Tag: plan

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Electricity Shopping Gotchas

electricity shopping gotchas
Be wary of the games some electricity retailers play

Texas electricity shopping is a minefield of gimmicks and gotchas. The average household overpays by ~$400 annually, while savvy retailers keep inventing new ways to squeeze higher margins from their customers.

To help level the playing field, we list the most common gotchas to watch out for below. How many are you aware of?

Energy-only rates

Each month, you pay both your chosen Retailer for electricity and your local Utility to deliver it. All Retailers bill for delivery on your Utility’s behalf, yet some quote their energy-only costs (without delivery) to appear cheaper. Always compare quotes with delivery charges included. If they aren’t listed, move on.

Usage-dependent rates, credits, or charges

Sites like PowerToChoose condition shoppers to compare prices only at 500-, 1000-, or 2000 kWh/mo, despite their actual usage varying widely over the year. Retailers capitalize with rate gimmicks that appear cheap at those exact usages while charging more overall.

Example: A plan charges a flat $80 for the first 1000 kWh plus 15¢/kWh for usage over 1000 kWh.

That’s only 8 ¢/kWh if you use exactly 1000 kWh/mo. But it’s 10.3 ¢/kWh at 1500 kWh/mo, 11.5 ¢/kWh at 2000, and a whopping 16 ¢/kWh if you only use 500 kWh.

“Non-cumulative” rates

A more extreme version of the above, where using one kWh more can change the rate for your entire month’s usage.

Example: $80 for usage up to 1000 kWh, or 15¢/kWh for usage over 1000 kWh.

Using 1000 kWh costs $80, but using 1001 costs $150.15 (vs. $80.15 in the case above).

Partial billing cycles

If your plan has usage-dependent charges, mind your start date. Most plans count usage per pre-defined “billing cycles”. If you start on a mid-cycle day, you’ll get partial first- and last cycles, or 13 billing cycles for a 12-month plan. Depending on the plan, that can cost you more.

Example: You use ~1500 kWh/month and pick a plan that credits you $95 for using at least 1000 kWh/billing cycle.

If you start (and end) the plan in the middle of a cycle, your first and last [half] cycles will only include ~750 kWh usage and you’ll forfeit one $95 credit.

“Free” nights/weekends/cash back/…

“Free” is the most powerful word in marketing, but there’s usually a catch.

Free Nights and/or Weekends plans tease savings for consumers who shift their usage to off-peak hours. But inflated daytime rates lead most to pay higher average rates. The same goes for plans that bundle gift cards, thermostats, or other freebies. Always do the math.

100% renewable

Wind and solar energy have clear CO2 and pollution benefits, so many Retailers offer them exclusively or as an upsell option.

Unfortunately, the Renewable Energy Certificates (RECs) that underpin virtually all such plans in Texas are completely ineffective. A 100% renewable plan may cost you more, but it makes no difference in the transition to clean energy. Unless it’s your cheapest option, skip the “green” plan.

Wholesale rates

“Wholesale” plans can be good for certain off-peak users, but they’re not for everyone. Real-time rates are highly volatile, and summertime price spikes can quickly erode months of savings. These plans require focused effort and/or home automation to shift usage to lower-priced periods, and higher usage to offset their monthly membership costs.

“Free” plan advice

The psychology of “free” applies to where you shop, as well. All electricity shopping sites must earn money to cover their expenses. If you aren’t paying them to shop on your behalf, Retailers are paying them to sell you plans at higher rates. Guess which costs you more?

Name recognition

Advertising and high-profile sponsorships cost money. So it ‘s no surprise that the Retailers we’re most familiar with tend to charge higher rates for the exact same electricity. (It may be a surprise that those same companies also sell it under less-known sibling brands at a lower price.)

Non-yearly contracts

Summer month electricity costs Retailers extra, which they pass on to you. To appear cheaper, some offer plans that avoid or underweight summer, such as 6- or 18-month plans spanning October to March.

To compare plans of different lengths, always factor in estimated costs for any months they don’t have in common. More details.

Variable rates

With few exceptions, “variable rate” plans are expensive and unpredictable. Retailers can change pricing at their sole discretion, so rates tend to spike dramatically after the promotional billing cycle.

