Energy bills are rising in Texas. Here's why — and what actually works.
Verified numbers from the EIA and ERCOT, the honest ranking of what saves money in a the Texas Gulf Coast home, and the rebate programs that are real right now (and the ones that aren't yet).
What's happening with electricity prices in Texas?
Short answer: Texas residential electricity averaged about 16.4¢ per kWh in March 2026 per the U.S. Energy Information Administration — up roughly 7% from a year earlier — and the grid operator expects a record summer. Rates here still sit below the national average, but the direction is up, and Gulf Coast homes feel it more than most because cooling dominates the bill.
Texas average residential rate
The average all-in residential electricity price in Texas was 16.39¢ per kWh as of March 2026 — up about 7% from 15.28¢ a year earlier. April 2026 EIA data shows 16.99¢ vs. 15.52¢ in April 2025.
Source: EIA Electric Power Monthly (March–April 2026)
Projected 2026 summer peak demand
ERCOT projects summer 2026 peak demand near 98,000 megawatts — roughly 15% above the all-time record of 85,508 MW set in August 2023.
Source: ERCOT Long-Term Load Forecast (April 2026)
Cooling's share of a summer bill
Air conditioning is typically 50–70% of a Texas home's total electricity bill in peak summer months — and Gulf Coast humidity keeps systems running longer than anywhere else in the state.
Source: EIA residential data; Texas retail market analyses (2026)
ERCOT's 2032 demand forecast
ERCOT's preliminary long-term forecast projects up to 367,790 MW of demand by 2032 — more than four times today's record — driven overwhelmingly by data centers and other large loads.
Source: ERCOT preliminary Long-Term Load Forecast, PUCT filing (April 2026)
Why are Texas electric bills going up?
Four forces, all pushing the same direction. None of them are within a homeowner's control — which is exactly why the second half of this guide focuses on the part that is: how much electricity your home needs in the first place.
Data centers and grid demand growth
ERCOT received 225 new large-load interconnection requests in 2025 alone — about 70% of them data centers. Serving that growth requires new generation and transmission, and regulators openly warn the buildout puts upward pressure on everyone's rates. Texas Senate Bill 6 (2025) now forces large loads to shoulder more of those costs, but the demand wave is still building.
Transmission and delivery costs
The poles-and-wires portion of your bill (CenterPoint delivery charges in most of the Houston–Galveston area) rises as utilities build infrastructure for a bigger, hotter, more crowded grid. Delivery charges apply per kWh — so the less you use, the less of this you pay too.
Extreme weather, more of it
Longer, hotter summers push residential usage up 40–50% in peak months versus spring. Storm hardening after Uri, Beryl, and the derecho years is also baked into delivery rates. On the Gulf Coast, heat plus humidity means cooling systems work harder per degree than in drier parts of Texas.
Natural gas prices set the market
Gas-fired plants still set the wholesale price in ERCOT most hours, so when natural gas costs more, wholesale power follows — and retail fixed-rate offers reprice upward at your next contract renewal.
Here, the electric bill is mostly an air-conditioning bill.
In peak summer, cooling typically accounts for 50–70% of a Texas home's electricity bill — and the Houston–Galveston corridor runs among the most energy-intensive summers in the state, because humidity makes systems work longer per degree of cooling. Dickinson, League City, and Galveston homes routinely see usage climb 40–50% from spring to August.
The upside of that concentration: every improvement to your cooling system, ducts, or envelope attacks the biggest line item on the bill. A 10% cooling improvement here is worth far more than the same improvement in Denver. That's why the ranked list below starts with HVAC.
How do you actually reduce an energy bill on the Gulf Coast?
Ranked by realistic impact for this climate, with the source behind every number and honest notes on cost and payback. No invented dollar promises — the right move depends on your home's weakest link.
- 1
Replace a 10–15-year-old AC with a high-SEER2 heat pump
Impact: Roughly 30% lower cooling costs moving from an old 10-SEER unit to today's 14.3-SEER2 federal minimum — more with 16–18+ SEER2 equipment (U.S. DOE efficiency standards analysis)
Cost: Highest upfront cost — financing available
In a climate where cooling is half the bill, the efficiency of the machine doing the cooling is the single biggest lever you control. Since 2023, no new system sold in Texas can be worse than 14.3 SEER2 — so any system from the 2000s is dramatically outclassed. Heat pumps earn their keep twice here: efficient cooling for nine months, and heating that's far cheaper than electric resistance strips in our mild winters. Right-sizing matters as much as the rating — an oversized unit short-cycles, dehumidifies poorly, and wastes the efficiency you paid for, which is why we start every replacement with a load calculation, not a brochure.
