One of the most important things to keep in mind when looking over the Power to Choose (PTC) web site is that although it is managed by the Public Utility Commission of Texas (PUC), the offers it shows are not necessarily endorsed by the PUC. PTC is an open marketplace where any licensed retail electricity provider (REP) is allowed to post offers they think will bring them the most customers. While REPs are required to disclose all the specifics of an electricity plan in their Electricity Facts Label (EFL), the information that’s most prominently displayed is what the average rate per kWh someone might pay at exactly 500, 1000 and 2000 kWh per month.
Average rate-per-kWh is not a very good way of judging an electricity plan because most of the offers are actually offer curves. The price is almost always different for each kWh of consumption, and the rates are often structured with energy or consumption credits that result in an low point on the price curves. This all adds up to lower than realistically achievable rates, because the credits and break points often happen at exactly 500, exactly 1000, or exactly 2000 kWh.
The problem is that almost no one consumes exactly 500, 1000 or 2000 kWh during a month, let alone for 12 consecutive months. So in reality, the rate you think you are buying isn’t exactly what you end up buying.
For example, if you go to powertochoose.org, you may find an offer that looks like this:
Realizing this can, and should help you make a smart decision that will save you the most money. You have to look at the Electricity Facts Label and determine the best program based on how much electricity you generally use each month of the year.
By statute, every EFL is required to have an “Electricity Price” section which details how they were able to come up with the 500, 1000 and 2000 kWh average rates. It may look like this:
Or something more detailed, like this:
Or something much more complicated, like this:
There should be enough detail in the EFL to help you get a good estimate of what your effective rate each month should be. The key is having a good idea of how much electricity you are using each month of the year, and to not get suckered into a rate plan that looks too good to be true. Make sure you read the fine print to avoid a big disappointment later along with an unexpectedly large electricity bill.