“Bait and switch”

Some Retailers post good deals on shopping sites, then tempt you with a barrage of seemingly cheaper rates when you visit their website to sign up. The new offers are usually of the usage-dependent type (see above) and more expensive, so stay the course to find your original target.

Non-recurring fees

Retailers’ Terms of Service documents detail one-time fees for non-payment, manual payment, disconnection, etc. You can avoid most of these with Autopay, e-billing, and timely payments; otherwise some can get quite expensive.

“Tease and squeeze”

Did you successfully navigate all of the above to nab a cheap rate? Retailers can still count on you forgetting your renewal months or years down the road. When you do, they’ll quietly roll you into an expensive month-to-month plan until you notice.

Win the Game

Knowledge is power, so we share these tips to help Texans get their best rate and save their hard-earned money.

For even more shopping power, click below to let our RateGrinder tool recommend the best plan for your home.

Not in the market for a new plan just yet? Tell our free RateAlert service about your current plan and we’ll monitor daily for better deals until your renewal.

Find Your Best Rate »

 

Did we miss any tricks above? Let us know in the comments.

Related Topics:

How to Shop For Electricity in Texas
Best Texas Electricity Rates

 

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Griddy Review

Griddy logo
Can you save money with Griddy’s wholesale electricity model? It depends…

February 2021 Update
During Winter Storm Uri, Griddy customers incurred extremely high wholesale rates of ~900 ¢/kWh for days. Griddy subsequently filed for bankruptcy and is no longer serving customers. We’ll be updating this article with those details once the final data is available.

What Is Griddy?

Griddy offers a retail electricity plan indexed to the real-time wholesale (or “spot”) price, which updates every 5 minutes per supply and demand. Unlike traditional plans, Griddy does not guarantee a fixed rate over a contract term. Instead, they take a lower overhead approach where customers assume the pricing risks of full spot market exposure. Since there’s no guaranteed rate, there’s no contract term or early cancellation fees.

Griddy charges a $9.99/month membership fee, then passes through all other costs without markup for every 15-minute service interval. Service is prepaid similar to a toll road account. $49 opens your account, which recharges automatically from your debit or credit card when the balance drops to $25.

Griddy is a great option for some users, but it isn’t for everyone. Electricity spot markets are highly volatile, and most consumers don’t understand the risks and effort involved. Prices are low most of the time, but can quickly spike to levels that break household budgets. Just ask anyone on Griddy in August 2019 when the spot rate jumped from 3 ¢/kWh to 900 ¢/kWh for hours. Many who didn’t reduce their usage paid hundreds of dollars for a single day.

The tradeoff is one of reward vs. risk management. Whereas fixed-rate contracts insure the customer against rate changes, Griddy users are “self-insured”. And with self-insurance, you must have the financial means to absorb high prices, take actions to mitigate them, or both. But is the reward worth it?

Savings Claims

Griddy often touts savings versus the Texas average, but that’s a weak benchmark. The average Texan pays a woefully high 11.7 ¢/kWh, mainly due to expired or tricky plans. For those that neglect their utilities, Griddy may indeed save them money. But so would 10 minutes of shopping.

A better comparison is between Griddy and competitive fixed-rate plans. Griddy stakes a claim here, too, asserting that “Real-time rates beat fixed-rate plans every time.”1 They don’t, however, offer any supporting data. So we opted to do the math and sign up for Griddy to sample their service for ourselves.

For transparent comparison, we created the internet’s only Time-of-Use Plans spreadsheet calculator, posted here. Plug in your electricity usage history from SmartMeterTexas.com to compare your 12-month average Griddy rate to the best 12-month fixed rate available at the same start time. Since spot pricing is too volatile to forecast, the Griddy plot lags by 12 months. Comparing over 12 months is key, since electricity pricing varies by season.

Historical Performance

For an average usage, Griddy generally hasn’t beaten the best fixed rate plans. An exception was June 2018, when shortage fears drove fixed rates especially high.

