Texas HVAC Energy Costs
in 2026
Real 2026 numbers from North Texas homes. What incentives are live, what expired, and what actually lowers your bill.
I hear the same April call every year in Plano, Frisco, and McKinney. The March bill came in around $300 on a 2,400 square foot house, and the homeowner thinks something broke. Usually it didn't. A fixed-rate plan expired in the fall, auto-rolled to variable at 21 cents per kWh, and nobody got a letter.
That call is going to repeat across North Texas about 10,000 times this summer. The Texas HVAC energy costs story right now is not the one homeowners think they're in.
Two things you need to know before you read anything else on this topic. First, the federal 25C tax credit that paid up to $2,000 on a heat pump expired December 31, 2025. It is gone. Second, the Texas HEAR rebate program you keep hearing about is not launched yet. No approved contractors, no funding released, no launch date posted.
That leaves Oncor rebates, plan shopping, and tuning the system you already own. That is the real playbook right now. If your AC is down and you need help today, call (940) 390-5676. Otherwise, bookmark our updated federal tax credit guide and keep reading.
Why Your Texas Electric Bill Is So High
Your bill is high because four forces are pushing on it at once. Most articles pick one and blame it. The honest answer is they compound.
Force one: rates
Texas residential rates rose from about 10 cents per kWh in January 2021 to 16.58 cents per kWh by December 2025. That is a 66% increase in five years. The current statewide average sits around 15.23 cents per kWh. Drivers include natural gas prices (gas still generates about 42% of Texas power), post-Uri regulatory costs, surging demand from data centers and crypto, and transmission infrastructure to connect West Texas wind and solar.
Force two: how much you use
Texas households average 1,096 to 1,176 kWh per month, 25% to 29% above the national average of 863 kWh. We are not paying dramatically higher rates than Illinois or Ohio. We are paying for 6 to 7 months of air conditioning against 105°F afternoons.
Force three: summer seasonality
The gap between your January bill and your August bill in Oncor territory is brutal. A typical DFW home runs about $105 to $110 in February and $225 to $235 in July and August. The equipment hasn't changed. The rate hasn't changed. You are running the compressor 14 hours a day instead of 2.
Force four: expired contracts
This is the quiet killer. When a fixed-rate contract ends, most REPs auto-roll customers to variable month-to-month rates running 18 to 25 cents per kWh. Homeowners rarely notice until the July bill arrives.
| Month | Avg kWh (Oncor DFW) | Avg Bill |
|---|---|---|
| January | 850 | $108 |
| April | 1,050 | $145 |
| July | 1,700 | $225 |
| August | 1,780 | $235 |
| October | 1,100 | $150 |
Source: ElectricRates.org · Data: U.S. EIA
If your bill is climbing faster than your neighbors', odds are it's force four. That one is free to fix. See our electricity shopping guide and the summer bills deep-dive for the full breakdown.
How to Read Your Oncor Bill: Supply vs Delivery vs Taxes
About 40% of your Texas bill goes to Oncor regardless of which REP you pick. You can't shop your way out of it. That is why two neighbors on the same street, same size house, same usage, can be on completely different REPs and still have bills within $20 of each other. The shoppable portion is smaller than the marketing makes it sound.
Your bill has four components, and only one is truly competitive:
- Energy supply charge (REP rate × kWh plus a base fee). Shoppable at powertochoose.org or choosetexaspower.org.
- TDU delivery charge (Oncor, CenterPoint, AEP Texas, or TNMP depending on your address). Roughly 5 to 6 cents per kWh plus a $4 to $8 monthly base. Not shoppable.
- Market charges (grid reliability, demand adjustments). Pass-through. Not shoppable.
- Taxes and fees (MGRT, PUCT assessment). Usually 2% to 4% of your total. Not shoppable.