Honest caveat: Only worth it when your current system is old, failing, or grossly oversized. A well-maintained 5-year-old system should stay put.
Explore equipment options - 2
Seal and insulate your ducts
Impact: In typical homes, 20–30% of conditioned air is lost to duct leaks, holes, and bad connections (ENERGY STAR)
Cost: Moderate — often the best payback of any single project
Most Gulf Coast ductwork runs through a 130°F attic. Every leak on the supply side dumps air you paid to cool into that attic; every leak on the return side pulls hot, humid attic air into your system. Sealing with mastic, repairing crushed flex duct, and insulating to R-6 or better delivers cooling you already paid for — and it's one of the first things a Mackey tech checks when a home has high bills and weak airflow.
- 3
Air-seal the house and top up attic insulation
Impact: EPA estimates an average 15% off heating and cooling costs nationally; in our hot-humid climate zone the modeled figure is closer to 9% — still meaningful on a Gulf Coast-sized cooling bill (EPA / ENERGY STAR sealing & insulation methodology)
Cost: Low to moderate
Attic insulation slows the 130°F attic from radiating into your ceiling all afternoon; air sealing stops conditioned air from leaking out around penetrations, top plates, and can lights. A radiant barrier under the roof deck can further cut attic temperatures in our sun-heavy climate.
Honest caveat: Gulf Coast humidity caveat: over-tightening a house without managing ventilation and drainage planes can trap moisture. Sealing here should be done with humidity in mind — not to northern-climate specs.
- 4
Swap a standard electric water heater for a heat pump water heater
Impact: About $550/year for a family of four versus a standard electric tank, with payback in roughly 3 years (ENERGY STAR certified HPWH savings tables)
Cost: Moderate — costs more than a like-for-like tank swap
Water heating is usually the second-biggest energy user after HVAC. A heat pump water heater makes the same hot water with about 75% less electricity, and in a Texas garage it gets a bonus: it cools and dehumidifies the space around it while it runs. If your electric tank is past 10 years old, replace it on your schedule — not the morning it fails.
- 5
Smart thermostat + a real setpoint strategy
Impact: Up to ~10% a year on heating and cooling from an 8-hour daily setback of 7–10°F (U.S. Department of Energy, Energy Saver)
Cost: Low — hardware plus an afternoon
The savings come from the schedule, not the gadget: let the house drift warmer while you're at work, pre-cool before ERCOT's late-afternoon peak, and hold steady in the evening. A smart thermostat just makes the discipline automatic — and many Texas retail plans pay bill credits for thermostat-based demand response enrollment.
Honest caveat: Heat pump owners: big manual setbacks can trigger expensive auxiliary heat in winter. Use a thermostat with heat pump logic and let it manage recovery.
- 6
Maintain the system you already own
Impact: Dirty coils, low charge, and clogged filters force longer runtimes; maintenance restores the efficiency the equipment shipped with (DOE Energy Saver maintenance guidance)
Cost: Lowest — a $49 tune-up, twice a year
A cooling-season and a heating-season visit catch the efficiency killers — dirty condenser coils, weak capacitors, low refrigerant charge, choked filters and drains — before they inflate July's bill or strand you in August. That's the honest math behind Mackey's $49 tune-up and the Happy Home Maintenance Plan: prevention costs less than the electricity wasted by a struggling system, before you even count avoided breakdowns.
See the Maintenance Plan - 7
Tame the electrical-side loads: pool pumps, phantom loads, panel health
Impact: A variable-speed pool pump can cut pumping energy dramatically versus an old single-speed unit; always-on phantom loads add up quietly (DOE Energy Saver)
Cost: Low to moderate
A single-speed pool pump running hours a day is often the largest non-HVAC load in a Gulf Coast backyard — variable-speed replacements are the standard fix, and ENERGY STAR models qualify for utility rebates. Inside, smart power strips kill standby draw from entertainment and office clusters. And an aging, overloaded panel doesn't just waste energy — it's a safety issue. If breakers trip regularly or the panel is warm to the touch, get it inspected before adding new loads like EV charging.