Griddy vs 12-month fixed rates
Historical Griddy rates for the average Houston load

How can this be, if “every REP [Retail Electricity Provider] purchases their electricity from the same price, the real-time wholesale price”2, and Griddy uniquely “cuts out all the needless layers…to keep costs low”3? Some reasons:

  • REPs do buy “wholesale”, but not only on the volatile spot market. Other wholesale forward markets cover from one day to years in advance of delivery. To offer low fixed rates that also insulate customers from the spot market, “layers” of employees constantly shop to secure capacity at attractive prices.
  • Griddy’s $9.99/month membership fee adds ~0.7 ¢/kWh for the average home, or less for homes with higher usage.
  • Griddy downplays ‘Ancillary Services’ charges, which add 17 – 36% atop the spot price on the bills we’ve seen. Exact rates aren’t publicly disclosed, so our calculator assumes 20%.
  • Griddy passes through a 2.5%+25¢ fee for each credit or debit payment. To avoid credit checks and customer defaults, Griddy is prepaid only. But they don’t support free bank drafts like most REPs.

Price Spikes

Last but definitely not least is spot market volatility, aka “price spikes”. The spot market works like a real-time auction, balancing electricity supply vs. demand for every 5 minute interval. As supply gets tighter, prices go up. When it gets very tight, they go up a lot. Sometimes spikes follow predictable events like extreme weather. Other times, a generator or transmission line failure causes issues out of the blue.

The chart above shows the impact of August 2019 spot price spikes on an average Houston home. Two days at ~200 ¢/kWh — including four hours at 900 ¢/kWh — raised the 12-month average rate ~2.5 ¢/kWh, or ~$350/year.

Griddy notes that >$1/kWh spikes are less common than “negative” (<$0/kWh) pricing, which is true. But the magnitude of these spikes, multiplied by the higher usage that drives them, can do sizable damage to electric bills. And while negative energy prices are nice, they rarely go negative enough to offset the TDU delivery charges. So don’t expect to make money running your arc welder at 2:00 am.

Shift and Save

Getting the best price on Griddy requires using less electricity when prices are high. In Texas, that typically means hot summer afternoons from 2 PM to 6 PM when millions of air conditioners are running full blast. Occasionally it’s cold winter mornings from 6 AM to 8 AM. When prices spike, Griddy users are financially motivated to shed or defer as much discretionary load as possible. Air conditioners, heaters, dryers, ovens, electric vehicles, and pool pumps are the first priorities.

How much can you save? That depends on you. The typical Texas usage profile would have cost ~5.4 ¢/kWh plus delivery over 12 months. The key exception is the 12 months prior to August 2019, when the average spiked to ~8 ¢/kWh.

Griddy savings potential examples
Griddy savings potential examples

But what if that same home had deferred 50% of their load whenever prices exceeded 10 ¢/kWh (~2% of the time)? Per the orange line, they’d normally have averaged ~4.8 ¢/kWh, or ~6 ¢/kWh leading up to August 2019. That’s good enough to beat the best fixed rates from Sept 2019 onward. Granted, 2020 didn’t have summer price spikes like 2019 due to COVID-19.

Finally, the pink line shows the incremental savings for a home that averages 2 MWh/month instead of 1. In that case, Griddy’s $9.99/month fee contributes 0.5 ¢/kWh less.

The ability to lower your costs by changing your consumption behavior is Griddy’s main benefit. With a fixed rate, your rate is based on the projected average behavior of all customers. Wholesale plans, however, reward individual efforts to defer usage when prices are high.

Non-Trivial Effort

Shifting your usage takes effort, but Griddy provides tools to help, starting with an excellent app. On your phone or PC, Griddy shows real-time and projected spot prices through the next day. You can slice and dice your past usage, rates, and costs for any timeframe to easily see and learn from usage and price trends.

The app also alerts you to price spikes in real time, so you can you can turn devices off if you choose. The alerts work as intended, but they are not a long-term solution. Manually responding to repeated alerts disrupts daily activities. And when work or life prevent a timely response, alerts can be downright stressful.

