"Lowest rate wins" is the wrong frame for low-usage homes.
Most Texas plan comparisons rank offers by the headline cents per kWh quoted at 1,000 kWh. That single number flatters plans that hide a minimum usage fee, because the fee only shows up in the EFL footnote and never in the marketing rate.
For a household at 1,200 kWh, the fee is invisible. For an apartment at 500 kWh, the fee can add the equivalent of 1 to 2 cents per kWh on every single kilowatt-hour you used. The plan that looked cheapest at the threshold is now the most expensive at your actual usage.
The fix is not subtle. Read the EFL, find the minimum usage clause, and rerun the math at your real monthly kWh, not at the marketing benchmark.
How a Texas minimum usage fee actually works.
Three numbers define every minimum usage fee. Find them in the EFL and you have the whole picture.
Trigger
The threshold
A monthly kWh number, usually 999 or 1,000. Use less than that in one billing cycle and the fee kicks in for that cycle. Some plans set it at 500 kWh; a few set it at 2,000 kWh.
Charge
The fee amount
A flat dollar amount added to your bill the cycle you fall below the threshold. Common values are $5.95, $6.95, $9.95 and $9.99. A few plans use higher values; the 2013 Texas ROSE survey logged some at $20.
Target
Who pays it
Small apartments, single occupants, snowbirds, second-home owners, students leaving town for summer, and anyone whose home sits empty for stretches. The Texas residential average of 1,176 kWh per month puts most full-time households above the line.
A minimum usage fee is not the same as a base charge. A base charge is a flat monthly amount you pay regardless of usage; the minimum usage fee only triggers when you go below the threshold.
Texas REPs known to charge a minimum usage fee.
Snapshot of plan structures observed across major Texas REPs. Specific plans rotate each year; always confirm the current EFL before signing.
| REP | Fee structure | Typical threshold | Typical fee |
|---|---|---|---|
| Discount Power | Minimum usage fee on several fixed plans | 999 kWh | $9.95 |
| Cirro Energy | Minimum usage fee on entry-level plans | 1,000 kWh | $5.95 |
| Reliant Energy | Some plans only; bill-credit plans are common | 1,000 kWh | Plan dependent |
| Direct Energy | Some plans; many use bill credits at 1,000 / 2,000 kWh | 1,000 kWh | Plan dependent |
| TXU Energy "Cash Money" | Inverse: bill credit ABOVE threshold, no credit below | 1,000 kWh | Credit cliff |
| Many low-rate teasers | Aggressive headline rate at 1,000 kWh; fee in EFL footnote | 999 to 1,000 kWh | $5 to $10 |
Source: Selectra review of EFL footnotes across CenterPoint and Oncor territories, plus the 2013 Texas ROSE Fees Summary. REP plan catalogues turn over each quarter; the EFL on the plan you sign is the only binding source.
A $10 fee on a 500 kWh apartment is an extra 2¢/kWh.
The fee looks small as a dollar amount. As a percentage of supply cost on a low-usage bill, it is huge.
A plan that markets at 9.5¢/kWh with a $9.95 minimum usage fee, used by a 500 kWh apartment: the fee alone adds $9.95 / 500 = 1.99¢/kWh. The effective supply rate becomes 11.5¢/kWh, not 9.5.
That is enough to flip the comparison against a "more expensive" plan that has no fee.
added to every kWh at 500 kWh of monthly use
Why REPs charge it and why the EFL has to disclose it.
A minimum usage fee is a fixed-cost recovery mechanism dressed up as a usage incentive. Two simple facts explain why it exists.
REPs have fixed costs per customer
Billing systems, call centers, customer acquisition, regulatory compliance and credit reserves cost roughly the same per account whether you use 400 kWh or 2,500 kWh. A low-usage customer who pays only for kWh barely covers these fixed costs.
Fixed-rate plans carry hedging risk
REPs buy power forward on ERCOT against expected customer load. A customer who uses far less than forecast leaves the REP with unsold hedges; the fee recovers a slice of that risk.
PUCT requires EFL disclosure
Under PUCT Substantive Rule 25.475, every retail electric plan must publish an Electricity Facts Label that itemizes the minimum usage fee, its threshold and any usage-based credits. Marketing pages do not have to highlight the fee, only the EFL does.
It is legal, but contested
A 2015 Houston Chronicle investigation found roughly 70% of Houston-area retail plans contained a minimum usage or equivalent provision. State Rep. Sylvester Turner's HB 2254 sought tighter disclosure rules that same year but was left pending in committee.
In short: the fee exists because low-usage customers cost more per kWh to serve. The PUCT lets REPs charge it, but only if the EFL spells it out.
Five ways Texans overpay because of minimum usage fees.
Each pattern below costs real money. Each one is avoidable if you read the EFL the right way.
Not to be confused with the monthly base charge.
A base charge is a flat monthly fee paid every billing cycle, regardless of how much electricity you use. It is the REP's version of a subscription. A minimum usage fee only triggers when you fall below a kWh threshold.
Some plans have neither, some have one, some have both. The EFL must disclose both lines separately.
Read the full base charge explainer to see how it stacks with or replaces the minimum usage fee.
Six steps to dodge a Texas minimum usage fee.
Estimate your real kWh
Pull the last 12 bills, average the monthly kWh. If your average sits below 1,000 kWh or has months below the line, you are a target for the fee.
Read the EFL footnotes
Open the PDF, search for "minimum" and "usage". Note the threshold and the fee. If the page hides it, that is a flag, not a feature.
Compare plans at YOUR kWh
Use Power to Choose with your actual usage, not the default 1,000 kWh benchmark. The ranking will reshuffle.
Filter for no-minimum plans
Several REPs publish plans with no minimum usage fee at all. They often have a slightly higher headline rate but a lower true cost for low-usage households.
Flag your low-use months
Mark on a calendar the months you historically used less than 1,000 kWh. If those months total three or more, a fee-free plan is almost always cheaper for you.
Need help paying?
Check Texas energy assistance programs (CEAP, funded by LIHEAP) on the assistance page; income-qualified households may get help with overdue bills.
Common questions about Texas minimum usage fees.
It is a surcharge a Texas retail electric provider adds to your bill when your monthly kWh falls below a plan-specific threshold (typically 999 or 1,000 kWh). Common fee values are $5 to $10 per low-use cycle. It is legal under PUCT Substantive Rule 25.475 as long as the EFL discloses it.
Open the EFL PDF for the plan and look under the recurring charges or monthly fees section. Search the document for the words minimum, usage and threshold. The label must state both the threshold kWh and the dollar fee. If you cannot find it, the plan probably does not have one; confirm with the REP in writing.
Yes. Pick a plan that explicitly has no minimum usage fee, or pick a plan whose threshold sits well below your real average kWh. Power to Choose lets you filter plans and recompute totals at your own usage instead of the 1,000 kWh marketing default.
Plan catalogues turn over each quarter, but Discount Power, Cirro Energy and some Reliant Energy and Direct Energy plans have historically used minimum usage fees. Many low-rate teaser plans across the market include one in the EFL footnote. Confirm the current EFL before you sign.
No. A base charge is a flat monthly fee billed every cycle regardless of usage. A minimum usage fee only triggers when your monthly kWh is below the threshold. Some plans use one, some use the other, some use both. The EFL discloses both lines separately.
You will likely trigger the fee for that cycle. The fee is monthly, not annual, so even one low-use month adds the full $5 to $10 charge. Snowbirds, second-home owners and summer-absent students should plan for it; a fee-free plan usually wins for these profiles over a full year.
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Same playbook, different utility. Pick another deregulated state to compare utilities, suppliers and switching rules.