Worked example for a 1,500 kWh July bill on a Plano home, showing what actually goes where:
| Line Item | Rate | Amount |
|---|---|---|
| Energy supply (REP) | 10.5¢/kWh × 1,500 | $157.50 |
| REP base fee | flat | $9.95 |
| TDU delivery (Oncor) | 5.5¢/kWh × 1,500 | $82.50 |
| TDU base charge | flat | $4.39 |
| Market / reliability | ~0.3¢/kWh | $4.50 |
| Taxes and PUCT assessment | ~2.5% | $6.47 |
| Total | $265.31 | |
| True effective rate | $265.31 / 1,500 kWh | 17.7¢/kWh |
The plan said 10.5 cents. The effective rate is 17.7 cents. That gap is Oncor pass-through plus taxes. One more trap on "cheap" plans: minimum usage clauses. A 9-cent plan with a "$100 usage credit at 1,000 kWh" becomes a 16-cent plan if you use 950 kWh. Read the Electricity Facts Label carefully. Our electricity shopping guide walks through the math plan by plan.
What Your Central AC Actually Costs to Run in a Texas Summer
Most homeowners have no idea what cooling alone is costing them. They look at the total bill and guess. Here is the real number.
A 3.5-ton central AC in a typical 2,000 square foot Frisco or Plano home draws around 3.8 kW on average when running. In July, that system runs about 14 hours a day. At 15.23 cents per kWh:
3.8 kW × 14 hrs × 31 days × $0.1523 = $251.76 per month
That is cooling alone. Add TDU delivery on those cooling kWh (about $75 to $90 more), then add your baseload (lights, fridge, laundry, water heater, electronics) which runs $60 to $80 in summer, and you land at $385 to $420 for a tuned mid-efficiency system at a 78°F setpoint. That is your July bill for a typical home running properly.
Every degree below 78°F raises your cooling cost 3% to 5% because the compressor runs longer chasing the setpoint against a hotter delta. The difference between 78°F and 72°F is roughly 20% to 30% more kWh. On a $250 cooling bill, that's $50 to $75 extra every single month.
| Home Size | AC Size | 78°F July | 74°F July | 72°F July |
|---|---|---|---|---|
| 1,500 sq ft | 2.5 ton | $180 | $215 | $230 |
| 2,000 sq ft | 3.5 ton | $252 | $300 | $325 |
| 2,500 sq ft | 4 ton | $320 | $385 | $415 |
| 3,000 sq ft | 5 ton | $400 | $480 | $520 |
These numbers assume the system is tuned. On a typical 12-year-old Plano service call, I'll pull a run capacitor off the condenser and find it reading low on its rated microfarads. A weak cap forces the compressor to pull more amps just to start and stay running. Dirty coils, low refrigerant, or weak capacitors can add 10% to 20% to your cooling costs without changing anything else on your bill. That is $25 to $50 a month leaking out because nobody cleaned a coil. A proper AC tune-up usually pays for itself in one summer.
If your July bill is running $500 or more on a 2,000 square foot home at reasonable setpoints, something is wrong with the system. Don't blame Oncor until you've had it checked.
HVAC Rebates and Tax Credits: What Works Right Now
There is currently no federal HVAC tax credit. None.
The One Big Beautiful Bill Act that President Trump signed on July 4, 2025 terminated both Section 25C (efficiency credit, up to $3,200) and Section 25D (residential clean energy credit, 30% for solar and geothermal) effective December 31, 2025. I've had several customers this spring ask me about "the $2,000 heat pump credit." I hate delivering this news, but it's gone.
Federal credits (expired)
Section 25C expired 12/31/2025. The $2,000 heat pump credit, $600 AC or furnace credit, and $2,000 insulation credit are not available for 2026 installs. The IRS treats expenditures as made when installation is completed, so anything placed in service after 12/31/2025 doesn't qualify. 2025 installs can still be claimed on your 2025 federal return using IRS Form 5695 (DOE reference). Section 25D (30% solar and geothermal credit) is also terminated.
