Tag: electric

PowerToChoose.org oversimplifies electric plan shopping in a way that is neither effective nor honest. Its superficial search results ignore the hidden rate games that retailers have played for years. As a result, the Texas PUC’s “official and unbiased” site misleads trusting consumers into overpaying by hundreds or thousands of dollars per year.

Consider this example: The average Texas home uses from 840 kilowatt-hours (kWh) of electricity in April to 1740 kWh in August, or about 1200 kWh/month annually. For such a home, PowerToChoose lists these 12-month plan options:

Can you tell the cheapest plan from the one that costs an extra $576? At 1000 kWh/month, all ten plans claim retail rates well below the wholesale price of ~7.5 ¢/kWh. Some users might notice different prices for 500- and 2000- kWh/month and mentally average those three prices over their actual monthly usages. But that approach is futile, and here’s why…

Texas retail electricity providers can define any pricing profile they want in a plan’s Electricity Facts Label (EFL). The EFL must list the price at 500-, 1000-, and 2000 kWh/month, but pricing at any other usage (even 999- or 1001 kWh) can vary wildly. The chart below shows the full rate profiles for the first six plans above. All charge a 3.2 ¢/kWh “teaser” rate in the rare case you use exactly 1000 kWh in a month, which is how they win the search game. But your usage and rate vary each month, which is how they make money.

You cannot tell a good plan from an overpriced gimmick from just the three “Price/kWh” numbers on sites like PowerToChoose. Even deciphering the full rate profile often isn’t enough: Outdated delivery charges, non-cumulative charges, non-recurring fees, and partial billing cycles add layers of confusion and expense that are rarely discussed, except by us.

The Right Way

The only effective way to compare plans is to compute your total cost across each of your usages (NOT their average). This means reading the rate terms in each EFL’s fine print and making a spreadsheet. Doing so reveals that Plan #11 — on page 2 of the results — is the cheapest. Plan #9 is close, but the others on the first page cost up to $580 more.

Plan #	Annual Cost	Amount You’d Overpay
1	$    1,440	$        375	+35%
2	$    1,299	$        234	+22%
3	$    1,590	$        525	+49%
4	$    1,414	$        349	+33%
5	$    1,180	$        115	+11%
6	$    1,116	$          51	+5%
7	$    1,305	$        240	+22%
8	$    1,528	$        463	+43%
9	$    1,069	$             4	+0%
10	$    1,645	$        580	+54%
11	$    1,065	$           –	+0%

All of this is arguably more work than countless Texans should have to do to get a competitive electric rate. That’s why we built and maintain Texas Power Guide’s RateGrinder tool to do the heavy lifting for you. Click below to give it a try. By educating and enabling consumers to find their electric plan, we hope you can put the time and money you save to better use.

Try RateGrinder »

 

Although PowerToChoose serves a valuable role as the marketplace for many low cost plans, consumers today have better options. PTC’s crippled search engine and guidance to compare pricing at only 1000 kWh ignore longstanding evidence that such an approach is broken.^{1 2} As a publicly-funded site with a stated mission to “protect customers”, they have the power to choose to offer a better solution.

This article was updated on 2/7/2018.

Oct ’18 update: After years of neglect, on 8/20/18 the PUC updated PowerToChoose.org to limit the number of plan listings per REP and filter out usage-dependent rates by default. We applaud these changes, as the average PTC user is now less likely to fall victim to gimmicky rates.

However, the changes don’t fix the underlying EFL price disclosure issues noted above, so gimmick rates remain one click away on PowerToChoose, and are still prominently featured on dozens of other shopping websites. Time will tell what, if any, effect the PUC’s changes have on average retail prices, but additional reforms are still needed.