How to Avoid Paying an Early Termination Fee (ETF)

If you're a Texas resident in an electricity contract, the idea of paying an early termination fee (ETF) can be frustrating. This is especially true if you're looking to switch providers to enroll in a better plan.

However, an existing Texas state law and some careful planning can help you avoid paying these costly fees. Below, we’ve listed some ways you can avoid paying an early termination fee.

Tip: If you don’t know if your plan has an early termination fee, you can contact your provider or look at your electricity facts label (EFL).

Time Your Switch to the End of the Contract

Most electricity contracts in Texas are between 1 and 36 months in length. But they can be longer in some cases. If you're looking to switch providers without paying an early termination fee, the easiest method is to just wait until your contract is near its expiration.

In Texas, you're allowed to switch electricity providers without penalty during the last 14 days of your contract. Retail Electric Providers (REPs, or simply “providers”) are legally required to notify you before your contract ends, giving you ample time to shop for a better plan.

Tip: Set a reminder 30 days before your contract expires so you can shop for rates without rushing.

Provide Documentation of a Move

Texas law protects you from having to pay an ETF if you move to a new location. If you're moving to a different part of Texas, out of state, or just next door, you can avoid this fee by providing proof of your move. The type of documents(s) you need to provide can vary depending on your provider. However, here are some of the documents that may be accepted:

• Lease agreement for the new residence

• Closing documents for a new home purchase

• Utility bill for the new residence in your name

• Post office change of address confirmation

• Forwarding address

Tip: Notify your current provider about your move as soon as possible, as they'll require documentation to waive the fee. If they’ve already charged you, you can still get a refund if you provide the proper documentation requested.

Watch for Rate Changes

If your provider increases your rate or changes other terms of your contract without your consent, you are entitled to cancel the contract without paying an early termination fee. This isn’t likely, but it’s a good idea to keep in the back of your mind.

Tip: Keep an eye on your bill statements for any unexpected changes, and contact your provider if you see adjustments. Variable-rate energy pricing can change monthly, but fixed-rate energy pricing has to stay the same throughout the duration of the contract.

Use a Grace Period for Switching Plans

Texas offers a grace period during the first 3 days after enrollment into a new plan. If you realize early on that the plan isn't right for you, this grace period allows you to switch to a different plan or provider without penalty. Check your contract or call your provider to verify if you qualify for this option.

Important Note: Grace periods are only available to customers who are switching their electricity provider at a current location. If you are moving into a location and establishing power for the first time in your name there, you do not have a grace period. 

Negotiate with Your Provider

If you're considering switching electricity providers before the end of your contract, don't hesitate to contact your current provider. In some cases, they may offer lower rates or alternative plans that make it worthwhile to stay, especially if you mention that you’re looking at competitive rates.

Tip: Providers may be willing to waive fees or offer incentives to keep your business, so it’s always worth asking.

Shop for Electricity Plans Without Early Termination Fees

When shopping for new electricity plans, look for offers that don’t include early termination fees. Many energy providers in Texas, including prepaid electricity companies, offer no-contract plans or flexible month-to-month options. While these plans may have higher rates, they give you the flexibility to switch providers whenever you find a better deal—without worrying about early termination fees.

Final Thoughts

While early termination fees can be an obstacle for Texas electricity customers, understanding your contract and knowing your rights can help you avoid paying them. Always plan ahead, monitor your contract’s expiration date, and take advantage of legal protections when applicable. By staying informed and proactive, you can avoid unnecessary fees and maximize your savings on electricity.

Ready to Shop for a Better Electricity Plan?

GetPower is your trusted source for all things related to Texas electricity. Our goal is to help Texans stay informed and confidently explore competitive electricity rates in the state. Whether you're monitoring market trends or searching for the best electricity rate for your home, GetPower provides all the information you need.

For more information, see our blog How to Choose the Best Electricity Plan in Texas.