How To Compare Texas Electric Plans

Don’t let sites like PowerToChoose lull you into a $500 mistake. We spell out how we compare electric plans (and how you should, too).

Most electricity shopping websites imply you can find a good rate merely with a guesstimate of your average usage, but savvy shoppers know that retailers rigged that game long ago. The persistence of websites touting that approach — including the PUC’s own PowerToChoose.org — is a big reason Texans with the responsibility to choose their provider consistently overpay.

That’s where we come in. We know what it really takes to find your best rate, and we’re not shy about sharing. Our RateGrinder tool does the heavy lifting that other sites don’t, and all our data and methods are an open book. So whether you’re curious how RateGrinder works or you’re making your own spreadsheet, read on for the internet’s first (and only) detailed guide to comparing Texas electric plans.

Understand “Fixed” Rates

We focus on Fixed Rate plans, as they’e usually the cheapest for most consumers. But “fixed” doesn’t mean “flat”. It means the same pricing terms apply for each month of the contract. Within each month, however, those terms may define rates that vary — sometimes wildly — based on the exact amount of electricity you use.

The pricing for each plan is defined by its Electricity Facts Label (EFL). It is impossible to know the rates at your monthly usages unless you read all the details in the EFL. In particular, you can’t tell a good plan from an overpriced gimmick by the three “Average Price/kWh” numbers on the EFL and sites like PowerToChoose, so ignore them. Your usage varies every month, and a mere 1 kWh shift can change the price drastically. The graph below shows several real-life examples.

Find the Plans

To compare electric plans, first you have to find them. There are 60+ Retail Electricity Provider (REP) websites and 30+ broker sites collectively offering thousands of Texas residential plans. You could search them all, but you likely won’t find cheaper options than those listed on PowerToChoose.org, which is its main strength.

Competitive retailers list their best plans on the state-run PowerToChoose marketplace because it’s where the shoppers are. And since the listings are free, retailers don’t have to boost their prices to cover broker commissions.

If PowerToChoose’s search engine ranked plans by your total costs, we could stop here and call it a day. But it doesn’t, so read on…

Filter Out the Duds

Neither PowerToChoose’s search results nor their “Export Offers” database provide enough detail to successfully navigate the minefield of rate gimmicks. But they do enable weeding out the obvious clunkers. If a plan’s EFL doesn’t claim a fair rate (currently ~12.5 ¢/kWh or better) at any of the 500, 1000, or 2000 kWh/month “Average Price” reference points, then skip it.

That may still leave dozens of options. Sort them by lowest cost at the usage point (500, 1000, or 2000) that’s closest to your monthly average.

Compare Your Total Costs

Here’s the tedious part. Seasoned shoppers know the only way to separate the great plans from the gimmicks is to read each EFL’s pricing terms and make a spreadsheet that computes the monthly and total costs for all your usages. Given the variety of plans and rate types, this can take hours. Arguably, it’s more work than a consumer should have to do to avoid overpaying for a basic commodity like electricity.

That’s why we built and maintain our RateGrinder tool — to fix these key gaps in PowerToChoose. If you’re making your own spreadsheet, you can download and inspect RateGrinder and read our ‘Add a Plan’ page to see exactly how we parameterize plans and calculate costs. In particular, here are some commonly overlooked details:

Normalize the TDU Charges

Each month, you pay two electric companies. You pay your chosen REP to resell you electricity at whatever rate(s) they’ve negotiated, often called the “Energy” charges. And you also pay your Transmission and Distribution Utility (TDU) — i.e. Centerpoint or Oncor — to maintain the power lines that deliver electricity to your home. You can’t choose your TDU, and every residence in their service area pays the same flat fee and usage-based charges each month.

Your REP bills you on your TDU’s behalf. Many times the REP will “bundle” the energy and TDU charges into a single, combined charge. Other times they’ll keep the Energy charges unbundled and “pass through” the TDU charges without markup. The EFL may clearly state the pass-through TDU charges, it may link to a separate web page, or it may leave it to you to figure out they’re not listed (and what they are!).

It gets trickier because TDU charges adjust up or down several times a year. In the “bundled” case, the REP generally absorbs those TDU cost changes over the contract life. In the “pass through” case, your overall costs will change.

When REPs don’t update their posted EFLs to reflect the latest TDU pass-through rates (and many don’t), it takes some research to figure out their original assumption. If the rates have since risen, their plan will cost more than what the EFL and PowerToChoose.org results claim. If rates have fallen, an otherwise good plan hindered by old rates may never show up in your top search results.

By law, the EFL claims at 500/1000/2000 kWh/month must include the TDU charges. If these “Average Price” numbers don’t match the bottom-up calculations, skip that plan.

Where discernable from the EFL, RateGrinder normalizes all plans to the current TDU charges in effect, so you’re always comparing apple to apples. See the RateGrinder ‘TDU_Info’ tab for historical TDU charges and their effective dates.

Cumulative vs. Non-Cumulative Rates

Most plans define cumulative charges for tiers of usage, such as $80 for the first 1000 kWh plus 15¢/kWh for usage over 1000 kWh. Be wary of occasional plans with rate profiles that are NOT cumulative, e.g. $80 for usage up to 1000 kWh, or 15¢/kWh for usage over 1000 kWh. Using 1001 kWh costs $80.15 in the first case, but $150.15 in the second.

Billing Cycles vs. Contract Dates

Virtually all Texans have smart meters, but TDUs and REPs still maintain a “billing cycle” based on the day of the month a worker used to come read your meter. Since you can start a new contract anytime, you’re almost certain to have 13 billing cycles in a 12-month contract: a partial month to align you to their cycle, 11 full months, and a partial month until your contract end date.

Check whether your EFL defines charges by month or by billing cycle. If it states “Energy charges are not prorated for short or nonstandard billing cycles”, consider what effect the extra cycle or split usage might have on any usage-based credits or rates.

Once you’ve selected a plan, RateGrinder helps you pick the right day to switch so you don’t get double-charged for partial months.

EFL Errors

Sometimes, REPs make mistakes and the pricing details just don’t add up to the 500/1000/2000 kWh/month Average Price claims on the EFL and/or PowerToChoose. PUC rules don’t state which EFL verbiage takes precedence, so always doublecheck the EFL math before signing up for a plan.

Non-Recurring Fees

With the cheapest plans now known, there’s one more aspect to consider: “Non-recurring fees” are one-time charges for services the REP may perform to administer your account. Fees vary by REP, and not all REPs charge fees for every service. If you subscribe to paperless billing and Autopay, manage your account solely online, and never miss a payment, you might never incur a fee. In that case we consider fees to be a “tie-breaker”. But if you miss payments and/or get disconnected, they can add up fast.

To find a plan’s fees, read the fine print in both the Terms of Service (TOS) and EFL documents. This is certainly another tedious task to expect of countless Texas consumers. That’s why we do it for you, by distilling a summary table in RateGrinder’s “More Plans” section.

The Right Tool

Sites like PowerToChoose overstate their ability to help consumers shop, misleading them into overpriced plans. Finding your best plan requires reading the EFL details and doing the math for your range of usage months. Doing so leaves nowhere for pricing gimmicks and teaser rates to hide.

The easiest way is to use our RateGrinder tool, which applies the methods above to today’s plans. To give it a try, click below to jump to our home page.

Next: Start Shopping »

Or, if you already have your own spreadsheet, try RateGrinder to doublecheck your results. If you don’t get the same answers after reviewing the tips above, email us your spreadsheet (no macros, please) and we’ll help you find the disconnect.

 

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