When shopping for a new electric company, many consumers simply look at a list of plans and choose the one that looks like it has the cheapest electricity rate. But in Texas, the advertised electricity rate doesn’t tell the whole story.
When you get your first electric bill, you might be surprised that you aren’t getting the rate you thought you were getting. This is because electricity rates on Texas electric plans can change dramatically depending on how much electricity you use. Even if you thought you were getting a fixed rate electricity plan, your electric bill and the effective electricity rate can fluctuate quite a bit from one month to the next.
Electric companies in Texas are free to price their energy plans however they want. Some plans are very simple and straight forward. Others are more complex and include multiple components that can lead to big swings in your electricity bill.
To help consumers choose the best electricity plan for them, Vault Energy Solutions has created the Vault Price Predictability Score. This is a score on a 5 point scale that gives you an idea how stable your electricity bill will be from one month to the next. This shouldn’t be the only determining factor in deciding on a plan but price predictability is an important consideration for many consumers.
How the Price Predictability Score works
Here are examples of plans that rank 1-5 on the Vault Price Predictability Score.
Price Predictability Score 1 out of 5
This represents the lowest level of price predictability. This level would include plans that are indexed to the wholesale price of electricity. Wholesale electricity rates in Texas are extremally volatile.
Consumers learned the hard way in the winter of 2020 that indexed electricity rates could lead to ruinous electric bills. One electric company that sold wholesale rate indexed plans to Texas consumers went out of business after their customers received electric bills of thousands of dollars for just a couple of days of power. Fortunately, these types of plans are no longer allowed to be sold to residential electricity customers in Texas.
Price Predictability Score 2 out of 5
Variable rate electricity plans are examples of plans that score a 2 on our scale. As the name implies, the rates on these plans can vary from month to month. When you don’t have a contract in place, the electric company can change the rate at any time. Occasionally, electric companies in Texas will advertise attractive teaser rates. But if these are variable rate plans, your cost can jump substantially after the first month.
If you have previously signed a fixed rate contract you could be automatically transferred to a variable rate plan once your term has expired. If this happens, you should look to either sign a new long term contract with your current provider or shop for a cheaper rate elsewhere.
Price Predictability Score 3 out of 5
Here is an example of a plan that scores a 3 out of 5. It is a bill credit plan. This is a popular style of plan in the market. Bill credit plans can be good deals if you get the right plan. But they can sometimes be tricky and lead to larger than expected bills. To find a good bill credit plan, look for a plan with a low energy charge and a relatively small bill credit. A large bill credit may seem attractive but if you fail to meet the usage requirements for a particular month, your bill can be a lot higher than you expected.
Plan: Base Saver III 12
Company: Just Energy
Pricing Details:
Term Length: 12 Months
Plan Type: Fixed Rate, Bill Credit
Energy Source: 15% Renewable
500 kWh Rate:17.7¢
1000 kWh Rate: 9.9¢
2000 kWh Rate: 13.5¢
Rate Breakdown
Energy Charge: 12.9¢
Base Charge: $0.00 per Month
Bill Credit: $75.00 per Month if usage is above 1000 kWh
TDU Meter Fee (Oncor): $3.42
TDU per kWh Fee (Oncor): 4.1543¢
The chart below shows the price you will pay depending on your electricity usage. You can see there is a big drop in cost just as you reach 1000 kWh in usage. But if you use just a little bit less than that, your electricity rate will be $75 higher.
Price Predictability Score 4 out of 5
The Secure 24 plan by Veteran Energy is an example of a plan with a price predictability score of 4 out of 5.
Here are the pricing details.
Term Length: 24 Months
Plan Type: Fixed Rate
Energy Source: 6% Renewable
500 kWh Rate:14.3¢
1000 kWh Rate: 11.9¢
2000 kWh Rate: 11.8¢
Rate Breakdown
Energy Charge: 7.45¢
Base Charge (Minimum Usage Fee): $9.95 per Month for less than 1000 kWh of usage
TDU Meter Fee (Oncor): $3.42
TDU per kWh Fee (Oncor): 4.1543¢
This is a very stable rate plan but it falls short of perfect because it has a minimum usage fee of $9.95 per month if you use less than 1000 kWh per month. This will result in a near $10 difference in your bill from 999 to 1000 kWh.
Price Predictability Score 5 out of 5
The Simple Choice 12 plan by Just Energy is an example of a plan that gets a 5 out of 5. It has a single fixed energy charge that isn’t tier based on usage. It has no Base charge and no minimum usage fee. Your all-in electricity rate therefore stays very consistent regardless of your electricity usage.
Note that even though this plan has a predictable price, the rate is very high. This just shows that while price predictability is one factor in your decision, it’s not the only thing you should look at. Ideally, you will be able to find a plan with a low electricity rate that stays relatively consistent from month to month.