Texas HEAR/HOMES rebates (not launched as of April 2026)
SECO has $690M allocated ($346M HOMES, $344M HEAR). RFP responses were due July 30, 2025. As of April 2026, no program implementer has been selected, no contractor list is posted, no launch date announced. SECO says plainly: do not enter any agreements contingent on these rebates. If a contractor tells you they can pre-sell you an $8,000 heat pump rebate, walk away.
Oncor rebates (active, Jupitair's primary territory)
This is what actually works right now. If you're in Frisco, Plano, McKinney, Allen, Prosper, The Colony, Little Elm, or Addison, you're in Oncor territory. The Home Energy Efficiency Standard Offer Program covers:
| Measure | Requirement | Rebate |
|---|---|---|
| Central AC or heat pump (standard) | SEER2 15.2+ ENERGY STAR | Up to ~$600/unit |
| Central AC or heat pump (tiered) | SEER2 16+ | ~$150 more per unit |
| Smart thermostat (mandatory on HVAC installs) | DOE-listed model | Up to $65 |
| Heat pump water heater | ENERGY STAR | Up to $500 |
| Low-income weatherization (2-5 ton) | Income qualified | $2,100 to $3,500 |
Two rules that trip people up. First, homeowners cannot apply directly. The rebate has to come through an Oncor-approved Participating Service Provider. Second, funding is capped and first-come, first-served with an annual deadline. Don't wait until the last quarter.
Other NTX utility territories
A small slice of Frisco's outer edges and parts of Denton County are CoServ, not Oncor. CoServ currently has no HVAC rebate program. They do offer Rush Hour Rewards ($10/month bill credit) with Google Nest enrollment. CenterPoint (Houston area) runs a separate program at up to $500 per heat pump plus a $75 thermostat rebate.
Stacking math (what you can actually combine)
Take an $8,800 new SEER2 16+ heat pump install in Plano:
- Base cost:$8,800
- Oncor standard rebate:-$600
- Manufacturer rebate (typical spring promo):-$500
- Dealer installation credit:-$300
- Net:$7,400
That is real money, but it's about $2,000 less than it would have been in 2025 with the 25C credit stacked on top. If you were on the fence about replacement, the math got worse, not better. Full program details live on our rebates page, and I'll update it the moment HEAR launches.
Shopping Your Electricity Plan: The Fastest Way to Cut Your Bill
The single fastest way to cut your Texas electric bill is not a new AC. It is re-shopping your plan. Zero capital cost. You can do it in 15 minutes tonight.
A competitive 12-month fixed rate on ComparePower as of April 2026 runs 7.6 to 8 cents per kWh. An expired variable plan runs 18 to 25 cents per kWh. On 1,000 kWh per month, that's a $100 to $170 gap every month, or $1,200 to $2,040 per year.
Four steps to shop correctly
- Check if your contract expired. Log in to your REP account or call them. Ask for your current rate and contract end date in writing.
- Shop at the right kWh tier. Most Texas homes use 1,000 kWh monthly on average, but summer runs 1,500 to 1,800. Check plan pricing at 1,000 and 2,000 kWh tiers. Some plans look cheap at 1,000 and get expensive at 2,000.
- Read the Electricity Facts Label. Watch for minimum usage fees, $9.95 monthly base charges, and "bill credit" clauses tied to specific usage bands.
- Pick contract length carefully. 12 months gives flexibility. 24 to 36 months locks rates during a volatile period but you pay an early termination fee if you move.
Current NTX competitive plans (April 2026 snapshot)
| Plan | Term | 1,000 kWh Rate | Notes |
|---|---|---|---|
| APG&E SimpleSaver 15M | 15 months | 7.6¢/kWh | Flat rate, no usage credits |
| Cirro Bill Bonus 12M | 12 months | 7.8¢/kWh | Flat rate |
| TXU Energy Smart Edge 12M | 12 months | 13.9¢/kWh | Name-brand premium |
If your current rate is above 12 cents per kWh on a 1,000 kWh bill, shop today.
