Is Power to Choose all it’s cracked up to be?

Power to Choose, managed by the Public Utility Commission of Texas (PUCT).  Have you used their website? The offers shown are not necessarily endorsed by the PUCT. Any licensed retail electricity provider (REP) operating in Texas can post offers.  They must disclose all the specifics of an electricity plan in their Electricity Facts Label (EFL). However, the information that’s most prominently displayed is the average rate per kWh someone might pay at exactly 500, 1000 and 2000 kWh per month.

The average rate per kWh is not a very good way of judging an electricity plan.  Most of the offers are actually offer curves. The price is almost always different for each kWh of consumption.  Additionally, the rates are often structured with energy or consumption credits. That results in a low point on the price curves. This all adds up to lower than realistically achievable rates. For the reason, the credits and breakpoints often happen at exactly 500, exactly 1000, or exactly 2000 kWh.

The truth comes out  

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.

The price curve you are buying can often look very different from the straight line you thought it was:
Expected vs Actual Rate

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. Determine the best program based on how much electricity you generally use each month of the year.

By statute, every EFL must include 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:

Sample EFL

Or something more detailed, like this:

Sample EFL

Or something much more complicated, like this:

Sample EFL

There should be enough detail in the EFL to help you get a good estimate of what your average rate per kWh or effective rate would be each month.  The key is having a good idea of how much electricity you are using each month of the year, and to not to fall for a gimmicky offer 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.

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