What they are

A minimum usage fee is a flat charge some Texas electricity plans apply when your monthly usage falls below a threshold — usually 1,000 kWh. The fee is typically $5-10.

It's not technically a fee for not using electricity. It's a fee the REP built into the plan structure to subsidize the low advertised rate at high usage. When you hit 1,000+ kWh the fee goes away and the plan behaves normally. When you fall below, the fee kicks in and effectively raises your per-kWh rate on everything you did use.

Why they exist

REPs want to advertise low rates. One way to lower the headline rate is to take the fixed monthly overhead (meter-read fees, customer service cost) and charge it only to "unprofitable" months — the light-usage ones. Plans with minimum usage fees aren't necessarily worse for everyone. For a household that always uses 1,200+ kWh, they can be cheaper than a flat-rate plan. For a household with variable usage, they're a trap.

When they hit

Texas weather is the main trigger. Homes that use 1,400 kWh in July can easily use 700 kWh in April or November when the AC is off. Those mild-weather months are when minimum usage fees fire.

Apartments are especially vulnerable. Small square footage + no pool + minimal AC use in shoulder months = almost always below 1,000 kWh.

How to spot them before signing up

Open the Electricity Facts Label (EFL). Scroll to the fee table. Look for language like:

  • "Minimum usage fee: $9.95 applied when usage is below 1,000 kWh"
  • "Base charge waived when monthly usage exceeds 1,000 kWh"
  • "$5.00 monthly charge when usage is less than 1,000 kWh"

These are all variations of the same mechanism. If you see any of them, and your usage ever dips below the threshold, this plan will cost more than it looks.

Plans that don't have them

"Flat-rate" and "no minimum usage" plans. The EFL table will show the same effective rate at 500, 1,000, and 2,000 kWh — a sign that no bill credits or minimum usage fees are distorting the math.

These plans often have a slightly higher headline rate at 2,000 kWh than bill-credit plans. That's the tradeoff: higher ceiling, no floor. For variable-usage households or anyone who doesn't want to think about this, they're usually the safer pick.

The fix if you're on one now

Cancel (eat the fee if there is one) or wait out your term. When you shop the replacement, filter for no minimum usage fee. On this site, the rate-at-500-kWh and rate-at-1000-kWh numbers appear side by side so plans with hidden minimum fees stand out instantly.