Griddy app wholesale electricity price screenshot
Griddy wholesale price display
Griddy app wholesale electricity cost screenshot
Griddy energy usage display

Automation

A more convenient and effective approach is to use home automation. As a first pass, nearly every load listed above can be scheduled with a programmable thermostat or timer to avoid the typical peak hours. This approach too has limits: Shutting off the AC for 4 hours every summer afternoon can impact family dynamics, to say the least.

For better results, Griddy enables event-driven control through IFTTT. IFTTT is a freemium service for implementing simple “If [This], Then [That]” rules. Griddy shares their spot price feed on IFTTT.com, and many appliance manufacturers allow IFTTT-based control. Between the two, users with an internet-connected smart thermostat can specify “If electricity prices exceed 10 ¢/kWh, then raise the AC setpoint 3°F”, or “If electricity prices return to normal, then resume the programmed schedule”. That way, loads are disabled only if/when prices actually spike, which is much less disruptive.

In practice, we experienced IFTTT reliability and response lag issues during the August ’19 price spikes, but Griddy says they’ve since worked with IFTTT to fix them. We also had to set the thermostat to pre-cool our home an extra 2°F from 11 AM to 4 PM so it would stay tolerable even if IFTTT disabled the AC for several hours. IFTTT supports numerous smart thermostat brands. They do not directly support any pool or EV charger brands, although some workarounds exist.

Greener Than Most

For clean energy supporters, Griddy is a compelling choice, but not for the reasons most people expect.

Unlike other retailers, Griddy doesn’t tout “100% renewable” energy backed by Renewable Energy Certificates (RECs), and that’s good. RECs don’t motivate new generation projects, they’re often overpriced, and they give consumers a false sense of accomplishment. Selling plans in Texas backed solely by REC purchases is essentially greenwashing.

Instead, Griddy educates consumers how they use electricity and financially motivates them to reduce or shift their usage. How is that “green”? As overall demand ramps up, grid operators tap resources from lowest to highest cost (and, as it happens, emissions): First wind and solar, then natural gas, and finally coal. Griddy’s price alerts often indicate expensive and dirty coal plants are ramping up to meet demand. But if enough consumers defer their load in response, those plants will stay offline, and the load will eventually be served by relatively cleaner natural gas plants instead. By changing their consumption behavior, Griddy users save money and incentivize a cleaner energy mix.

Of course, you could opt to behave the same way on a fixed rate plan, but would you? Like any insurance, fixed-rate plans decouple behavior from immediate consequences. Consumers feel free to consume, knowing someone else (the REP) is absorbing the impact of peak pricing. Not with Griddy: There’s nothing like a 200 ¢/kWh day to influence how and when you use energy!

Solar and battery storage owners may also benefit from Griddy. These technologies inherently reduce grid consumption during peak demand hours. And for excess generation in any 15-minute interval, Griddy credits customers at the spot rate for energy (but not TDU delivery). Whether Griddy offers the best payback for your system depends on a number of factors, so plug your data into our calculator or get a free, unbiased analysis.

Summary

Direct exposure to spot market prices is risky business. Griddy is leading efforts to bring it to the mainstream, but it’s not for everyone. Scoring low prices takes considerable effort to avoid price spikes, though some folks (like us) may enjoy the challenge.

At a minimum, anyone considering Griddy needs enough cash reserves to buffer highly volatile summer bills. Beyond that, actually saving money with Griddy depends on your circumstances.

If you chronically neglect your electric plan as your retailer ratchets your rate upwards of 12 ¢/kWh, then Griddy may cost you less. But that’s a very low bar that hopefully doesn’t apply to those who’ve read this far!

If you regularly shop your plan, Griddy might still save you money if…

  • Fixed rate offers are relatively high, and
  • Your usage is relatively high, to dilute Griddy’s $9.99/mo fee, and
  • You use home automation to reduce usage during price spikes, or
  • You have an inherently “off-peak ” electricity usage profile (e.g. rooftop solar, or multiple EVs charged overnight).

Everyone’s situation is different, and nobody can predict future spot market prices. Check out TPG’s Time-of-Use Plans Calculator to compare past Griddy performance for your home. Then click here to find your current best fixed rate.

