All Texas electric companies must provide a standardized document called an Electricity Facts Label along with each plan they sell. This document is meant to provide the customer with all of the relevant details of the electricity plan.
The document follows a standard format and contains certain key pieces of information you will need to familiarize yourself with before signing a contract with a new energy provider.
A Sample Texas EFL
We will review a sample of an EFL here and discuss the information it contains.
Average Electricity Rates for The Plan
Section 1 is something you will see at the top of every EFL. This spells out what your average electricity rate would be if you used 500 kWh, 1000 kWh, or 2000 kWh of electricity in a month. You will notice that this particular plan has a much cheaper rate at the 1000 kWh usage level.
Electric companies know that these three standard usage levels are what is used to compare their plans against plans from their competitors. With that in mind, they will often design their plans so that they achieve the lowest rate at exactly one of these 3 levels.
The Average Price per kWh is calculated by dividing the total bill amount (excluding any taxes or local assessments) by the total kilowatt hours of electricity used for the period. The total bill amount is determined by applying the various charges and credits that are outlined in section 2.
Calculating Your Electricity Bill
Section 2 shows the pricing components that determine how much you will pay under this plan. There are lots of different pricing components you will find in Texas electricity plans. This example happens to include some of the most common.
Base Charge
This is a flat monthly dollar amount that is included in the plan. For this sample, it happens to be $0. Other plans will charge varying amounts. $9.99 is a common amount. Although, sometimes they can be more. This charge is sometimes also referred to as a monthly subscription or billing charge.
Energy Charge
This is the per kWh charge that your retail electricity provider is charging you. Keep in mind that Texas electric companies make their money by purchasing electricity at wholesale prices from the energy producers and reselling it to consumers.
For this plan, the Energy Charge is 12.9¢ per kWh. Some plans apply multiple pricing levels to the energy charge depending on how much electricity you use. For example, a plan may charge one rate for up to 1000 kWh per month but another rate for usage above that.
Usage Credit
Not all plans have usage credits. This is an example of a bill credit plan. In this example, you will get a $95 credit added to your bill when you hit 1000 kWh for the month. This helps to drop the electricity rate for the plan to it’s lowest level at 1000 kWh.
TDU Delivery Charge (per kWh)
This is a per kWh charge in addition to the Energy Charge. This money goes to the TDU that delivers your power. See more information on Texas TDUs and why these fees are on your bill.
TDU Delivery Charge (per billing cycle)
This is a fixed monthly dollar amount that goes to the TDUs. See the complete schedule of TDU Fees.
EFL Disclosures
Section 3 includes additional information and disclosers about the plan.
Type of Product
Most plans sold in Texas are fixed rate plans. Though some are variable rate.
Contract Term
Contract lengths in Texas can range from 1 to 60 months. 12 months is the most common contract length.
Termination Fees
These are sometimes called cancellation fees. Most plans longer than 1 month have termination fees.
Can my price change?
Even plans with fixed rates can see their price changed if TDU fees go up. The fees are usually pass through to the final consumer
Is this a prepaid plan?
Most electricity in Texas is sold as a post-pay product meaning you pay your electric bill after you use your power. Many companies do offer prepaid electricity plans though.
Does the REP purchase excess distributed renewable energy?
Many electricity providers are now offering solar buy back programs that allow home owners with solar panels to sell their excess power back to the grid.
Renewable content
What percentage of the plan comprises renewable energy. This is typically accomplished through the use of renewable energy certificates (RECs). The state average for renewable energy is 25%.
Final Thoughts
Always review the Electricity Facts Label when you are comparing electricity plans. The advertised rates at the common usage levels do not always tell the whole story. If you don’t understand how your electricity bill is calculated, you might be in for a rude surprise when you open your first electricity bill. In addition the the EFL, each plan sold in Texas also comes with a Your Rights As a Customer (YRAC) document, and a Terms of Service document.