Source: ElectricRates.org · Data: U.S. EIA
Solar buyback plans (if you have rooftop solar)
This is where most solar homeowners leave real money on the table. REP buyback rates vary wildly. Green Mountain Energy pays around 8.5 cents per kWh with month-to-month rollover and an annual true-up. Gexa Solar Export Saver pays a flat 3 cents per kWh. Rhythm Energy pays ERCOT wholesale, averaging 3 to 5 cents per kWh with no rollover. On a 500 kWh/month export system, that spread is $27.50 per month, or $330 per year, or $6,600 over a 20-year system life. Pick the wrong buyback plan and your solar ROI extends by years. Full comparison on our electricity shopping page.
ERCOT and the Grid: Reliability and Your Bill
Summer 2025 set a new Texas demand record, and most homeowners never heard about it. ERCOT peaked at 83.9 GW on August 18. The grid did better than anyone post-Uri expected.
Three numbers to remember. Zero Energy Emergency Alerts issued all summer. Zero conservation appeals. Battery storage injected 6,300 MW on July 11, covering 9.2% of peak demand that day. Reserve margins held at 10% to 15% through every heat wave. This is not the 2021 grid.
The short answer on grid reliability: the risk of a Uri-style catastrophic failure has meaningfully declined. Battery storage (14,137 MW installed and growing) is changing the math on evening peak hours. Generation interconnection has caught up to most of the post-Uri demand surge.
The longer-term concern is different. Texas demand is projected to grow from roughly 85 GW today toward 145 GW within five years. The drivers are data centers, AI compute, crypto mining, and industrial load. That is a 70% demand increase in five years. Generation build-out is the structural challenge, not current reliability.
What this means for homeowners: wholesale prices are climbing. That filters into variable-rate plans and next year's fixed-rate offers. The 7.6 cents per kWh plan available today will probably not exist in 2027. Lock a fixed rate while they're available. Texas energy efficiency programs saved 602 GWh and cut summer peak demand by about 610 MW in 2024 at roughly 2 cents per kWh. Efficiency is one of the cheapest grid resources we have. Full grid context lives on our ERCOT and grid page.
SEER2, R-454B, and Whether to Repair or Replace Your AC
A refrigerant recharge that cost $195 in 2023 now costs around $580. Same service, same labor, same amount of gas. The difference is EPA's R-410A production ban took effect January 1, 2025, and the price of R-410A refrigerant tripled.
The R-410A economics
Wholesale R-410A moved from $8 to $12 per pound in 2024 to $25 to $45 per pound depending on market. Industry forecasts put further increases at 15% to 30% per year through 2029 as existing stockpiles deplete. Servicing existing R-410A systems is still legal and will remain so for the life of the equipment. But repairs are getting expensive fast.
The R-454B transition
New residential HVAC equipment manufactured after January 1, 2025 uses R-454B, an A2L (mildly flammable) refrigerant with lower global warming potential. Equipment costs 8% to 10% more than late-2024 R-410A gear. R-454B cannot be retrofitted into R-410A systems. If your old coil fails, the whole system gets replaced, not converted.
What SEER2 you actually need in Texas
Federal minimum for the DOE South Region (Texas): SEER2 14.3, effective January 1, 2023. This is equivalent to the old SEER 15. Any unit installed below SEER2 14.3 is illegal. Stop benchmarking against SEER 10 systems from 15 years ago.
| Tier | SEER2 | What You Get |
|---|---|---|
| Legal minimum | SEER2 14.3 | No rebates, basic efficiency |
| ENERGY STAR / Oncor standard rebate | SEER2 15.2+ | ~$600 Oncor rebate |
| Oncor tiered rebate | SEER2 16+ | ~$750 Oncor rebate total |
| Premium variable-speed | SEER2 18-20+ | Best long-term ROI, 20-25% less cooling energy |
Repair vs replace math (11-year-old R-410A system)
Suppose your 11-year-old system is quoting $1,600 for a coil replacement plus a slow leak. Projected refrigerant recharge cost over 5 years runs roughly $1,800 (three recharges at escalating prices).