 

Last updated: 9/25/2020

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Reliant “Texas Bonus 24” Plan Review

Reliant Secure 24 plan $600 bonus teaser
How much does a “$600 bonus” cost? A lot more than $600…

We regularly receive flyers for Reliant’s “Texas Bonus 24” electric plan with all the warning signs: “Get a low price”, $600 bonus”, and of course “Limited time offer”. They’ll even offer to discount your current provider’s cancellation fee so you can “take advantage of this deal”.

Curiously, there’s no mention of electricity pricing. You have to call them to learn those details, using the promo code from your flyer.

Once you do you’ll see that this plan is no deal. At 10.2 ¢/kWh (…as of November 2018, see below for updates), the “energy charge” is 4.9 ¢/kWh more than the lowest cost competitor. For the average Houston home, that means paying an extra $1372 to get a $600 rebate, which is a “bonus” for nobody except Reliant. Those with higher usage can expect to overpay even more. And if you sign up and then realize you’ve made a mistake, you’ll incur a whopping $295 cancellation fee.

Don’t fall for high rates masked by cash-back gimmicks. All electricity is the same, and many competitors — and even other Reliant plans — offer much better rates. To start saving today, skip the runaround and click below to find your best rate.

 

Find Your Best Plan »

 

October 2020 update:
Another month, another ludicrous “Texas Bonus 24” offer. The latest (via promo code MC9UBK) costs 9.1326 ¢/kWh plus ~4.5 ¢/kWh for Centerpoint delivery. With competitive rates at ~4.9 ¢/kWh plus delivery, you should run — not walk — away from this offer.

July 2023 update:
With promo code MH1BA5, the plan costs 11.9972 ¢/kWh (energy-only) plus Centerpoint delivery. That equates to ~15.9 ¢/kWh for 2000 kWh/mo usage, vs. ~10.5 ¢/kWh for more competitive alternatives.

Did you receive an even newer version? Send it to us and we’ll help check it out.

 

* Notes: Calculations above are based on the plan EFLs posted on Reliant.com and competitor sites as of 11/1/2018, and assume the 2016 average Texas monthly residential load profile from EIA scaled linearly to each target monthly usage.  Cost projections exclude taxes and non-recurring fees.

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Gexa “BOGO 12” Plan Review

buy one get one bad deal
Gexa’s “BOGO 12” plan masks a high rate with a “50% off” pitch. Don’t do it.

Gexa Energy has been touting their “BOGO 12” buy one / get one plan. This plan promises you’ll “only pay for 50% of your energy charges, every month”.

As you might expect, there are two obvious catches. First, the undiscounted energy-only charges are a sky-high 14.9¢/kWh for Centerpoint-area customers. Even after the 50% “discount”, 7.45 ¢/kWh is still 60% higher than some competitors.  Second, the BOGO discount does not apply to Gexa’s $9.95\mo minimum usage charge, or to Centerpoint’s delivery charges, currently $5.47/mo + 4.11 ¢/kWh.

All together, the plan costs a hefty 11.8 – 14.6 ¢/kWh, depending on your usage. By law, Gexa discloses these average costs in their Electricity Facts Label, which you should always read. EFL reference prices already include discounts like BOGO, so don’t expect to take another half off. Instead, just say no.

But perhaps Gexa has designs beyond BOGO… When you visit their website, they reveal two other plans claiming a seemingly lower 7.9 ¢/kWh rate. Looks great, right? Wrong. As usual, these teaser rates only apply at exactly 500 or 1000 kWh/mo. If you use any more or less in a given month — which you will — your rate increases dramatically. For their “Supreme Plus 12”, using 999 kWh instead of 1000 more than doubles your bill!

Gexa BOGO electric plan rate comparison

12-month Electricity Costs
Houston Home Averaging 1000 kWh/mo *
Avg Rate Cost Premium
Gexa “BOGO”  12.7 ¢/kWh  $1,522  +$383
Gexa “Basic Plus 12” 14.4 ¢/kWh  $1,724 + $585
Gexa “Supreme Plus 12” 13.2 ¢/kWh  $1,586  + $447
Low cost competitor 9.5 ¢/kWh  $1,139  —

Compared to a competitive plan, these Gexa options would cost an extra $383 to $585 per year. Always be cautious of heavily-advertised gimmicks like BOGO, Free Nights/Weekends, free thermostats, etc. You must do the math — such as with our RateGrinder tool — to avoid a costly $585 mistake.

