Whenever you make your weekly grocery run, you may be accustomed to reading nutrition labels on food packages. These labels may help you decide towards or against purchasing a certain item or brand, depending on the nutritional value that you derive from that item.
In a similar way, when you go shopping for a retail electric provider (REP) in Texas from the many options to choose from, courtesy of energy deregulation, you’ll definitely want to look out for electricity facts labels (EFL).
What is an EFL?
An electricity facts label (EFL) is much like the nutrition label on your food. It includes a summary of critical pieces of information that can help you decide which REP to sign a contract with. Providing an EFL has been mandated by the Public Utility Commission of Texas (PUCT), which is a regulatory agency ensuring that services offered by REPs are priced reasonably.
Why should I read an EFL?
Reviewing EFLs that are given to you by energy providers is an efficient way to compare between potential REPs you may be interested in as you do your research. An EFL informs customers about the type of plan they are being offered, the start date of their contract, and critically, the price that they will pay for this energy plan. It includes something called a “disclosure chart”, which lays out all the costs associated with your energy bill in an easy-to-read format.
Here are some of the costs you will see in a disclosure chart:
- Cost per kWh of electricity, which is the fixed energy rate that an REP sets for a particular plan, such as $0.10 per kWh.
- Base charge, where some REPs will charge you a minimum fee regardless of how much energy you actually consumed in a particular month, and is meant to cover operational costs
- Transmission and Distribution Utility (TDU) delivery charges, which are fees that cover the cost to deliver electricity to your home. This fee will be the same for every REP in your area. TDU charges include two separate fees: a fixed monthly fee (e.g., $5 per month) and a fee based on how many kWh of energy you use (e.g., $0.05 per kWh).
- Average cost in a month, based on 500 kWh, 1000 kWh, and 2000 kWh of use. This is a summary estimate that includes the cost of all other charges listed in an EFL (including the ones listed above). This figure helps make it easier to see your estimated overall cost depending on how much energy you typically use in a month.
How to Calculate your Average Energy Cost Using EFLs
Let’s say an REP is charging $0.09 per kWh of use, a TDU delivery charge of $6 per month and $0.03 per kWh, and a base charge of $5 per month. If you use 1050 kWh in a month, here is how you would calculate your average energy price:
(Cost per kWh + TDU fee per kwH) + (monthly base charge + monthly TDU charge)
Monthly usage (kWh)
= ($0.09 + $0.03) + ($6+$5)
= $0.12 + ($11/1050)
This REP would charge you 12 cents per kWh. Simply multiply this by how many kWh you used in a month, and you would know your average monthly electricity cost.
How does this cost compare to another REP? This is the calculation you would use based on the information from their EFL to calculate and compare prices.
Other Useful Info
In addition to all the fees included in the calculation above, there are other things to keep in mind about each REP that may factor into your decision, including those that may have otherwise been in fine print and overlooked, such as:
- Early termination fees if you decide to end your contract prior to the agreed-upon term,
- Whether the plan offered is fixed or variable
- Whether you have to pre-pay or pay in advance
- Whether the price indicated in your plan can change within your contract term
- Percentage of energy that comes from renewable sources
In Texas, with energy deregulation, you have the power of choice. Arrow Energy aims to empower customers to make the right decisions for themselves. If you need some guidance on how to make these decisions, contact Arrow Energy today.