Loading NuWatt Energy...
We use your location to provide localized solar offers and incentives.
We serve MA, NH, CT, RI, ME, VT, NJ, PA, and TX
Loading NuWatt Energy...
In most of the US, you cannot choose your electricity provider. In Texas, approximately 85% of residents can. This creates a unique opportunity — and risk — for heat pump owners. Your electricity rate directly determines your savings.
The difference between a $0.09/kWh plan and a $0.19/kWh plan is over $900/year in heat pump operating costs. Rate shopping matters more than which heat pump brand you choose.
~85%
TX Residents with REP Choice
$0.09-$0.19
Rate Range (Deregulated)
$610-$1,550
Potential Annual Savings
2.5x
Savings Spread by Rate
Federal 25C Tax Credit Expired (Dec 31, 2025)
The $2,000 federal tax credit for heat pumps is no longer available. In Texas, your electricity rate is now the #1 factor in heat pump economics. Choosing the right REP and plan can save you $500-$900/year more than choosing the wrong one.
Texas has a split electricity market. Understanding which type you are in is the first step to optimizing your heat pump economics.
~85% of Texas
You choose your REP (Retail Electric Provider) — dozens of companies compete for your business with different rates and plans
TDU delivers the power — Oncor (DFW), CenterPoint (Houston), AEP Texas, TNMP handle the wires and poles regardless of your REP
Rates vary $0.09-$0.19/kWh — your choice of plan can mean $900+/year difference in heat pump costs
Risk: Variable plans can spike during extreme weather. Must actively manage your electricity plan.
Major metros: Dallas-Fort Worth, Houston, Corpus Christi, Midland-Odessa, Lubbock, Waco, Abilene, Tyler, Beaumont
~15% of Texas
One provider, fixed rates — municipal utility or electric cooperative sets the rates. No shopping required.
Typically lower and more stable — rates around $0.11-$0.13/kWh with less volatility than deregulated markets
No action needed — rates are set by the utility commission. Predictable billing for heat pump owners.
No choice: Cannot shop for a lower rate. If rates increase, your only option is conservation or solar.
Major metros: Austin (Austin Energy), San Antonio (CPS Energy), El Paso (El Paso Electric), plus many rural co-ops
In deregulated areas, your REP (Retail Electric Provider) is who you pay and who sets your rate. Your TDU (Transmission and Distribution Utility) is the company that owns the wires and delivers electricity to your home. You cannot choose your TDU — it is determined by your address. Oncor serves DFW, CenterPoint serves Houston, AEP Texas serves South/West Texas, and TNMP serves parts of Central and East Texas. TDU delivery charges are passed through by every REP and are the same regardless of which REP you choose.
Average residential electricity rates across major Texas metros. Deregulated areas show the range of available plans; regulated areas show the utility rate.
| Metro Area | Delivery Utility (TDU) | Market | Avg Rate | Range | Strategy for HP Owners |
|---|---|---|---|---|---|
Dallas-Fort Worth | Oncor | Deregulated | $0.15/kWh | $0.10 - $0.16 | Lock fixed rate 12-24 months |
Houston | CenterPoint | Deregulated | $0.14/kWh | $0.09 - $0.16 | Lock fixed rate, avoid variable |
Austin | Austin Energy | Regulated | $0.12/kWh | Fixed tiers | No action needed — stable rates |
San Antonio | CPS Energy | Regulated | $0.13/kWh | Fixed rate | No action needed — lowest major metro |
Corpus Christi | AEP Texas | Deregulated | $0.13/kWh | $0.10 - $0.15 | Lock fixed rate |
El Paso | El Paso Electric | Regulated | $0.12/kWh | Fixed tiers | No action needed |
TDU
Oncor
Avg Rate
$0.15/kWh
Range
$0.10 - $0.16
Strategy: Lock fixed rate 12-24 months
TDU
CenterPoint
Avg Rate
$0.14/kWh
Range
$0.09 - $0.16
Strategy: Lock fixed rate, avoid variable
TDU
Austin Energy
Avg Rate
$0.12/kWh
Range
Fixed tiers
Strategy: No action needed — stable rates
TDU
CPS Energy
Avg Rate
$0.13/kWh
Range
Fixed rate
Strategy: No action needed — lowest major metro
TDU
AEP Texas
Avg Rate
$0.13/kWh
Range
$0.10 - $0.15
Strategy: Lock fixed rate
TDU
El Paso Electric
Avg Rate
$0.12/kWh
Range
Fixed tiers
Strategy: No action needed
Same 3-ton heat pump, same home, same weather — the only variable is your electricity rate. Annual costs compared to gas furnace + central AC at $2,400/year.