After all, there’s no reason to pay more for the same electricity. It all comes from the same sources across the same wires. If there’s an outage, your delivery utility (not Gexa or any other retailer) is who you call for help.

Next, click below to jump to our home page and let Texas Power Guide find the true lowest rate for your home’s usage profile.

 

Shop The Easy Way »

 

* Notes: Calculations are based on the plan EFLs posted on GexaEnergy.com and competitor sites as of 5/11/2018, and assume the 2016 average Texas monthly residential load profile from EIA scaled linearly to a 1000 kWh/month average.  Cost projections exclude taxes and non-recurring fees.

 

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Reliant “Secure 24” Plan Review

Reliant Secure 24 plan $600 bonus teaser
How much does a “$600 bonus” cost? A lot more than $600…

Today we received a mail offer for Reliant’s “Secure 24” electric plan with all the warning signs: “Get a low price”, $600 bonus”, and of course “Limited time offer”. They’ll even cover your current provider’s cancellation fee (up to $300) so you can “take advantage of this deal”. No mention of actual electricity pricing, though, so we followed the link to check it out.

The key number is the “energy charge”. At 7.6 ¢/kWh, it’s nearly double some low-cost competitors. Including the TDU delivery charges, you’ll pay upwards of 12.5 ¢/kW. This is not a competitive rate. But there’s the $600 bonus to consider, so let’s do the math for 3 average electricity usage cases:

2-Year Electricity Costs (Houston/Centerpoint area) *
Avg monthly usage (kWh)
500 1000 2000
Reliant “Secure 24” plan  $1,596  $3,056  $5,964
Low-cost competitor 24-month plan  $768  $2,238  $4,262
Difference  $828   $818   $1,722

Clearly this plan is overpriced for nearly any household, but especially for those with higher electricity usage. Even after the $600 “bonus” it costs $218 to $1122 more than competitors. If you sign up and then decide you’ve made a mistake, you’ll incur a $295 cancellation fee.

Those in the DFW/Oncor service area with very low usage may be able to break even, depending on your shopping skills. But likely not once you consider 12-month or shorter alternatives, which tend to be cheaper. Also this offer “is nontransferable to another person, household, or address”, so Reliant’s Marketing department might only offer it to residences with higher consumption.

In any case, don’t fall for Secure 24’s high rates masked by cash-back gimmicks. Electricity is just electricity, and many competitors — and even other Reliant plans — offer much better deals. Skip the runaround and click below to let Texas Power Guide’s RateGrinder calculator help you find your best plan quickly and easily.

 

Try RateGrinder »

 

April 2018 update:
Another month, another “Secure 24” offer. The latest flyer ditches the URL to encourage you to call for details, but you can still find them here with the promo code. Since January, rates for Secure 24 and the best competitor plans have both risen by about 1 ¢/kWh, so our guidance hasn’t changed.

September 2018 update (Now with airline miles!):
In the latest iteration, Reliant adds another layer of obfuscation by rebating you with Southwest Airlines Rapid Rewards miles instead of real money. The math, however, is similar. At 12.7 ¢/kWh for a Dallas customer using 1000 kWh/month, this plan costs $768 more than competitors. The 27,000 airline points are worth ~$405, so you’d be overpaying by $363 (…or more if you live in Houston or use more electricity). And rates are still falling from their June peak, so now is not a good time to lock into a long-term 24-month contract.

November 2018 update:
Reliant changed the name of this plan to ‘Texas Bonus 24’, but it’s still the same overpriced plan as always. For details, see here.

 

Did you receive an even newer version of this offer? Send it to us and we’ll gladly help check it out.

 

* Notes: Calculations are based on the plan EFLs posted on Reliant.com and competitor sites as of 1/31/2018, and assume the 2016 average Texas monthly residential load profile from EIA scaled linearly to each target monthly usage.  Cost projections exclude taxes and non-recurring fees.

