×
Switching Energy Providers

What to Know About Early Termination Fees in Texas

If you are considering terminating your Texas electricity or natural gas service before the end of your contract, be aware of the early termination fee (ETF) that may apply. 

An ETF is a penalty that utility companies typically charge customers who break their contracts before the agreed-upon termination date. 

Read on to learn more about ETFs and how to avoid them if you live in the Lone Star State.

Key Takeaways

  • If you’re thinking about changing your electric provider to a new electric company, it’s important to ask whether you’ll be charged a cancellation fee.
  • Each energy provider in Texas differs depending on their rate plans and available options. 
  • There is no Texas law saying that energy companies have an obligation to charge an early termination fee, so it’s important to shop around to find the retail energy provider that’s right for you.


Will I Be Charged with an Early Termination Fee?

An electricity early termination fee is a charge that is assessed to customers who cancel their electric service before their contract period is up. This fee is designed to recoup the costs that the utility company incurs when someone cancels their service, such as the costs of customer acquisition and energy generation. 

The fee can vary depending on the state in which you live, but it is typically around $200 or less.

If you are thinking about canceling your electricity service, be sure to check with your utility company to see how much the early termination fee will be. Otherwise, you could end up paying more than you anticipated.

In the state of Texas, there is no law that requires companies to charge customers an early termination fee (ETF) for discontinuing service. However, many companies do have their own policies in place regarding ETFs. 

Therefore, it’s important to ask your retail electricity provider for details on how much you will be charged for early termination and by which standard – either by a general flat fee or by a monthly rate. In some cases, opting for one over the other could end up saving you quite a bit of money, so it’s important to differentiate between the two.

The Short Answer? It Depends. 

The first thing to know about early termination fees is that they vary widely. There is no set amount that companies charge, and the fee can be anything from a few dollars to several hundred. In general, the bigger the company, the higher the fee. 

Whether or not you’ll be charged an early termination fee if you cancel your electricity service in Texas depends on a few factors. First, if you’re moving and can provide proof of your new address and new zip code, your electricity provider cannot charge you an early termination fee before the start date of your new service. 

However, if you are not moving and simply want to change providers on your account for preference alone, you may be subject to an early termination fee if it’s stated in your new contract. 

An REP (retail energy provider) can charge a deposit, too, if your credit is not satisfactory according to the contract terms. Usually, this is up to 1/5th of the estimated annual billing or the sum of the estimated billings for the upcoming two months.

Finally, if your contract term is about to expire, you can switch providers without incurring an early termination charge 14 days or fewer before the expiration date. That’s according to Texas law. You can be charged a renewal rate in some cases, too, so it’s important to keep these factors in mind. 

If your contract is about to expire, the company is required to notify you in writing within 30 business days before the expiration date. You can switch without incurring an early termination charge as long as you do so within 14 days (both of the notice and before the contract is set to expire). If you take no action, you will then have a month-to-month billing, according to the Public Utility Commission of Texas.

So the bottom line is this—if you’re considering canceling your electricity service in Texas, be sure to check your contract first and then plan accordingly to find the best time to do so.

And before signing up for any service and providing your Social Security Number, be sure to check the company’s policy on early termination fees so that you are not surprised by any charges if you decide to cancel your service.

How Much Do Early Termination Fees Typically Cost?

In Texas, early termination fees (ETFs) are generally assessed by providers when a customer cancels their service before their contract is up. 

ETFs can vary widely in cost, depending on the type of service being canceled and the length of the contract. The range varies depending on the plan or contract signed. It can be as little as $0 or as much as $300. It’s important to note, too, that residential customers typically have lower early termination charges than commercial ones.

In some cases, providers may waive the ETF if the customer agrees to sign up for a new service contract. However, this is not always the case, so it’s important to check with your provider before canceling your service.

Most of the time, early termination fees can be a significant expense if you cancel your contract before the end date. 

In Texas, the most common type of early termination fee is a flat rate, which is typically around $125. 

However, some companies charge a monthly rate that will depend on how many months were left in the contract. For example, if you cancel your contract with 10 months remaining, you may be charged a fee of $100 per month. 

Avg. early termination fee flat rate $125
Avg. early termination fee monthly rate$100

As a result, it is important to carefully consider the cost of early termination fees before signing a contract.

Another important thing to know is that early termination fees are almost always negotiable. If you’re really dead-set on getting out of your contract, it’s worth calling up customer service and seeing if they’ll waive the fee. The worst they can say is no, after all. 

And finally, it’s important to remember that not all companies charge early termination fees. If you’re not happy with your current service provider, it might be worth looking into switching to a company that doesn’t penalize customers for leaving. 

After all, there’s no sense in sticking with a company that doesn’t make you happy—even if it does come with a hefty fee.


Can I Take My Current Provider With Me When I Move? 

When you move to a new home, you have the opportunity to choose a new electricity supplier. You may even be able to transfer your existing contract to your new address. 

However, it’s always a good idea to compare prices before making a decision. 

Moving is the perfect time to switch providers without having to pay a penalty. By conducting a price comparison, you can make sure you’re getting the best deal possible. 

Remember, not all electricity suppliers are the same. 

Some may offer better rates or more flexible contracts. So take your time and shop around before choosing a new provider.

Conclusion

Early termination fees can be confusing, but they’re important to understand before deciding to switch providers or move residences. If you have any questions about early termination fees or would like more information on how they work, please contact your electricity provider—they will be able to help clarify anything that’s unclear in your contract.

Questions Others Are Asking 

Do I need to match my electricity contract to my lease? 

The simple answer is no—you don’t need to match your electricity contract to your lease. However, if your lease is for a fixed term (say, one year), then it’s likely that your electricity contract will be for a similar term. 

What factors should I consider when choosing an energy supplier?

Compare pricing and terms to find the best deal. Also, read the fine print carefully to make sure you understand the terms of service and any fees that may apply. 

What is Power to Choose in Texas?

Power to Choose is a website set up by the state of Texas to help residents choose the best electricity plan for their needs. It offers a searchable database of each new plan, as well as a way to compare plans side by side, providing information on discounts, fees, penalties, terms and conditions, and more. However, there are many problems with the state’s Power to Choose Website.

Leave a Reply

Your email address will not be published.