| Electricity Rate | Annual HP Cost (Heat + Cool) | vs Gas + AC ($2,400/yr) | Annual Savings |
|---|---|---|---|
| $0.09/kWh | $850 | $2,400 | $1,550/yr |
| $0.12/kWh | $1,130 | $2,400 | $1,270/yr |
| $0.14/kWh | $1,320 | $2,400 | $1,080/yr |
| $0.16/kWh | $1,510 | $2,400 | $890/yr |
| $0.19/kWh | $1,790 | $2,400 | $610/yr |
HP Annual Cost
$850
Gas + AC Baseline
$2,400
HP Annual Cost
$1,130
Gas + AC Baseline
$2,400
HP Annual Cost
$1,320
Gas + AC Baseline
$2,400
HP Annual Cost
$1,510
Gas + AC Baseline
$2,400
HP Annual Cost
$1,790
Gas + AC Baseline
$2,400
At $0.09/kWh, your annual savings are $1,550 — that is 2.5x the savings at $0.19/kWh ($610). Rate shopping matters more than which heat pump brand you choose. A $500 price difference between heat pump models pales in comparison to the $940/year difference between the cheapest and most expensive electricity rates.
If you are in a deregulated area, these six strategies will maximize your heat pump savings and protect you from rate volatility.
Secure a 12-24 month fixed-rate plan before your heat pump install. This locks in your savings calculation and eliminates rate volatility risk.
Texas wholesale prices are volatile, especially in summer. Variable rate plans can spike from $0.10 to $0.40/kWh in a single billing cycle.
Some REPs charge $10/month or more if you use less than 1,000 kWh. With an efficient heat pump, you might hit this threshold in spring/fall.
Pre-cool your home during off-peak hours, let the heat pump coast during expensive peak afternoon periods. Potential 10-20% additional savings.
The official Texas comparison tool (powertochoose.org) lets you compare every REP plan side-by-side. Filter by fixed rate and contract length.
Extremely low introductory rates that spike after 3-6 months can cost you more over a year. Always calculate the full-term average rate.
Some REPs offer time-of-use (TOU) plans with cheaper overnight and weekend rates. Combined with a smart thermostat, you can save an additional 10-20%.
Pre-cool or pre-heat your home overnight. Run at full capacity during cheapest hours.
Normal operation. Moderate rates during morning and early afternoon.
Minimize heat pump usage. Coast on pre-cooled/pre-heated thermal mass. Smart thermostat automates this.
Often off-peak all day. Great for deep pre-conditioning your home.
Heat pump runs at full capacity during cheapest rates. Pre-heats (winter) or pre-cools (summer) your home 2-3 degrees beyond your comfort setting.
Normal operation at moderate rates. Home maintains temperature from morning pre-conditioning.
Smart thermostat raises setpoint 2-3 degrees (summer) or lowers 2-3 degrees (winter). Heat pump coasts on stored thermal energy.
Off-peak rates resume. Heat pump returns to normal setpoint and begins pre-conditioning for the next day.
If you live in Austin, San Antonio, or El Paso, your rates are set by the municipal utility. Here is how each structure affects heat pump economics.
Tiered rate structure
HP Impact: Heat pump owners may hit higher tiers in peak summer months. However, eliminating gas bills still results in net savings. Budget billing (averaged monthly payments) helps smooth costs.
Flat rate structure
Flat rate — same rate regardless of usage level. Predictable and simple billing.
Lowest major metro rate — approximately $0.125/kWh average residential rate, making it one of the best places in TX for heat pump economics.
Budget billing available — averaged monthly payments based on 12-month rolling usage. No surprises.
HP Impact: Best case for heat pump owners in Texas. Stable, low rate with no tiering penalties for increased electricity usage. Estimated savings of $1,270/year vs gas + AC.
The February 2021 grid crisis changed how Texans think about electricity risk. Here is what heat pump owners need to know.
Wholesale electricity prices spiked to $9,000/MWh during the crisis. Customers on variable-rate and indexed plans faced monthly bills ranging from $5,000 to $17,000. Fixed-rate customers were fully protected and paid their normal bills.
An all-electric home (heat pump for both heating and cooling) on a variable rate plan is maximally exposed to wholesale price spikes. During Uri, some customers saw bills exceeding their monthly mortgage.
Fixed-rate customers paid their normal contracted rate throughout the crisis. The REP absorbed the difference between wholesale and retail prices. This is the strongest argument for locking a fixed rate.
Battery storage and solar panels provide an additional layer of protection. During grid outages, a battery can keep your heat pump running on stored solar energy, maintaining home comfort and safety.
