Why do many electricity plans cost more when you renew?
Because the price you compared was a new-customer price, and your renewal is priced separately. When the contract ends, the provider offers you a renewal price. On a plan that started with a low introductory price, that offer can be well above what the next new customer pays for the same plan, much like a first-year internet price.
That difference is the renewal price gap: how much a renewal offer exceeds the price a new customer could get for the same plan, in the same utility area, on the same day. UK regulators call the practice price walking, and consumer groups there call it the loyalty penalty. Each cent of gap costs about $120 a year at 1,000 kWh a month.
Power to Choose, the state's plan comparison site, shows each plan's new-customer price and none of the renewal prices. Many of the lowest-priced plans there are priced below what a provider can likely make money at. A price like that has to be made up somewhere: at other usage levels, or at renewal.
Texas bills show the gap. In a May 2026 analysis of 7,148 Texas electricity bills, homes that had stayed with a provider paid about 1.5¢ per kWh more for energy than homes that had switched at least twice in four years, about $180 a year at 1,000 kWh a month.
Regulators elsewhere have documented the economics behind it. Reviewing UK car and home insurance, the Financial Conduct Authority found new-customer prices "sometimes below cost," and that "firms seek to recover any initial losses by increasing the customer margin, and thus the price, at renewal." Since 2022, renewals there can cost no more than the equivalent new-customer price.
What does it mean to renew at the new-customer price?
If you want a provider that could be a long-term home, this is the feature to look for.
A plan renews at the new-customer price when its renewal offer costs no more than new customers pay for the same plan, in the same utility area, on the same day. Any provider can offer it, and the ones that do say so.
It doesn't freeze your price: wholesale costs and regulated delivery charges move, so the new-customer price can rise or fall between terms, and the renewal offer stays at or below it. It also isn't the cheapest plan for the first term, since a plan with an introductory price usually costs less in its first year. It can be the cheapest over the years you stay.
How do you check for a renewal price gap?
Compare two numbers from the same day: the average price on your renewal offer's Electricity Facts Label (EFL), and the same number for the plan the provider offers new customers.
Your contract expiration notice describes any renewal offers and where to find their EFLs. For a fixed-rate contract longer than four months, Texas rules require the last of these notices at least 30 days before the contract ends.
The check at renewal
Two Electricity Facts Labels, the same day, the same usage
Average price per kWh at 1,000 kWh, from each EFL
Your renewal offer
Its EFL is enclosed with, or linked from, your contract expiration notice
16.9¢
The same plan for new customers
Or its closest match, from the provider's website or Power to Choose
−12.9¢
Renewal price gap
About $40 a month, $480 a year at 1,000 kWh
=4.0¢
If your renewal offer carries a plan name that new customers can't choose, use the provider's closest new-customer plan: the same term and the same type of rate.
To know in advance, check whether the plans you're comparing renew at the new-customer price. Ask the provider, "Will my renewal offer cost no more than this plan costs new customers?" Look for it in the plan's terms of service, in wording such as "your renewal price will not exceed the price offered to new customers for the same plan." Read how the terms define the comparison, including which price yours is measured against and what happens if the plan stops enrolling new customers.
What can you do about a renewal price gap?
If your renewal offer has a gap, ask your provider whether you can move to its new-customer plan instead. If not, you can accept the offer or switch to another plan, ideally one that renews at the new-customer price.
You could instead switch to a new introductory price at every contract end. That only works if you catch each expiration notice in time, and each move means a new enrollment, possibly a credit check or deposit, new autopay, and a final bill from the old provider. Miss the window, and you pay the renewal price or the month-to-month price.
On a plan that renews at the new-customer price, each contract end is a quick read of the offer, and you renew at what new customers pay for the plan at that time.
Two plans through the same three years
Average price per kWh in each yearly term, renewing each time
A plan with an introductory price
Renews with a gap
Years one to three: 12.9¢, 16.9¢ (4.0¢ renewal price gap), 17.4¢ (4.3¢ renewal price gap).
A plan that renews at the new-customer price
No renewal price gap
Years one to three: 14.6¢, 14.9¢, 14.7¢.
Renewal pricing FAQ
How do I keep my electricity rate low after the first year?
Along with the features your home needs, choose a plan that renews at the new-customer price: your renewal costs no more than new customers pay for the same plan that day. Without that, a low first-year price can be followed by a renewal price gap at each contract end.
Do Power to Choose prices show what I'll pay at renewal?
No. Power to Choose lists what new customers pay for each plan. Your renewal price is set when the contract ends, so before you sign, check whether the plan renews at the new-customer price.
Why is my electricity renewal rate higher than what new customers pay?
Many plans start with a low introductory price, and their renewal offers can be priced above what new customers pay for the same plan. That difference is a renewal price gap. A plan that renews at the new-customer price doesn't have one.
Does renewing at the new-customer price mean my rate can't go up?
No. The new-customer price can change with wholesale costs and delivery charges, so it can rise or fall between terms. Your renewal costs no more than that price on the day it's offered.
Can a plan with an introductory price cost less overall?
In the first term, usually. Over several years, it depends on the size of the renewal price gap and how long you stay.
What happens if I don't respond to my contract expiration notice?
Service continues. The provider moves the account to its month-to-month default product, which has its own price that can change between billing cycles. You can leave it at any time without a termination fee. If your plan renews at the new-customer price, check its terms for whether that also applies to the default product.
Sources and related reading
The Public Utility Commission of Texas's contract-disclosure rule, 16 TAC §25.475 sets the timing and contents of contract expiration notices, including renewal offers and the month-to-month default product. The May 2026 Texas bill analysis, published by retail provider Base Power, compares energy rates by switching history. The UK Financial Conduct Authority's general insurance pricing practices market study documents below-cost new-customer pricing recovered at renewal, and its 2021 policy statement has required since January 2022 that home and motor insurance renewals cost no more than the equivalent new-customer price.
Reviewed October 31, 2026. This guide provides general educational information, not legal advice. Rules and plan terms can change; confirm current PUCT materials and your own plan documents for your situation.
Continue with should you renew or switch, how to read an Electricity Facts Label, or choosing a contract length.