What Happens When Your Electricity Contract Expires in Texas?
Watt Owl5 min read
Key Takeaways
- ★Your power stays on. Your provider automatically moves you to a month-to-month holdover plan.
- ★Holdover rates are variable and often 50% or more above competitive fixed rates.
- ★Your provider must send at least three written notices before your contract ends (PUCT Rule §25.475).
- ★You can switch penalty-free starting 14 days before your contract expiration date.
- ★Switching takes about seven business days with no interruption to your service.
Most Texans don't think about their electricity contract until a letter shows up warning them it's about to end. By then, the clock is already ticking.
If you miss that window, your provider won't cut your power. But they will move you to a plan that costs a lot more. Here's what actually happens when your contract expires, what rights Texas law gives you, and how to avoid overpaying.
What happens to your power when your contract ends?
Nothing dramatic. Your lights stay on, your AC keeps running, and your refrigerator doesn't skip a beat.
Under PUCT Rule §25.475, your REP is required to continue serving you on what's called a "default renewal product." This is a month-to-month variable-rate plan you can cancel at any time without a penalty.
The catch? That variable rate is almost always higher than what you were paying on your fixed-rate contract.
What is a holdover rate (and why is it so expensive)?
A holdover rate is the price your REP charges after your contract expires. Unlike a fixed rate, this one can change every billing cycle, and it's entirely at your provider's discretion.
There's no regulatory cap on holdover rates in the deregulated Texas market. During summer months, variable rates can climb to 20–30¢ per kWh or higher. The average Texas residential rate was 15.87¢/kWh as of December 2025, according to the EIA. Competitive fixed-rate plans run closer to 10–13¢/kWh at 1,000 kWh of usage.
If you're on a holdover rate, you could be overpaying by a wide margin. Our fixed vs. variable rate plans guide explains the differences.
When does your provider have to warn you?
Texas law is specific about this. Under PUCT Rule §25.475(e)(1)(A), your REP must send you at least three written notices during the final third of your contract. For a 12-month plan, that means notices start arriving around month eight.
The final notice must arrive at least 30 days before your contract expires (15 days for contracts of four months or less). That notice has to include:
- Your contract expiration date in boldfaced and underlined text
- The terms of the default renewal product you'll be moved to
- A copy of the EFL for that renewal product. Our guide on how to read an EFL explains what to look for.
- A statement that the default product is month-to-month and cancellable at any time
Can you switch providers without paying a penalty?
Yes. Under PUCT Rule §25.475(e)(2)(C)(ii), you can switch penalty-free starting 14 days before your contract expiration date. You don't have to wait until the contract officially ends.
Once your contract has expired, you're on a month-to-month plan with no early termination fee. You can switch at any time, free of charge.
If your contract hasn't expired yet and you're wondering about early termination fees, our early termination fee calculator can help you figure out whether switching early makes financial sense.
The switch itself typically takes about seven business days, according to the Power to Choose FAQ. Your power stays on during the transition. You also have a right of rescission: you can cancel the switch within three business days of receiving your new Terms of Service.
Our step-by-step switching guide walks you through the full process.
What should you do before your contract expires?
Start early. Don't wait for your REP's renewal notice to show up.
- Find your contract end date on your most recent electricity bill, your provider's online portal, or by calling their customer service line
- Compare plans at your actual usage level, not the 1,000 kWh average. Check your bill for your real monthly kWh, then use Watt Owl’s free electricity plans comparison tool to find the best rate for you.
- Look at different plan structures like bill credit plans and free nights and weekends plans
- Lock in a new fixed-rate plan before your current contract ends to avoid the holdover rate
What Could You Be Paying Right Now?
ZIP 77001 (CenterPoint Energy service area)
| Provider | Plan | Rate | Est. Bill | Term | |
|---|---|---|---|---|---|
 | Smart Choice - 12JUST ENERGY | 8.5¢ | $85 | 12mo | Details |
 | GridPlus 12CHARIOT ENERGY• 100% Green | 8.8¢ | $88 | 12mo | Details |
 | Frontier Power Saver 12FRONTIER UTILITIES | 12.3¢ | $123 | 12mo | Details |
Estimates based on published rates and the usage you entered. Actual bills vary by usage pattern, fees, and provider terms. See our methodology.
Frequently asked questions
No. Your power will not be shut off. Your REP is required to continue serving you on a month-to-month variable rate plan if you don't choose a new plan before your contract ends. Your lights stay on, but the holdover rate is typically much higher than a competitive fixed-rate plan.
Check your most recent electricity bill. Most providers print the contract end date on each statement. You can also log into your provider's online account or call their customer service line. Under PUCT rules, your REP must send you at least three written notices during the final third of your contract, with the last one arriving at least 30 days before expiration.
No. Once your contract has expired, you're on a month-to-month plan with no termination penalty. You can switch to a new provider at any time, free of charge. Under PUCT Rule §25.475, you can actually switch penalty-free starting 14 days before your contract expiration date.
Switching typically takes about seven business days. Your power stays on continuously during the transition. Your new provider handles the switch once you enroll. You also have a right of rescission: you can cancel the switch within three business days of receiving your new Terms of Service.
Your electricity contract expiration isn't an emergency, but it is a deadline worth watching. The holdover rate your provider puts you on can cost significantly more each month, and the longer you wait, the more that adds up.
Texas gives you strong protections. Your provider has to warn you, you can switch penalty-free before the contract ends, and the process takes about a week with no interruption to your service. The best move is to start comparing plans before your contract expires.
Find Plans Before Your Contract Expires
Enter your ZIP code to see real rates based on your usage.
Watt Owl is a licensed electricity broker in Texas (PUCT License BR260022). We may earn a commission when you enroll through our links. Our recommendations are based on transparent rate calculations, not commission size.
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