Why Is My Electricity Bill Higher Than the Advertised Rate?

Picture this: You signed up for a plan advertised at 10¢ per kilowatt-hour at 1,000 kWh. You used 800 kWh last month and missed the bill credit. Your effective rate: 16.3¢. That’s a 63% jump over the advertised number. What happened?

The rate on your bill is almost never the rate you signed up for. That’s not because your provider is scamming you. It’s because of how electricity pricing works in Texas. Three specific things create the gap between the advertised rate and what you pay: delivery charges from your local utility, bill credits that only kick in at certain usage levels, and contract expiration.

None of it is hidden, either. The information is on your plan’s Electricity Facts Label, but the standard format makes it easy to miss. This article breaks down each factor with real numbers from the Texas market so you can see exactly where the extra cents come from.

Why is the rate on your bill different from the rate you signed up for?

When you shop for electricity in Texas, every plan comes with an Electricity Facts Label. The PUCT requires this under Substantive Rule §25.475. It shows a “total average price” at 500, 1,000, and 2,000 kWh per month. Most marketing highlights the 1,000 kWh number because it represents roughly average residential usage.

But “average price at 1,000 kWh” isn’t a flat rate. It’s a blended number that rolls together your energy charge from your REP, fixed monthly fees, and delivery charges from your TDU. If your usage lands anywhere other than exactly 1,000 kWh, the math shifts.

Three things drive the gap:

• TDU delivery charges, which include fixed monthly fees that spread across fewer kilowatt-hours when you use less electricity
• Bill credits and usage thresholds that disappear entirely if your usage drops below a specific level
• Contract expiration, which can bump you to a significantly higher holdover rate

Understanding the difference between fixed vs. variable rate plans helps too, but these three structural factors affect both types.

What are TDU delivery charges and how much do they add?

Texas splits electricity service between two companies. Your REP sells you the electricity. Your TDU owns the power lines and delivers it to your home. You pay both on the same bill, but only the REP portion changes when you switch providers.

TDU charges have two parts: a fixed monthly fee covering your meter and basic service, and a per-kWh delivery rate. Here’s what each territory charges as of March 2026.

That fixed charge is where the rate divergence starts. At 1,000 kWh in Oncor territory, $4.23 in fixed fees adds 0.42¢ per kWh to your rate. At 500 kWh, those same $4.23 add 0.85¢ per kWh. The less electricity you use, the more each kilowatt-hour costs in fixed charges.

For a plan advertised at 12.6¢/kWh at 1,000 kWh in Oncor territory, the effective rate ranges from about 13.4¢ at 500 kWh down to 12.4¢ at 2,000 kWh. A full 1¢ gap, entirely from how fixed charges get distributed across your usage.

These delivery rates aren’t static, either. TDU charges typically update twice a year, on March 1 and September 1, though the PUCT can approve out-of-cycle adjustments when utilities file for interim rate changes. The September 2025 round brought increases across most territories: Oncor went up 8.6%, CenterPoint rose 3.3%, and TNMP climbed 4.5%. These increases hit every customer in those territories, regardless of plan choice.

For a full breakdown of delivery rates in your area, see our guide to TDU delivery charges by territory. You can also compare plans for Dallas, Fort Worth, and Houston on our city pages.

How do bill credits change your effective rate at different usage levels?

Some plans offer a bill credit when your usage hits a specific threshold. The credit makes the rate look attractive at exactly 1,000 kWh, because that’s the number highlighted on Power to Choose. But if your usage falls short, the credit vanishes and your effective rate jumps.

Among the plans we track, 9 plans in Oncor territory include, as of March 2026, usage-based bill credits. Most are set at 1,000 kWh.

Take a plan with a $50 bill credit at 1,000 kWh. At that exact usage, you get the full credit and the advertised rate might show 10¢/kWh. But at 800 kWh, you miss the threshold and lose the entire $50. Your effective rate jumps to around 16.3¢/kWh. That’s a 63% increase over the advertised rate, all because you used 200 fewer kilowatt-hours. In dollar terms, a customer expecting a $100 bill at 1,000 kWh might see $130 at 800 kWh instead.

Above the threshold, the credit still dilutes. At 1,200 kWh, that $50 spreads across more usage, pushing your effective rate about 1.2¢ above the advertised number.

This is what we call the “1,000 kWh trap.” The plan looks cheap at the one usage level that appears on the EFL, but costs significantly more at any other level. We break down the full mechanics in our guide to bill credit plans and how they work.

