Bill Credit Electricity Plans: The Texas $10 Trap Explained

Open Power to Choose today and sort by price. The cheapest plans at the top will almost all have tiny advertised rates — 8¢, 9¢, 10¢/kWh — and almost all of them will cost you more than a middle-of-the-pack plan at 11¢/kWh. That's because they're bill-credit plans. This article explains exactly what that means, how the trap works mechanically, and how to tell whether a bill-credit plan actually saves you money at your specific usage level.

What is a bill credit?

A bill credit is a flat dollar amount (typically $30 to $125) that the retailer applies to your invoice — but only when your monthly usage hits a specific threshold. Common thresholds are exactly 1,000 kWh or exactly 2,000 kWh. Miss by a single kWh and the credit disappears entirely. It's not proportional: using 999 kWh gets you zero credit, using 1,000 kWh gets you the full amount. The retailer calls this a "usage incentive." In practice it's a cliff.

Why retailers use bill credits

Bill credits exist because Power to Choose lets retailers report an "average price" at 500, 1,000, and 2,000 kWh usage levels — and the comparison shoppers who use Power to Choose almost always sort by the 1,000 kWh column. If you design a plan with a big credit that kicks in at exactly 1,000 kWh, you can make your plan look dramatically cheaper than the competition on that one sort key without actually being cheaper on average. It's SEO for the PUC's plan comparison tool.

When bill credits actually work

Bill credits are a good deal under one specific condition: your monthly usage is consistently at or above the credit threshold, year-round, including the coldest winter and the hottest summer. For a Houston household running central AC in July at 1,800 kWh and coasting through a mild October at 800 kWh, a 1,000 kWh threshold means you hit the credit in summer and miss it in fall — meaning your "discount plan" costs more than a flat-rate plan on half your monthly bills.

• •Use 1,000+ kWh every single month (check your last 12 bills, not just summer)
• •Lifestyle is unlikely to change (same house, same household size, same AC usage pattern)
• •You've done the math at YOUR usage — not just the advertised rate
• •The credit threshold matches your ACTUAL average (1,000 plan for a 1,100 kWh household, not a 950 kWh one)

The one number you need

Every Texas plan has an Electricity Facts Label (EFL) legally required by the PUC. On every EFL there's a section called "Average Price per kWh" showing what you'd pay at three hypothetical usage levels: 500 kWh, 1,000 kWh, and 2,000 kWh. The number in the column that matches your ACTUAL average usage is the only number that matters. If you use 900 kWh/month on average, you care about the 500-column (low) and ignore the 1,000-column that the retailer is advertising.