The Problem with ‘Power To Choose’

Power To Choose and most other online shopping sites don’t let you compare electric plans over your range of monthly usages, which can cost you hundreds of extra dollars each year. Shopping by only a single electricity usage number — even if it’s your home’s average — almost guarantees you’ll overpay.

Consider this real-life example: For a Houston home that consumes an average of 1500 kWh per month annually, PowerToChoose.org recently suggested these 12-month plan options:

Power To Choose default results
Default results from PowerToChoose.org (2/17/2017)

All ten first-page options tout rates of 5.6 ¢/kWh or better in big text. Pick one with a good company “rating” and you’re good, right? WRONG. Choosing any of those ten will actually cost you an average of 7.9 to 9.8 ¢/kWh. Pick the “4.7¢” plan listed first and you’ll pay $699/year more than necessary.

Why? The devil is in the details that Power To Choose doesn’t implement.

Most importantly, your monthly electricity usage varies over the year, typically doubling or more from the spring/fall month lows to the air conditioned summer peaks. Retailers know this. They also know Power To Choose and most other shopping sites only let you search by a single usage number. So retailers design rate profiles that are low at the one usage you can search for but high most everywhere else, which increases your annual cost. Per the chart below, the “4.7¢” plan ends up costing a hefty 9.8 ¢/kWh over the year.  (The 4.7 ¢ teaser rate never even applies for our example usage range.)

Teaser plan actual costs
“4.7¢” teaser plan actual costs

It doesn’t help that Power To Choose doesn’t even allow searching for plans that are centered on a 1,500 kWh/month average usage. (The “Estimated Use:  1,001 – 2,000 kWh” selection in our example actually sorts results by pricing at 1,000 kWh/month.) But even if PTC offered the option to search at any single average usage, retailers could just design more plans with different teaser points to lure in customers. To truly find the best plan, you must compute and compare pricing across each of your 12 months of usage.

With a proper search tool — such as TPG’s RateGrinder calculator — you can easily identify teaser rates and even work them to your advantage. That’s how consumers occasionally get pricing below the wholesale rate. Our 1500 kWh/month example usage perfectly matches the strengths of the true cheapest offering (shown below) while avoiding it’s weaknesses. The result is an average annual rate of only 5.9 ¢/kWh, for a $699/year savings vs. the “4.7¢” option above. Even if usage shifts a little lower or higher than expected, such an inexpensive baseline easily offsets any minor pricing risk.

Best Plan Actual Costs
Best plan actual costs

Although Power To Choose is valuable as the marketplace for most of the best electric plan offerings, don’t rely on it’s inadequate search engine to actually find your plan. Instead, always shop based on your home’s particular month-to-month usage profile. Texas Power Guide’s RateGrinder calculator provides everything you need to easily find and compare the best plans yourself.

Try RateGrinder

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