Repair pathway
$1,600 coil + $1,800 refrigerant over 5 years = $3,400 with a system that is still 11 years old.
Replacement pathway
$8,800 new SEER2 16+ minus $600 Oncor minus $500 manufacturer = $7,700 net, 10-year warranty, no R-410A risk.
My rule of thumb. If your R-410A system is 10+ years old and has an active refrigerant leak, replacement is almost always the better 5-year math. If it's 6 years old with a capacitor problem, fix it. I'll tell you either answer honestly on a service call. Our AC repair and replacement teams work the math on every quote.
Lowering Your Texas Electric Bill Without Buying New Equipment
You can cut $50 to $100 off your July bill this week without spending more than $200. Here's the exact list I give homeowners who can't afford a new AC right now.
- Set your thermostat to 78°F when home, 82°F to 85°F away, 80°F to 82°F sleeping. Every degree below 78°F adds 3% to 5% to cooling costs. With a ceiling fan running, 78°F feels like 74°F at a fraction of the energy.
- Close west-facing blinds by noon. Afternoon sun through an uncovered west window can add 15% to your cooling load. Blackout blinds or cellular shades on west and southwest windows during 12 PM to 6 PM is free money.
- Change your filter monthly in summer. A dirty filter restricts airflow, forces the blower to work harder, and can ice up the coil. Monthly filter changes save 10% to 15% on cooling energy. Buy a 12-pack and stop thinking about it.
- Pre-cool before 1 PM if you're on a time-of-use plan. Peak hours on most TOU plans run 1 PM to 7 PM. Drop the house to 74°F by noon, let it drift to 80°F by 5 PM. Homeowners who shift heavy loads this way typically cut 15% to 20% off their peak-season bill with no equipment change.
- Audit your plan and check for expired contracts. This is worth more than everything else on this list combined if your contract expired. See the plan shopping section above.
- Unplug phantom loads. Cable boxes, gaming consoles, chargers, and old TVs pull 5 to 20 watts even "off." On a typical home that's $10 to $15 per month. Smart power strips fix it for $20.
- Schedule an AC tune-up before June 1. Dirty coils, low refrigerant, weak capacitors, and restricted airflow each add 10% to 20% to cooling energy use. A tune-up typically pays itself back within 6 weeks.
- Install a smart thermostat. Ecobee or Nest typically save $131 to $145 per year, payback in 1.5 to 2 years. If you're about to replace your HVAC system, Oncor requires a smart thermostat for rebate eligibility anyway, so factor it in.
A common Dallas-area playbook
2,000 square foot home, July bill around $280. Raise the thermostat from 72°F to 78°F, program 82°F to 85°F away, change filters monthly, schedule a tune-up before summer. Bills typically drop toward $190 for under $200 out-of-pocket. That's the playbook, not a promise. Your house, your shade, and your system decide the final number.
Don't buy a $12,000 new AC to solve a $200 problem. Our full bill-lowering playbook goes deeper. For a pre-season tune-up from someone who actually checks refrigerant charge and capacitor draw, call (940) 390-5676.
Articles in This Section
Summer Electric Bills in North Texas
Why your summer bills spike and what's normal
How to Lower Your Summer Electric Bill
12 proven strategies ranked by impact and cost
Texas HVAC Rebate Guide
Utility rebates by provider and how to claim them
Federal Tax Credits (25C) Guide
What expired on 12/31/2025 and what's left for 2025 installs
Texas Electricity Shopping Guide
How to shop rates in the deregulated market
ERCOT Grid & Your HVAC
Texas grid reliability, demand response, and your bill
Texas HVAC Energy Costs FAQ
The questions I actually hear on service calls
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