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Direct Energy “Free Power 100” Review

“Free Power 100” is Direct Energy’s latest heavily-advertised “free weekends” rehash. It’s identical to last summer’s “Free Power Weekends 12” plan, except for a bundled $100 Visa gift card and 0.3-0.4 ¢/kWh higher energy rates. As usual, a high weekday energy rate means that overall it costs upwards of 20% more than many competitors. The table below compares the options for customers in DFW, which is the best case. Houston-area premiums are higher.

Direct Energy “Free Power 100” (DFW/Oncor area)
Avg monthly usage (kWh)
500 1000 2000
Average rate (¢/kWh) 1 10.1 9.3 8.8
12-month cost (after $100 gift card)  $506  $1,016  $2,012
 – Lowest-cost fixed-rate competitor 2  $369  $755  $1,670
 = Direct Energy cost premium +$137  +$261  +$342
+37% +35% +20%

laundryAs a reminder, Direct Energy’s “average rate” claim already assumes 31% of your usage occurs within the “free” period. So unless your electricity usage is extremely weekend-centric, don’t expect you’ll make up the difference. See the previous review for more on why “free weekends” plans generally aren’t a great deal.

To find your true lowest cost electric plan options, click the link below and enter your monthly usages into our RateGrinder tool. There’s no simpler way to save the most on your electric bill!

 

Try RateGrinder »

 

1 Data from “Electricity Facts label (EFL) Direct Energy Free Power 100 – Indexed Oncor Electric Delivery Service Area 11/7/2017”
2 Competitor data per RateGrinder analysis on 11/15/2017. See Today’s Best Rates for the latest survey of offerings.

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The Problem with ‘Power To Choose’

Shop Compare Lose

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:

Power To Choose default results
Default results from PowerToChoose.org (2/5/2018)

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.

Example electric plan rate profiles
Rate Profiles for Plans #1 – #6, and Average Texas Monthly Usage

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.

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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.

 

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Pass on TXU’s “Season Pass”

TXU’s “Season Pass 24” plan has a catchy gimmick, but it’s nobody’s best deal on electricity.

TXU is the largest Retail Electricity Provider in Texas. Lately, they’ve been heavily advertising their “Season Pass 24” plan on radio and TV. This plan grabs your attention by touting 50% off energy charges in 6 summer and winter months (Jun-Aug and Dec-Feb). Certainly these are among the months when most homes incur their largest energy costs. But is it worth it?

Excerpt from TXU Energy Season Pass 24 EFL
Excerpt from TXU Energy Season Pass 24 EFL, 1/9/2017

With this plan, the EFL’s own disclosures tell most of the story: The lowest average price claimed is a whopping 12.9 ¢/kWh at 2000 kWh/month usage. That’s 70% more than our Oncor-area benchmark of 7.6 ¢/kWh for the same usage. The math for Centerpoint customers is similar. No wonder TXU can afford to advertise so much.

“But what about the half-price months?”, you ask. They’re already included in TXU’s 12.9¢ math. Breaking it down at 2000 kWh usage, the plan actually charges 15.75 ¢/kWh in spring and fall and 10.1 ¢/kWh in summer and winter. (The “50% off” applies to energy charges, but not base or TDU charges.) Even if it were possible to shift all of your annual usage to just those 6 months, 10.1 ¢/kWh is still a hefty 33% premium over many better year-round options.

Season Pass 24 also locks you into a 2-year contract with a sizeable $295 early termination fee. For the “average” Texas home that uses 14 MWh annually, the total Season Pass 2-year cost is $3706. That’s $1500 more than numerous competitive options. Don’t fall for it. Even if you’re set on TXU as your provider, there are better options. You can find and compare the best plans yourself easily with TexasPowerGuide.com’s RateGrinder calculator.

Note: TXU doesn’t list Season Pass 24 on PowerToChoose.org, and the plan doesn’t make TPG’s cut for inclusion in the RateGrinder database.

11/15/2017 update: TXU is ramping up the advertising for “Season Pass” again this winter. The current plan rates are nearly identical to those originally described above, which is to say they’re still very expensive, with or without a $100 gift card. To find better options from TXU and others, click here:

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