Texas Energy Rates: What is a Kilowatt-Hour (kWh)?

A kilowatt-hour (kWh) is a unit of electricity that retail electricity providers (REPs) use to measure the amount of energy a household uses in a monthly billing cycle. Retail energy providers in Texas charge electricity consumers by the number of kilowatt-hours used per billing cycle, and advertise plans based on how much they charge per kWh. However, an REP’s advertised rate per kWh is not always the rate you’ll be charged for that plan; in fact, most REPs listed on Texas’ Power to Choose advertise rates that are much lower than what they’ll actually bill you.

Table of Contents

• What is a Kilowatt Hour (kWh)?
• Kilowatt-Hour vs Kilowatt
• How Much Does 1 Kilowatt-Hour (kWh) of Electricity Cost in Texas?
• How Do Retail Electric Providers (REPs) Determine Energy Rates per kWh?
• What Can One Kilowatt-Hour Power?
• How Do I Calculate How Many kWh an Appliance Uses?
• How Many Kilowatt-Hours (kWh) Does the Average Household Use?
• How to Check Your House’s kWh Electricity Usage
• How to Reduce Your Electricity Consumption

What is a Kilowatt Hour (kWh)?

First off, a watt (W) is a unit of electrical energy. Household appliances usages are measured in watts. 1,000 W is equal to 1 Kilowatt (kW).

k – 1,000
W – watt, which is the unit of measure denoting how much electricity is transferred
h – hour

Collectively, this three-figure measurement, kWh, is used to explain how much electricity your home consumes in a month.

Kilowatt-Hour vs Kilowatt

The two terms sound similar, and while they are both related, there is one key difference between a kilowatt and a kilowatt-hour: a kilowatt (kW) is the amount of electrical energy an appliance uses at one time, whereas a kilowatt-hour (kWh) is the total amount of electricity used over a period of time. This is why we calculate kilowatt-hours by multiplying the number of kilowatts a device uses by the number of hours that device is used.

To simplify this further, the two measure different things: a kilowatt measures power (how much electricity is required to power a device at one time) and a kilowatt-hour measures energy (how much electricity is used to power a device over a period of time). If that sounds confusing, it’s because it is confusing. And REPs will be sure to take full advantage of that to profit off unaware consumers.

How Much Does 1 Kilowatt-Hour (kWh) of Electricity Cost in Texas?

According to the U.S. Energy Information Administration, the average cost of electricity in Texas residences is 12.8 cents per kWh as of March 2022, compared to a national average of 14.47 cents per kWh. This statistic includes both the regulated and deregulated areas of the state. As of July 2022, prices have skyrocketed to over 20 cents per kWh in some cases. For more information on price increases, see Why Texas Electricity Prices Are Rising.

However, don’t let these numbers fool you. Just because Texans pay less than the national average per kilowatt-hour doesn’t mean you’ll get the same great rates. Unfortunately, if you live in an energy-deregulated area of Texas, you may be paying up to 50% more for your electricity than your fellow Texans in regulated areas – and, according to the U.S. Energy Information Administration, you’re probably subject to higher rates than the national average.

In fact, the Texas Coalition for Affordable Power estimates that Texans in deregulated parts of Texas paid $25 Billion more for their electricity than their neighbors in regulated areas in the 10 years following deregulation. This is because Retail Electricity Providers (REPs) have the ability to determine their own electricity rates, and can even charge you higher prices per kilowatt-hour than advertised on Power to Choose! Luckily for you, Energy Ogre has access to exclusive reduced-rate electricity pricing from select REPs that we make available to our customers.

How Do Retail Electricity Providers (REPs) Determine Energy Rates per kWh?

REPs buy electricity at a wholesale price determined by the market. So, when they sell it to you, they often offer a variety of plans: a fixed-rate plan, a variable-rate plan, and an indexed-rate plan. If you know how much electricity you use, when you use it, and a few other variables, you can choose the one that best suits your needs for the best price. Or you can let us help you choose a plan that’s guaranteed to maximize your savings!

For more information on REPs, check out How do Retail Electricity Providers Work?

Fixed-Rate Electricity Plans

Fixed-rate electricity plans ensure the electricity price you pay per kilowatt-hour stays the same throughout your contract. However, this doesn't mean that your bill will be the same every month (we’re looking at you June, July, and August!) because you may use more (or less) energy during certain times of the year. Overall, the benefit here just means your price per kWh won’t increase if the market price increases.