- 8
Pick your retail electricity plan like an engineer, not a marketer
Impact: Choosing a straightforward fixed-rate plan over a gimmick plan routinely matters as much as a major efficiency project — hundreds of dollars a year for many households (Texas Electricity Facts Label (EFL) disclosures)
Cost: Free — an hour of reading
Texas's deregulated market means the same kilowatt-hour can cost wildly different amounts depending on the plan. Bill-credit plans advertise low averages that only materialize at exactly 1,000+ kWh; free-nights plans charge premium daytime rates that punish daytime AC use. Read the Electricity Facts Label: compare the average price at 500, 1,000, and 2,000 kWh — if those three numbers differ sharply, the plan has a gimmick. Power to Choose lists plans but doesn't vet them.
Honest caveat: A rule of thumb from the EFL data: if the 500 kWh and 1,000 kWh rates are within about a cent of each other, it's a straightforward plan.
Which Texas electricity plan type actually costs less?
Texans choose their retail electricity provider — and the plan structure often matters more than the advertised rate. The tell is on the Electricity Facts Label: compare the average price at 500, 1,000, and 2,000 kWh. If those numbers differ sharply, the plan has a gimmick. Power to Choose lists plans; it doesn't vet them.
Straight fixed-rate
The pitch: One price per kWh, every month of the contract.
The reality: What you see is what you pay. The advertised rate is usually higher than gimmick plans' headlines — and usually cheaper across a real 12-month bill.
Best for: Most households. Predictable, no usage targets to hit.
Bill-credit plans
The pitch: A big monthly credit (often $50–$100) drops your average rate.
The reality: The credit only triggers inside a usage band — usually 1,000–1,999 kWh. Use 950 kWh in a mild month and the credit vanishes while the high base rate stays.
Best for: Homes whose usage reliably lands in the band every single month — rarer than it sounds.
Free nights / weekends
The pitch: Electricity is free during off-peak windows.
The reality: Daytime rates are priced at a premium — and on the Gulf Coast, your AC does its heaviest work on summer afternoons, exactly when the meter charges most.
Best for: Night-shift households or homes with batteries that can genuinely shift load.
What rebates and tax credits are actually available in 2026?
This is where homeowners get misled most. The status of every major program, verified as of July 2026 — including the ones that expired and the ones that haven't launched.
Federal 25C Energy Efficient Home Improvement Credit
Expired Dec 31, 2025The 30% federal tax credit for heat pumps, insulation, and efficiency upgrades ended for anything placed in service after December 31, 2025, under the One Big Beautiful Bill Act (per IRS guidance). Installations completed in 2026 do not qualify. If anyone quotes you a price 'after federal tax credit' this year, ask exactly which credit they mean.
Texas HOMES & HEAR rebates (Inflation Reduction Act)
Not yet launched — targeted fall 2026Texas holds $690 million in federal home-energy rebate funding, but the programs are NOT accepting applications yet. The State Energy Conservation Office hired an implementation contractor in April 2026 and is targeting a fall 2026 launch, pending federal approval. SECO has published a fraud alert: there are no approved contractors yet, and past receipts cannot be reimbursed. When they launch, HOMES could offer up to $8,000 for whole-home retrofits and HEAR up to $14,000 for income-qualified electrification.
Utility rebates (CenterPoint Energy and others)
Active nowUtility efficiency programs are the real money available today — CenterPoint Energy, which delivers power across the Houston–Galveston area, runs residential rebate programs for high-efficiency equipment and insulation, with amounts that vary by program year. We track what's current so you don't have to.
Where should you start?
Start by finding your home's weakest link — then use the tools below to make the fix affordable and keep it performing.
Home Health Score
Eight questions, two minutes, free. Find out which system in YOUR home is the weakest link — that's where the savings are.
Score your homeRebate Finder
See which utility and manufacturer rebates are actually active right now for Gulf Coast homeowners — and which programs aren't live yet.
Check current rebatesFinancing
High-efficiency equipment pays back over years — financing spreads the cost so the monthly math works from day one.
