If you just moved to Texas, then you’ll be happy to know Texans have more Retail Energy Providers (REPs) to choose from than any other state. However, understanding Texas’s electricity rates might be confusing at first. After all, it’s important to get an apples-to-apples comparison while shopping around for different providers. To make it easier for Texans to understand and compare energy rates, the Public Utility of Texas (PUC) requires all Retail Energy Providers in the state to provide the customer with an Electricity Facts Label (EFL).
The Electricity Facts Label shows the customer the terms and conditions for that particular rate plan. It will include important information such as the energy rate per kWh, term length, cancellation fees, and any other charges that may apply to the plan. When comparing energy providers, be sure to ask for the EFL if not already provided.
Comparing Retail Energy Providers
Contents
- 1 Comparing Retail Energy Providers
- 2 Breaking down the Electric Bill
- 3 The Average Price per kWh
- 4 How to Calculate the Average Price per kWh
- 5 Example of Calculating the Rate
- 6 Use the Electricity Facts Label to Compare Energy Plans
- 7 Is this a Fixed-Rate or Variable-Rate Plan?
- 8 How Long is the Agreement?
- 9 Is there a Cancellation Fee?
- 10 Are There Additional Fees?
- 11 What is the Source of Power Generation?
The purpose of the Electricity Facts Label is to take the confusion and frustration away from the customers when trying to figure out which rate plan is right for them. Naturally, there are a few questions customers have when shopping around for a lower rate.
- What is the energy rate for this plan?
- Is this a fixed or variable rate?
- How long is the plan for?
- Are there any cancellation fees?
- Are there any additional fees?
- What sources of power generation is the plan derived from?
Knowing the answers to these questions can help the customer make an informed decision about which energy plan will save them the most money. The electricity facts label provided to the customer from the energy provider will answer all these questions.
Breaking down the Electric Bill
Before we jump into the EFL, it’s important to have a basic understanding of energy deregulation and the energy charges that make up the electric bill. The two main charges that make up the electric bill are the delivery charge and the supply charge. If you change retail energy providers, expect to still receive one electric bill from the Local Utility Company (LUC) incorporating both these charges.
Delivery Charge – In Texas, the delivery charge is known as the Transmission and Distribution Utility (TDU) charge. This is the regulated portion of the electric bill and charged to the customer by the LUC. These charges represent the costs of maintaining the power lines needed to safely deliver the electricity to the customers. In the event of a power outage, the customer will report the issue to the LUC.
- Per kWh TDU charge
- Per month TDU charge
Supply Charge – The supply charge is the deregulated portion of the electric bill. This charge represents the cost of generating the electricity the customer is estimated to use during the term of the energy agreement. Texans have the power to shop and choose a lower supply charge on the electric bill.
- Energy charge per kWh
- Base charge per month
The Average Price per kWh
The Electricity Facts Label will provide the average price per kWh the customer can expect to pay based on a given usage. Every EFL will come with the average price per kWh the customer can expect to pay from the usage of 500, 1000, and 2,000 kWh. The average price per kWh will include both the TDU (delivery) charge and the supply charge.
How to Calculate the Average Price per kWh
Every business and household will be different. The average price per kWh will vary depending on the number of kWh the customer uses per month. To determine the average price per kWh, use the following formula:
(Energy Charge per kWh + Per kWh TDU Charge) + ((Per month TDU charge + Base charge per month)/(monthly usage))
Example of Calculating the Rate
Let’s say you’re trying to calculate the average price per kWh based on the following scenario:
Monthly usage: 1,200 kWh
Energy Charge: 5 cents
Base Charge: $8.00
Per kWh TDU Charge: 6 cents
Per Month TDU Charge: $7.00
($0.05 + $0.06) +(($7 + $8)/(1,200)) = 12.25 cents per kWh
Use the Electricity Facts Label to Compare Energy Plans
As mentioned above the TDU (delivery) charges are regulated and will remain the same no matter the Retail Energy Provider you choose. Compare energy plans by looking at the energy charge and base charge provided by each energy provider. These charges will be included in the Electricity Facts Label. The lower the energy charge and base charge, the more you will save.
Is this a Fixed-Rate or Variable-Rate Plan?
The most common energy plans include the fixed-rate or variable-rate plan. The energy market can be very volatile. If you want to have peace of mind, you may want to consider locking in a fixed-rate. This plan will put a ceiling on the price and protect you against any increases in the energy market.
How Long is the Agreement?
The most common term lengths are the 12, 24, and 36 months agreements. It is possible to have shorter- or longer-term agreements. The length of the term is based on the customer’s preference.
Is there a Cancellation Fee?
Most energy agreements will have a cancellation fee if the customer switches providers before the expiration date. However, if you are on a month-to-month plan then you will not have to worry about paying a penalty when you change providers.
Are There Additional Fees?
If you come across a plan that is advertising an extremely low energy rate, then watch out! This plan will likely have additional fees that will be passed onto the electric bill. The Electricity Facts Label will include all fees associated with the plan.
What is the Source of Power Generation?
The majority of energy is generated from conventional methods such as coal, natural gas, and nuclear power. The Electricity Facts Label will include the sources of generation in which your plan is derived from.