Buying Electricity in Texas, it’s NOW Buyer Beware!
Now in Texas since Deregulation in 2002 in, there are currently 259 registered Utility companies competing for your electricity business Now that is a good thing because it brought down Electricity Rates in Texas. However, it’s now turning into actually a bad thing because Utility companies are becoming more creative in coming up with products that sound GREAT but are deceptive what the consumers will be paying.
Before deregulation, what you have to pay was simple and no surprises like going up to the gas pump; you pay what posted on the pump.
The PUC (Public Utility Commission) in Texas pretty much protected residential consumers by developing a facts label, which was design so residential consumers can compare apples to apples and not apples to oranges.
This Facts Label, must be posted by the Utility co. What the average cost to the consumer within three usages per month, which are for 500kWh, 1000 kWh, and 2000 kWh. Now, these rates will include monthly charges above the rate they quote.
The average residential customer usage is almost always below 2000 kWh per month. However, Utility Co would advertise their rates based on the highest usage. Thus, showing the lowest rate if the consumer did at least 2000 kWh for that month. So, now, when they get their first bill, they find actually are paying a higher rate than they thought
Most residential consumers don’t read the facts label that the Utility Co, obligated to disclose or even aware of fact labels exist at all.
NOW something even more TROUBLING with PUC Facts Label that Utility companies has come up with a way to manipulate the Facts Label to show a very cheap rate and still follow the guidelines of posting their rates at 500kWh, 1000 kWh and 2000 kWh.
Although they are indeed still meeting the requirements of the Facts label, it is, in my opinion, very deceptive.
NOW this is how it works. Let’s take 1000 kWh usage; the utility advertises their rate 7.4 cents per kWh.
The following is what posted on their facts label for 12 months at 7.4 cents per kWh
500kWh -17 cents per kWh,
1000 kWh 7.4 cents per kWh
2000 kWh – 11.7 per kWh
So, HOW is this Possible that 1000 kWh consumption is only 7.4 cents per kWh at 1000kWh but not on the other consumption rates of 500kWh & !000 kWh??
Well, they give precisely at 1000 kWh usage for the month a $90 credit toward that monthly bill. So, if you only do precisely 1000 kWh per month, then indeed, your average cost is 7.4 cents per kWh. However, there is no more credit applied to the monthly account after 1000kWh
The Utility company that advertise 7.4 cents per kWh states in their facts label that the energy charge is really 11.8 cents per kWh
So, why the following posting in the facts label by the Utility Co.
500kWh -17 cents per kWh,
1000 kWh 7.4 cents per kWh
2000 kWh – 11.7 per kWh
The discount does not come in until 1000 kWh and that the average goes up after 1000 usage mark to the 2000 level where they show the average cost would be over 2000 kWh to be 11.7 cents per kWh
This information was taken from an actual Texas Utility company posted on September 12th, 2019
I am not disclosing who this Utility company because there are many Utility companies, are forced to do the same in order not to lose business.
The Utility Co. are forced to follow suit because Texas consumers are price sensitive and just shop for rates. Like sh0pping for gas in Texas.
Once again, deregulation in Texas is a good thing, and PUC tried to make it possible for helping Texas residential customers to compare apples to apples. However, the market continues to get more complex.
Now, in my opinion, PUC should make new rules based on the unique complexity of the electricity market place. I believe that whatever the Facts Labels state, what their energy charge is that they can only advertise their rate.
The company I used for this example is indeed advertising their rate 12-month rate at 7.4 cents per kWh when they show in their facts label that it’s indeed 11.8 cents. They should not be allowed to advertise 7.4 cents. Now, if they want to give consumers a reasonable rate, they provide the $90.00 discount every month no matter what their usage is in order consumers really know what they are paying and compare apples to apples like buying gas in Texas and NOT apples to Oranges!
Seven Things you Need to Know About Buying Electricity for your home in Texas
1) Anyone can switch electric companies as long as you are not in a co-op. Now, if you are not sure if you are in a co-op. Then just type your zip code with each company; if you are in co-op, it will not provide pricing. However, if you get pricing, you can buy electricity from that company.
2) There are always two companies involved in electricity. One is the company you choose to buy electricity from, and one is the other one that delivers the electricity. AEP Central is the company that owns all the wires and transformers down here in the Valley, and their charge for supplying electricity to you is the same no matter which company you choose to buy your electricity from.
3) There are two costs to consider when buying electricity. One is the rate they charge per kWh, and the other is if they have a monthly meter or service charge. If it's worth paying this charge depends on your usage and how much you save per kWh with this supplier.
A) So if one company charges 10 cents per kWh and has no meter charge versus one that charges 10 cents per kWh with $7.00 charge. The second one will cost you $84 more per year.
B) Another thing to look at is that some companies will charge a monthly fee below a certain usage. For example, a company state there is a monthly fee $7.00 if 1000 kWh or less a month but over 1000 kWh, no monthly fee. So, in this case, if you average 800 kWh a month, you will experience a monthly fee of $7.00. Now, if your monthly average is over 1000 kWh, then you will have no fee to worry about.
4) Rates vary by the length of the term. Now, if you see a period of 6 months, that has a good rate, but you will be moving in 4 months. You can still sign up for the six month and cancel the contract when leaving without experiencing a cancellation fee as long as you provide a forward address where you are moving. (Check the cancellation clause in your contract or look for the facts label with each company, and it will tell you) (Any Questions? Call us at 956 381-4446)
5) Most companies will NOT require a security deposit unless there is a credit issue now; if there is a credit issue, not all companies have the same requirements. So if one asks for a security deposit, the next company may not because their credit requirements are less. Now, if all companies are requesting a security deposit, you will find that not all will require the same one. So shop around for the best deal.
6) Prepay Options. We offer SMART Prepaid Electric - The Benefit prepaid plan you can buy as much as you want, and no deposit is required. Now with Prepay plan, you just buy the amount you need for 1,2,3 months (No limit you Buy as much as you want) ! You buy energy by putting money into your account.( Like a savings account ) and then you draw from it, buy more when needed, and put it back into your account. Now if you move, you can either get a refund for the unused portion or leave it in your account when you return and finish it.
7) Payment options. Some companies charge a fee if you pay online or use a credit card. Now, if you normally pay by check, there will usually be no issue. However, if you use other means of paying, you must check the company for their payment fees.
Real Corporation, 1703 W. Calle Cedro, Edinburg Texas 78541 866 287-9484 or 956 381-4446