See financing optionsHappy Home Maintenance Plan
Twice-a-year precision tune-ups keep the efficiency you paid for. Maintenance is the cheapest kilowatt-hour there is.
See the Maintenance PlanTexas energy bill questions we hear every week
Why is my electric bill so high in Texas right now?
Three forces are stacking: rates are up (Texas residential electricity averaged about 16.4¢/kWh in March 2026 per EIA, roughly 7% higher than a year earlier), summers keep pushing usage 40–50% above spring levels, and grid demand growth — led by data centers — is driving transmission investment that lands on every bill. On the Gulf Coast, air conditioning alone is typically 50–70% of a summer bill, so anything that reduces cooling load cuts the biggest line item first.
What uses the most electricity in a Gulf Coast home?
Air conditioning, by a wide margin — typically half or more of a summer bill in the Houston–Galveston area, because heat plus humidity keeps systems running longer than in drier parts of Texas. Water heating is usually second, followed by pool pumps where present, then appliances and always-on electronics.
What's the single most effective way to lower my energy bill?
It depends on your home's weakest link, which is why we built the free Home Health Score. As a rule: if your AC is 10–15+ years old, replacing it with a high-SEER2 heat pump is the biggest lever (moving from an old 10-SEER unit to today's 14.3-SEER2 minimum cuts cooling costs roughly 30% per DOE standards analysis). If the equipment is newer, duct sealing and attic insulation usually deliver the best payback — ENERGY STAR estimates 20–30% of conditioned air is lost through typical duct systems.
Do smart thermostats actually save money?
Yes — when they change behavior. The U.S. Department of Energy estimates you can save up to about 10% a year on heating and cooling by setting temperatures back 7–10°F for 8 hours a day, and a smart thermostat automates that schedule. One caveat: heat pump owners should use a thermostat with heat pump logic, because aggressive manual setbacks can trigger costly auxiliary heat in winter.
Is the federal energy efficiency tax credit still available in 2026?
No. The federal 25C Energy Efficient Home Improvement Credit expired for anything placed in service after December 31, 2025, under the One Big Beautiful Bill Act, per IRS guidance. The residential clean energy credit (25D) for solar ended at the same time. Utility rebates remain active, and Texas's HOMES/HEAR rebate programs are targeted to launch in fall 2026 — but they are not accepting applications yet.
When do the Texas HOMES and HEAR rebates launch?
Texas is targeting fall 2026, pending U.S. Department of Energy approval — the programs are in design now and are NOT accepting applications as of mid-2026. The state's energy office has published a fraud alert warning homeowners not to sign agreements with anyone claiming to be an approved contractor, because no contractors have been approved yet. When live, rebates could reach $8,000 (HOMES) and $14,000 (HEAR, income-qualified).
Should I set my thermostat higher and just run ceiling fans?
That's one of the best no-cost strategies on the Gulf Coast — a ceiling fan's wind-chill effect lets most people feel comfortable about 4°F warmer, per DOE guidance, and each degree of setpoint you give back reduces AC runtime. Two rules: fans cool people, not rooms, so turn them off in empty rooms — and if your home feels sticky at 76°F, the real problem is humidity control, which is an HVAC sizing and maintenance issue worth diagnosing.
How this guide was sourced
Figures on this page were verified in July 2026 against the sources below, and the page is reviewed by the Mackey Services team as programs and prices change. Where a number is an estimate, we say whose estimate it is. If a rate, rebate, or deadline has changed since, tell us — we'll fix it.
- U.S. Energy Information Administration (EIA), Electric Power Monthly, March–April 2026
- ERCOT Long-Term Load Forecast and preliminary 2026–2032 PUCT filing (April 2026)
- U.S. Department of Energy, Energy Saver guidance
- EPA / ENERGY STAR sealing, insulation, duct, and heat pump water heater methodologies
- IRS guidance on the One Big Beautiful Bill Act (Pub. L. 119-21) energy credit terminations
- Texas State Energy Conservation Office (SECO), HOMES & HEAR program status
Want a pro to find your home's biggest energy leak?
Start with the $49 tune-up or a free estimate — a licensed Mackey Services tech will tell you honestly which of these levers is worth pulling in your home, and which aren't. (281) 317-0631.
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