Variable-Rate Electricity Plans

Variable-rate electricity plans mean your electricity price per kilowatt-hour will fluctuate in accordance with the market prices per month. Variable-rate plans are what you’re automatically put into if your electricity contract lapses. Market prices depend on weather, the cost of natural gas, and a few other factors. These plans are often expensive but offer a little more flexibility should you need to move or switch providers since there are no early termination fees (ETF).

Indexed-Rate Electricity Plans

Indexed-rate electricity plans are similar to variable-rate plans in the sense that both offer prices that are in direct correlation to the market. Once again, you can expect your price per kilowatt-hour to change month to month.

For more information on different types of electricity plans, check out our article on how to choose the best electricity plan for your household. At Energy Ogre, we believe that you need to have a plan that’s optimized for you. Likewise, we take into account your kilowatt-hour usage and any seasonal changes. We know that everyone is different, and everyone’s energy usage is different, too. When you choose Energy Ogre, we help you find the plan that gives you the best rate based on your own usage. So, it’s okay if you don’t understand the kilowatt-hour because we understand it for you.

What Can One Kilowatt-Hour Power?

 A kilowatt is equal to 1,000 watts, so if you had a 1-kilowatt A/C unit and ran it for 1 hour, you’d use 1 kilowatt-hour of electricity. If you had a 500-watt dish washer and ran it for an hour, you’d use 0.5 kilowatt-hour of electricity. Now that you know the math, let’s see what one kilowatt-hour can do: 

•    Power a refrigerator for 20 hours 

•    Drive an electric car for 3.6 miles 

•    Toast 89 pieces of bread 

•    Power a 100-watt light bulb for 10 hours 

•    Run a dishwasher for less than an hour 

•    Keep your iron on for an hour

How Do I Calculate How Many kWh an Appliance Uses?

In order to figure out how much electricity each of your appliances use, you need to know the wattage of your appliance. Once you know that, you can use the formula: (watts x hours) divided by 1,000 = kWh. 

Not happy with how much you’re spending powering your appliances? Check out this list of energy-saving smart devices, or read up on energy-draining appliances that may be raising your electric bill.

How Many Kilowatt-Hours (kWh) Does the Average Household Use?

According to the U.S. Energy Information Administration, the average household uses around 920 kWh per month. Due to the climate here in the South, however, Texas uses slightly more electricity at 1776 kWh per month.

However, not all households are the same. You may live in a single-family home, an apartment with roommates, or a townhouse; check out the following estimates for each of these living arrangements.

• Small Single-Family Home: 1300 kWh/month
• Single-Family Townhome: 900 kWh/month
• Apartment: 750 kWh/month
• Mobile Home: 1200 kWh/month

How to Check Your House’s kWh Electricity Usage

When it comes to fully understanding your home’s kWh usage, you’ve got to know the difference between your electric meter and your electrical line—and how to read both. Because deregulated areas of Texas require both a retail electricity provider (REP) and a transmission and distribution service provider (TDSP), you pay for both the electricity you use and the delivery of that electricity. The line reading shows the amount of power the TDSP supplies to you, and your meter measures the amount of electricity you’re using in kilowatt-hours. REPs check your meter to know how much they should be billing you, but as an informed consumer, it’s nice to have the ability to check it yourself and prepare for your anticipated costs. Check out our article on TDSPs and electricity delivery charges to learn more about how electricity is delivered to your home.

How to Reduce Your Electricity Consumption

Reducing your electricity consumption is easier than you think. In fact, we’ve created a home energy efficiency checklist so you can be sure you’re doing your part to lighten the load. Plus, there are smart energy-saving devices that you can install within your home to decrease your monthly bill. And while you’re upgrading those, be on the lookout for these expensive energy-draining devices that might actually be raising your energy bill without you realizing. For more quick tips to lower your electric bill in the summer or how to lower your winter electricity bill, we can help.

Sign up with Energy Ogre to ensure you’re getting the lowest rate every month--because while we all have to use electricity, we don’t all need to pay an arm and a leg for it.

Still unsure about joining the team? Take a look at our article Why Energy Ogre?

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