Always maintain a fixed-rate electricity plan — never go month-to-month or variable
Consider battery backup (10-13.5 kWh) for grid outage resilience
Keep emergency supplemental heating available (portable propane heater)
Insulate and air-seal your home to extend comfort during outages
Install a smart thermostat with grid-responsive features
Review your plan renewal terms 60 days before expiration — do not auto-renew into a variable rate
Common questions about Texas electricity rates and heat pump economics.
The average residential electricity rate in Texas in 2026 is approximately $0.13-$0.15/kWh in deregulated areas and $0.11-$0.13/kWh in regulated areas (Austin, San Antonio, El Paso). Rates vary significantly by REP, plan type, and usage level. In deregulated areas, fixed-rate plans range from $0.09 to $0.19/kWh depending on contract length and provider.
If you are in a deregulated area (~85% of Texas), use the official Power to Choose website (powertochoose.org) to compare REPs. Prioritize: (1) fixed-rate plans for 12-24 months, (2) no minimum usage fees, (3) transparent pricing without hidden charges, and (4) consider TOU plans if you have a smart thermostat. If you are in a regulated area (Austin, San Antonio, El Paso), you have one provider with stable rates and no action is needed.
The cheapest fixed rates in Texas are typically $0.09-$0.11/kWh for 12-24 month plans in deregulated areas. Regulated utilities like Austin Energy and CPS Energy offer base rates around $0.11-$0.12/kWh. Be cautious of extremely low rates below $0.08/kWh — these are often short-term teaser rates or variable plans that will increase significantly.
Fixed rate, always. An all-electric home with a heat pump means all your heating AND cooling runs on electricity. You are fully exposed to rate fluctuations. A fixed-rate plan protects you from summer price spikes and winter storm scenarios. Variable rates in Texas have historically spiked to extreme levels during grid stress events.
Power to Choose (powertochoose.org) is the official electricity shopping website maintained by the Public Utility Commission of Texas. It lists every available retail electricity plan in deregulated areas, with pricing, contract terms, and Electricity Facts Labels (EFLs). You can filter by fixed vs variable rate, contract length, renewable content, and your delivery utility (Oncor, CenterPoint, AEP, TNMP).
Time-of-use (TOU) plans charge different rates based on the time of day. With a heat pump and smart thermostat, you can pre-cool your home during cheap off-peak hours (typically 9 PM - 6 AM at $0.06-$0.09/kWh) and coast through expensive on-peak periods (2 PM - 9 PM at $0.18-$0.28/kWh). This strategy can save an additional 10-20% on electricity bills compared to a flat-rate plan.
Austin Energy rates average around $0.12/kWh and are tiered — the first 500 kWh is cheapest, with prices increasing at higher usage levels. In deregulated areas, the best available rates can be lower ($0.09-$0.11/kWh) but require active shopping and the risk of higher rates upon renewal. Austin Energy offers stability and predictability, which many homeowners prefer. Neither option is universally cheaper.
Your electricity bill will increase because you are now using electricity for heating (instead of gas). However, your total energy costs should decrease because heat pumps are 2.5-3.5x more efficient than gas furnaces. For a typical Texas home, expect electricity bills to rise $40-$80/month during winter, but you eliminate $100-$200/month in gas bills. Net annual savings range from $610-$1,550 depending on your electricity rate.
During Winter Storm Uri in February 2021, wholesale electricity prices spiked to $9,000/MWh and some variable-rate customers received monthly bills of $5,000-$17,000. Fixed-rate customers were fully protected and paid their normal rates. For heat pump owners, this reinforces the critical importance of a fixed-rate plan — an all-electric home on a variable rate faces extreme financial exposure during grid emergencies. Battery backup and solar panels provide additional protection.
Yes. In deregulated areas, you can switch your Retail Electric Provider at any time. If you are in a fixed-rate contract, there may be an early termination fee (typically $100-$200). Many homeowners wait until their current contract ends, then switch to a plan optimized for higher electricity usage. After installing a heat pump, look for plans with competitive rates at the 1,500-2,500 kWh usage level, as your consumption will likely increase.
Continue your research with these related guides on heat pump costs, rebates, and fuel comparisons.
All Texas energy guides, rebates, and calculators in one place.
Complete guide to heat pump types, costs, and efficiency ratings.
Full cost of going all-electric: heat pump, panel upgrade, EV charger.
Custom heat pump sizing, pricing, and savings estimate for your home.
Find out exactly how much a heat pump will cost and save you based on your Texas home, your local utility area, and current electricity rates. Custom sizing, pricing, and payback analysis included.
Last updated: February 2026