Texas Historical Electricity Pricing (1985–2026)

Before deregulation in 2002, Texas electricity rates were set by the Public Utility Commission and averaged around 7–8 cents per kWh throughout the 1990s. In 1985, the average residential rate was just 5.21 cents/kWh. Rates increased steadily through the regulated era, reaching 7.32 cents/kWh by 1999 when Governor Bush signed the deregulation legislation. During this period, customers had no choice in their electricity provider — rates were determined by your local utility monopoly.

Texas electricity rates have increased approximately 209% since 1985, rising from 5.21 cents/kWh to 16.11 cents/kWh in 2026. However, when adjusted for inflation, the picture changes significantly. The 1985 rate of 5.21 cents would be equivalent to approximately 14.7 cents in 2026 dollars, meaning the real (inflation-adjusted) increase is closer to 10% over 40 years. Most of the nominal price increase simply reflects the declining value of the dollar over four decades.

The highest wholesale electricity price in Texas history occurred during Winter Storm Uri in February 2021, when ERCOT real-time prices hit the $9,000/MWh cap (equivalent to $9 per kWh) for over 32 consecutive hours. Some customers on variable-rate wholesale plans received monthly bills exceeding $10,000. For average retail rates, 2008 holds the record at 14.32 cents/kWh annually, driven by Hurricane Ike’s infrastructure damage and oil prices hitting $147/barrel that summer.

Commercial electricity rates in Texas are typically 15–25% lower than residential rates. In 2026, the average commercial rate is 12.89 cents/kWh compared to 16.11 cents/kWh for residential. This gap exists because commercial customers use more electricity (spreading fixed costs over more kWh), have more predictable demand patterns, and often qualify for demand-based rate structures that reward consistent usage.

Texas electricity rates fell to decade lows in 2014–2015 primarily due to the shale gas boom. Hydraulic fracturing technology unlocked massive natural gas reserves in Texas, and since natural gas fuels over 40% of Texas electricity generation, wholesale power prices dropped significantly. The average retail rate fell to 10.98 cents/kWh in 2015 — the lowest since 2004. This period demonstrated how closely Texas electricity prices track natural gas markets.

Since Winter Storm Uri in February 2021, Texas retail electricity rates have increased approximately 25%, from 12.85 cents/kWh in 2021 to 16.11 cents/kWh in 2026. Much of this increase reflects utilities recovering storm-related costs, new weatherization requirements mandated by the Texas Legislature, and investments in grid reliability. ERCOT has also implemented new ancillary service requirements that add to wholesale costs passed through to consumers.

The 2000s (2000–2009) saw the largest electricity rate increases in Texas history, with rates climbing from 7.58 cents/kWh to 11.87 cents/kWh — a 57% increase in just one decade. This period included electricity deregulation (2002), Hurricane Rita (2005), Hurricane Ike (2008), and record oil prices. By contrast, the 1990s saw only a 20% increase, and the 2010s actually started with declining rates before rebounding later in the decade.

Historically, Texas electricity rates have consistently run 10–20% below the national average. In 1985, Texas rates were 5.21 cents/kWh versus the U.S. average of 6.44 cents. In 2026, Texas averages 16.11 cents/kWh compared to the national average of approximately 17.5 cents. This advantage stems from Texas’s abundant natural gas, significant wind generation capacity, and the competitive pressure created by deregulation in the ERCOT market.

October and November historically offer the lowest electricity rates in Texas, typically 15–20% below summer peaks. This pattern exists because wholesale electricity prices drop significantly when air conditioning demand falls but before winter heating needs begin. Retail electric providers often launch their most competitive plans in fall to attract customers before the winter contract renewal season. March and April also tend to offer good rates for similar seasonal demand reasons.

Since deregulation began in 2002, Texas average electricity rates have increased from 8.54 cents/kWh to 16.11 cents/kWh — an 89% increase over 24 years, or about 2.7% annually. Critics argue rates would have risen less under regulation, while supporters note that active shoppers consistently find rates 20–30% below the state average. The competitive market has also driven innovation in plan structures, renewable energy options, and smart home integration that regulated utilities were slower to adopt.