How to Read A Texas Electricity Facts Label
Selecting an electricity plan and provider can be tricky, as there are so many to choose from in deregulated parts of Texas. How do you look past all the advertising and get the electricity plan's plain and simple details? The electricity facts label, or EFL, is an invaluable resource when you're shopping for electricity.
The Public Utility Commission (PUC) of Texas requires retail electricity providers (REPs) to provide an EFL with each plan they offer. It discloses essential information about the plan's term length, early termination fees, renewable energy content, and every other piece of information that might be glossed over in some of the advertising.
When comparing energy providers and choosing an electricity plan, review the EFL for each plan you're considering and compare the terms and conditions. That will make it easy to understand the differences between each plan and ultimately select the best one for you.
Why Is It Important to Review the EFL?
The EFL isn't just extra paperwork. It's an important document designed to help you understand how your electricity bill is calculated. The EFL answers many common questions, such as how much you'll be charged for electricity, the length of the contract, penalties for terminating the contract early, and everything else that affects your monthly bill.
It's well worth your time to understand your needs and find an electricity plan that matches. A free nights and weekends plan might seem like a great idea, but if you actually use most of your electricity during the day. If you look to the EFL for a bill estimation (instead of an ad that promises free nights), you might learn your bill will be higher than you expect.
When you start a new service plan with a Texas REP, you'll receive a copy of the plan's EFL with your first monthly bill. Review it alongside your statement to make sure the calculation matches the EFL. If it doesn't, contact your provider.
What Information Is On the EFL?
EFLs can look a little different from one provider to the next, but every Texas EFL includes three sections of information: electricity price, rate calculation, and contract terms.
1. Electricity Price
This first section outlines the price of the plan, the energy rate per kilowatt-hour (kWh), base charge, and delivery charges.
2. Rate Calculation
Base charges, delivery fees, and energy usage affect your bill. This section shows how it's calculated.
3. Contract Terms
The third and longest section contains all the other details about your electricity service - if it's a fixed or variable rate, the length of contract, early termination fees, the energy's renewable content, and more.
Terms You'll See On the EFL
There are also several words and phrases you'll notice when reviewing the EFL. The following glossary will come in handy as you inspect EFLs:
Kilowatt-hour (kWh): The amount of electricity in kilowatts used per hour.
Base Charge: This is a fixed fee for operational costs.
Energy Rate: The price per kWh for electricity.
Average Rate: The price per kWh based on usage levels.
Transmission / Distribution Service Provider (TDSP) Fees: These government-regulated costs cover infrastructure, meters, and repairs and are present regardless of which company you choose. Texas deregulated TDSPs include CenterPoint, Oncor, AEP Central, AEP North, and Texas New Mexico Power.
Contract Length: The number of months of your contract; typically one, six, 12, 18, 24, or 36 months.
Type of Plan: Whether the plan has a fixed, variable, or index rate.
Early Termination Fee: This is the fee you'll pay if you cancel the contract before its end date.
Special Rates: This will show the pricing structure for promotional plans such as free nights and weekends plans.
Usage Credit: This is a credit applied to your account once you reach a certain usage.
How to Calculate the Average Energy Price
Electricity bills can seem like a mystery, but the EFL will actually show you how they're calculated. Look at the pricing section. It shows the average electricity prices for usage levels at 500, 1000, and 2000 kWh. These prices reflect the average rates you'll pay for electricity and delivery if you use exactly that much power.
For example, an energy plan may have a rate of 8 cents/kWh for usage levels of over 1,000 kWh but a rate of 16 cents kWh if you only use 500 to 800 kWh. That means that if you sign up for a plan designed for more usage than you need, your monthly bills will be a lot higher than if you'd chosen a plan geared toward usage rates of 1000 kWh
Electric bills are calculated like this:
Energy Charge + Per-kWh TDU Fee + [(Monthly TDU charge + Base Charge)/Usage]
Let's look at this example:
- Usage: 1000 kWh
- Energy charge: 10 cents per kWh
- Base charge: $10.00
- Monthly TDU delivery charge: $15.00
- Per kWh TDU delivery charge: 5 cents per kWh
Here's how you would calculate the energy price for 1000 kWh:
$0.08 + $0.05 + [($15+ $10)/1000 kWh] = 15.5 cents per kWh
Don't Sleep on Your EFL!
When you can decipher the information in the EFL, you can figure out how much you'll be paying for electricity every month. That's knowledge and insight that'll help you make good budgeting decisions.
At Energy Texas, we're big on honesty and transparency,
and we encourage you to compare our EFLs to those of other
providers. We pledge to always describe our plans accurately and
completely so you can make well-informed decisions about your
electricity. Want to see what's available in your area? Check
out our plans today!
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