Plans with time-of-use structures like free nights and weekends can create similar rate swings depending on when you use electricity, though the mechanism is time-based rather than volume-based.

What happens to your rate when your contract expires?

When your fixed-rate contract ends and you don’t pick a new plan, your REP moves you to a month-to-month default rate. These holdover rates are often significantly higher than what you were paying.

Under PUCT Substantive Rule §25.475, your provider must send you at least three written notices during the final third of your contract. For 12-month contracts, the first notice can arrive up to three months before expiration. The final notice comes at least 30 days before the end date.

You can switch to a new plan starting 14 days before your contract expires without paying an early termination fee. If you miss that window and do nothing, the default rate kicks in automatically. The PUCT requires this default to be a month-to-month product you can cancel without penalty. But the price is rarely competitive.

Some REPs set holdover rates significantly higher than the contracted price. Others are more modest. The problem is that most customers don’t notice the switch until they see the bill. By then, they’ve already paid the higher rate for a full billing cycle.

As of March 2026, 12-month fixed-rate plans among the ones we track average 15.1¢/kWh at 1,000 kWh. The EIA reports the statewide average residential rate at 15.87¢/kWh as of December 2025. If your holdover rate sits well above those numbers, you’re overpaying.

To understand your options, see what happens when your contract expires. If you’re still under contract and considering an early switch, our early termination calculator can help you weigh the cancellation fee against the savings.

How do you figure out what you’re really paying per kWh?

The fastest way to find your actual rate: take your total bill amount and divide by your total kWh for that month. That number is your effective rate per kilowatt-hour.

Say your total bill last month was $173 and you used 1,100 kWh. Divide: $173 ÷ 1,100 = 15.7¢/kWh. Now pull up your plan’s EFL and check the listed rate at 1,000 kWh. Maybe it shows 14.2¢. That 1.5¢ gap is real money: it means you paid about $16.50 more than you’d expect from the label. The difference comes from fixed TDU charges spreading across your actual usage and possibly a bill credit that only partially applied.

Compare it against the three rates on your plan’s EFL. The label shows total average prices at 500, 1,000, and 2,000 kWh. Find the breakpoint closest to your usage and see how your effective rate lines up.

If there’s a noticeable gap, it’s likely one of the three causes we covered: fixed TDU charges spreading across low usage, a bill credit you missed or one that’s diluted at higher usage, or a contract that expired without you noticing.

You can also check your hourly consumption through Smart Meter Texas (smartmetertexas.com). It provides 15-minute interval data from your meter, which helps you see whether your usage pattern matches what your plan was designed for. For a walkthrough of the pricing table, check out how to read your Electricity Facts Label.

If your bill has been climbing, check whether your usage changed or whether a TDU rate increase took effect. The most recent increases hit in September 2025, and the next round is scheduled for March 2026. A higher bill doesn’t always mean you’re on a bad plan.

Enter your current rate below to see how it compares against the best plans available.

How Does Your Rate Compare?

Enter your current rate to see how much you could save by switching to a competitive plan.

ZIP 77001 (CenterPoint Energy service area)

Your current rate (¢/kWh)

Monthly Usage

kWh

5001,0001,5002,000

100-5,000 kWh range

Provider	Plan	Rate	Est. Bill	Term
	GridPlus 12CHARIOT ENERGY• 100% Green	7.7¢	$76	12mo	Details
	Smart Choice - 12JUST ENERGY	8.9¢	$89	12mo	Details
	Bright Nights 12CHARIOT ENERGY• 100% Green	12.0¢	$120	12mo	Details

View All 155 Plans

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

How can you compare plans based on your actual usage?

Power to Choose shows rates at three fixed breakpoints: 500, 1,000, and 2,000 kWh. If your usage falls between those numbers, you’re guessing at your actual cost.

Watt Owl calculates your estimated bill at your actual monthly usage, not just the three EFL breakpoints. Enter your ZIP code and kWh, and every plan recalculates in real time from its underlying tariff components, the same fixed charges, per-kWh rates, and bill credits that determine your real bill. That means a plan with a 1,000 kWh credit shows its true cost at 800 or 1,200 kWh, not just the flattering number on Power to Choose.

The gap between your advertised rate and your actual bill doesn’t have to be a surprise. Knowing where it comes from is the first step. Comparing at the right usage level is the fix.

Start by finding what’s available in your area. You can compare plans in Dallas at your usage level or check rates in Houston at 1,000 kWh. Ready to make the switch? Here’s how to switch electricity providers.

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.