Your electricity plan has an end date, and what happens after that date is one of the most expensive things Texas homeowners overlook. When a fixed-rate contract expires, most people assume their rate simply continues. It usually does not. Here is exactly what happens, what your provider is required to tell you, and how to avoid the rate jump that catches so many households off guard.
The short version: you roll onto a month-to-month rate
In deregulated Texas, almost every retail electricity plan is a term contract. Common terms are 12, 24, or 36 months. When that term ends and you have not signed a new agreement, your provider does not cut off your power. Instead, your service continues on a default month-to-month plan, often called a holdover or default renewal rate.
That holdover rate is set by the provider and is typically a variable rate, which means it can change from month to month with no contract protecting it. For many households it ends up higher, sometimes significantly higher, than the fixed rate they had been paying. You keep the lights on, but you may be paying more for the same electricity.
What your provider is required to tell you
Texas rules require your retail provider to warn you before your contract ends. You should receive at least two written contract-expiration notices before the term is up. These notices are required to spell out:
- The date your current contract expires
- What happens if you do nothing — the plan and rate you will default to
- That you are free to shop and switch to any provider or plan with no penalty once your term ends
These notices usually arrive with your bill or by email, so they are easy to miss. If you have moved, changed your email, or simply skim your statements, the expiration date can pass without you noticing until the higher rate shows up.
Key insight
Doing nothing is a decision. If you let your contract lapse, you are choosing the provider's default month-to-month rate, which is rarely the best deal available at your address.
What it costs you to let it lapse
The exact dollar difference depends on your provider, your usage, and your delivery area, so there is no single number that applies to everyone. What is consistent is the pattern: default holdover rates are designed to be a fallback, not a competitive offer. Because the rate is variable, it can also climb during high-demand months like a hot Texas summer.
The only way to know your real numbers is to look at your current bill and compare it against the live plans available at your service address. Always check the Electricity Facts Label (EFL) for any plan you consider. The EFL is the standardized one-page disclosure that shows the average price per kWh at 500, 1,000, and 2,000 kWh, the contract term, and any fees. Comparing EFLs is how you make an apples-to-apples decision instead of guessing.
Are you locked in? No.
Once your contract term has ended, you are free to leave at any time with no early termination fee. A provider can only charge an early termination fee if you cancel before your term is up. After expiration, you are month to month and can switch whenever you want.
Even if you are still inside your term, it is worth knowing your end date now. That way you can line up a new plan to start the moment your current one expires, with no gap and no holdover period in between.
Your options when a contract expires
- Sign a new fixed-rate plan — lock in a known price for another term and protect yourself from month-to-month swings.
- Renew with your current provider — sometimes a fine option, but only after you compare it against other plans at your address, not on autopilot.
- Switch providers entirely — if a better plan is available where you live, the switch is straightforward and you keep the same wires and meter.
- Stay on the default month-to-month rate — usually the most expensive path, and the one that happens by default if you ignore the notices.
How to switch the right way
Switching providers in Texas does not interrupt your power. The poles, wires, and meter belong to your local Transmission and Distribution Utility (TDU), and that does not change when you switch retail plans. Your new provider coordinates the changeover behind the scenes, and you simply start getting billed under the new plan.
This is where Energy Direct helps. As a local independent Ambit Energy consultant, we can compare the plans available at your exact Texas address by ZIP, walk you through the EFL so you understand the real all-in price, and handle the switch for you through Ambit. There is no charge to compare, and you are never pushed onto a plan that does not fit your usage.
Bottom line
When your Texas electricity contract expires, you do not lose power, but you usually roll onto a higher month-to-month rate unless you act. Watch for the expiration notices, know your end date, compare live plans by your service address using the EFL, and switch before the holdover rate starts. A few minutes of comparing can keep you from quietly overpaying month after month.