if you need to move early
Your credit situation allows you to get a post-paid plan

Choose variable rate if:

You might move in the next few months
You don’t want any commitment or contract
You’re comfortable with your bill changing month to month
You’re good at watching rates and switching plans when they get too high
You’re on pay-as-you-go and don’t have post-paid options right now

Choose pay-as-you-go if:

You need lights today with no credit check and no deposit
You prefer paying as you go instead of getting a monthly bill
You’re building payment history to qualify for a fixed-rate plan later (read our path to traditional plans guide)

The Hidden Cost: Not Choosing at All

If your plan expires and you don’t pick a new one, most companies automatically switch you to a month-to-month variable rate. This “default” rate is almost always higher than any plan you’d actively choose. Some default rates are 18-22 cents per unit when you could be paying 11-13 cents on a fixed plan.

If you’ve been on the same plan for a while, check your latest bill. If you see “month-to-month” or “variable” and you didn’t specifically choose that, you’re probably overpaying. Time to shop.

Watch Out for “Introductory” Rates

Some variable plans offer a low introductory rate — like 9 cents per unit for the first 3 months. After the intro period, the rate jumps to whatever the company wants. These plans look amazing at first and then quietly get expensive.

Read the details. If a rate looks too good to be true, check what happens after the promotional period. A fixed plan at 12.5 cents for 12 months is better than a variable plan at 9 cents for 3 months and 17 cents for the next 9.

How to Switch Plans Without a Gap

Switching light companies in Texas takes 1-3 business days. Your lights don’t go off during the switch. The old company and new company coordinate the meter reading and handoff. You don’t have to do anything except sign up for the new plan.

If you’re on a contract plan with a cancellation fee, make sure the savings from switching will exceed the fee. A $150 cancellation fee that saves you $40/month pays for itself in 4 months.

If you’re on a month-to-month or pay-as-you-go plan, you can switch whenever you want with no fee. There’s no reason to stay on a plan that’s costing you more than it should.

Enter your ZIP to see all available plans at your address — both fixed and variable — and compare the real costs.

Bottom Line

Fixed rate = your price per unit is locked. You trade flexibility for stability. Best for people who plan to stay put.

Variable rate = your price can change monthly. You trade stability for flexibility. Best for people who might move or want no commitment.

In Texas, where summers are brutal and expensive, fixed-rate plans save most people money over a full year. If you’re on pay-as-you-go, look for one with a fixed per-unit rate to get the best of both worlds.

Whatever you pick, picking something is better than defaulting to whatever the company sticks you with. Check your options at NoDepositLights.com.

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This guide is for informational purposes only and does not constitute legal or financial advice. For official rules, visit the Public Utility Commission of Texas. NoDepositLights.com is powered by Compare Power (PUCT License BR190020).