Texas Wholesale Electricity Rates the Lowest in the U.S.?

Disclaimer: Wholesale electricity pricing (energy only) is not the same as fixed all-in supplier rates that are provided to our clients by us, or directly by your energy supplier.

In Texas electricity pricing skyrocketed after February 2021, following Winter Storm Uri.  Electricity consumers were shocked by their monthly invoices and electricity suppliers were forced to pay millions of dollars on their end, as well.  PUC (Public Utility Commission) in response, lowered the maximum price cap that utilities/power generators were able to charge.

For over the past 10 years, Texas energy prices have been lower than most other states in the US and the rest of the world. 

Texas - Cheapest Electricity in the US 

• Texas is 9th in Electricity Prices in the US (less than a cent/kWh difference in total), in the latest energy report. (Sourced from U.S. Energy Information Administration (EIA)
• Business Rates- 2nd Place
• Residential Rates- 22nd Place
• In October 2021, 9.02 cents per/kWh was the average rate from Texas residential, commercial, and industrial buildings, combined.

Texas- Cheapest Electricity in the World

• Ranks 6th cheapest territories for electricity, out of 30 developed countries (sourced from IEA)
• Dr. Michael E Webber (Josey Centennial Professor in Energy Resources) confirmed that market design and rise of wind and solar, are the main factors that correlates with these lower electricity prices.

ERCOT (Electricity Reliability Council of Texas) manages most of Texas’s power grid and their main responsibilities include the following, based on their website:



• Maintain system reliability.
• Facilitate a competitive wholesale market.
• Facilitate a competitive retail market.
• Ensure open access to transmission.

During and immediately following the winter storm mentioned above, generating units of all fuel types that normally fell on the ERCOT power grid tripped, causing an enormous amount of power generation (30,000MW+) to be displaced off-grid.  This, in turn, was the reason behind extreme power price spikes that were passed on to electricity consumers, during this time.  Another important factor to note, that Reuters explains here, is that ERCOT doesn’t have a capacity market and therefore is susceptible to price spikes. 

Generally–without volatile weather conditions or other unique factors that may cause price spikes, Texas still continues to have some of the best wholesale electricity prices in the world and Texas residents have the power to choose their energy provider/supplier in this deregulated market.