Electricity 101

Month to Month or No Contract Electricity Plans

Gexa Energy
April 26, 2023
minutes read
Gexa Energy
Publication Date:
October 11, 2023
Last updated:
October 11, 2023

Whether you’re just moving into a new home or reconsidering your energy plan, understanding the intricacies of various energy options will help you make the right choice for your household. Among the myriad of choices available, month-to-month energy plans and no-contract electricity plans stand out as popular options for consumers who have strong reasons not to commit to a yearly plan. In particular, consumers looking for month-to-month electricity plans in Texas often choose these plans due to their greater flexibility. Let’s explore how these plans work, their advantages and disadvantages, and how to decide if this type of energy plan is right for you.


Month-to-month vs. no contract: What’s the difference?

While these terms are often used interchangeably, there is a subtle difference:

  • Month-to-Month Energy Plans: These plans don’t have a fixed contract duration. As the name suggests, they run from one month to the next, and the consumer can typically leave the plan at any time without a penalty.
  • No Contract Electricity Plans: These are often pre-paid plans where consumers pay for their electricity upfront without a long-term commitment. While you may pay for a month’s worth of energy at a time, they don’t run month-to-month.

Both these types of plans offer flexibility, often sought after in the volatile world of energy prices, especially in regions like Texas.

How do month-to-month electricity plans work?

Month-to-month electric plans operate on a simple principle: You pay for the energy you consume each month without being tied to a long-term contract. These plans’ rates can vary based on the wholesale cost of electricity, meaning they can fluctuate from one month to the next.  

Many providers, like Gexa Energy, offer a range of electricity plans that cater to different needs. If you’re considering a month-to-month plan, it’s crucial to understand the underlying rate structure. For instance, a variable rate may change based on market conditions, while a fixed rate remains the same throughout the plan’s duration. And with a month-to-month plan, you’ll most likely be paying a variable rate for each month.  

Most people assume that month-to-month energy plans require large deposits, but that’s not always true. It’s best to shop around and compare rates and requirements from multiple providers before choosing the one that’s right for you.  

How do no-contract electricity plans work?

Much like month-to-month plans, no-contract plans let you pay for your electricity on a monthly basis. However, month-to-month plans typically require a contract that stays in effect until you cancel it at the end of a given month. As you would imagine, no-contract plans don’t need a contract and typically require you to purchase your energy at a fixed monthly rate at the start of each month and then do so again the next month.

The pros and cons of month-to-month energy plans

Every energy solution has its unique set of advantages and disadvantages. Here’s a look at the pros and cons of month-to-month plans:


  1. Flexibility: No long-term commitments mean you can switch providers or plans as your situation changes.
  1. No Early Termination Fees: You can typically exit a month-to-month plan without incurring penalties.
  1. Potential for Lower Prices: In months when energy prices drop, you might pay less than customers on fixed-rate plans.


  1. Price Volatility: Your bills can fluctuate, making it challenging to budget consistently.
  1. Potentially Higher Prices: In peak demand months, you might end up paying more than customers on fixed-rate plans.
  1. Lack of Price Security: Without a fixed rate, there’s no protection against potential price hikes.

When to sign up for a month-to-month electricity plan

Opting for a month-to-month electric plan might suit people who want to avoid long-term commitments or have seasonal or unpredictable electricity needs. These types of plans allow you to cancel or switch providers at the end of a given month without penalty, and that might be ideal for you if you fit into any of these categories:

  1. Short-Term Residents: If you’re in an area for less than a year but longer than a month.
  1. Those Awaiting Price Drops: If you anticipate a seasonal decline in energy prices and don’t want to lock into a higher price.
  1. People Seeking Flexibility: If you’re unsure about your long-term living situation or energy consumption needs.

However, if you prefer predictability in your bills and are staying in one place for an extended period, you might consider fixed-rate plans or longer contract terms.  

Navigating Texas electricity markets

Most of the Texas electricity market is deregulated, meaning consumers can choose their electricity provider. Residential and commercial consumers can shop for electricity plans based on their energy usage and budget.

The Texas electricity market offers a broad spectrum of choices for consumers. When choosing an electricity provider, understanding your energy needs, consumption habits, and budgetary constraints is crucial.

Whether you’re leaning towards month-to-month electricity plans or considering other options, it’s best to weigh the pros and cons and choose what best aligns with your energy requirements. At Gexa Energy, we’re here to assist you in choosing the right electricity plan tailored to your needs.

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Gexa Energy purchases renewable energy credits (RECs) from renewable generation resources throughout North America to match 100% of the energy sold under your electric plan. The RECs Gexa purchases represent the renewable attributes of power generated from a variety of renewable energy sources, including, but not limited to, the sun, wind, geothermal, hydroelectric, wave or tidal energy, and biomass or biomass-based waste products, including landfill gas.