Texas Electricity Consumer Questions—TDU Charges

Occasionally, folks ask some good questions when they’re shopping for electricity. Our Texas Electricity Consumer Questions Series tries to clear up the confusion and answers those questions so you can be a better informed consumer.

Generating electricity is only half its cost. Getting it to you is the other.
Photo by Ladyheart at Morguefile.com

From J. in Sharyland— “Are there any REPs that don’t have high TDU charges?”

We understand your frustration, J., but remember that REPs don’t have TDU charges —consumers do. Here’s why:

TDU’s own and maintain the local network of transmission and distribution lines. TDUs must offer access to their wires to all REPs on a non-discriminatory basis under standard terms and conditions set by the PUC. REPs sell the electricity to their customers.

Electricity consumers live within a TDU company’s service territory and receive their electricity via that utility’s wires. The consumer buys the electricity from an REP but must pay for the transmission and distribution of that electricity over the local wires to their home.

TDU delivery charges depend on where the consumer lives, who their TDU is, and the PUC-approved rate their TDU can charge them based on their electrical usage.

TDU service territories in ERCOT are divided into 5 main service areas which are based on the original investor owned utilities (IOU) from before deregulation. These IOUs are:

Texas-New Mexico Power Company (TNMP)
AEP Texas Central
AEP Texas North
Center Point Energy
Oncor

Sharyland Utilities territory mainly straddles Oncor and AEP Texas North.

Some background—
Back in March 2015, Sharyland Utility residential customers saw a 25% increase in their TDU charges. The increase stemmed from Sharyland’s rate case application to the PUC to increase it’s rates following its merger with Cap Rock Energy. The new service territory was then known as “SU-CapRock”.

Unfortunately, settling the whole mess turned into a game of “kick the hornet’s nest”. The PUC and all concerned parties are still working to sort it all out. Sharyland’s delivery rates remain among the highest in the state.

Texas PUC Removes 1 Cent Plans

In what I consider to be an outstanding move today, the Public Utilities Commision of Texas (PUC) has removed the 1 cent plans from the front page of the Power To Choose (PTC) website. The website, a state sponsored entity, serves as an open marketplace for electricity providers to show their plans to customers. The problem with these plans however, is that they’re somewhat deceptive to casual shoppers who don’t dig far into the fine print of their plans.

The basic gist is that the low 1 cent rates are achieved through bill credits, which they receive if they hit a certain threshold or window of usage each month, say 1,000 kilowatts. If a customer fails to use that, no credits kick in, and their rate is more like 10 cents per kWh, instead of the advertised 1 cent. Obviously this proved confusing and troublesome to some customers who expected a much lower electricity bill because they failed to read the fine print.

Personally, I think this is a smart move for PTC and works in serving the interests of the customers. Shoppers can still find these minimum usage electricity plans, but they have to actively seek them out. They no longer appear on the first page of the PTC search grid. As a state sponsored site, it is important that Power To Choose do their best to look out for customers and keep the Retail Electricity Providers (REPs) from “gaming the system,” which is perpetually a problem with the PTC website. Which led to one really interesting quote from Paul Ring, who runs the always excellent Energy Choice Matters website:

Such “whack-a-mole” regulation compels the question of whether customers would be better served by visiting a third-party site which, unlike a “neutral” state-sanctioned site, may offer opinions on the best products, and which plans are simply gimmicks. Moreover, unlike the Power to Choose site, third-party sites are financially invested in ensuring customers select a satisfactory product so that customers return to the site in the future — a motive which should eliminate the listing of any products that are not in the customer’s interest.

It’s hard to argue with his logic.

Donna Nelson, Chairman of the PUC, also stressed that this is also just a first step, and that the PUC would also be looking into whether these minimum usage plans might not even fit the current definition of a Fixed Rate plan.

At the end of the day, customers want an easy to understand ordering process, and plans such as these with formulas for certain rates are often too complex or hard to explain online without the help of an electricity expert, something the casual shopper often doesn’t even know that they need. Today was definitely a victory for the good guys.

Celebrate Your Independence —You’re Free to Choose!

alamo-fireworksThis coming January 1 will mark the 10 year anniversary of the end of the reign of the old incumbent Texas utilities and the opening of competition among new retail electricity providers.

That means for ten years, consumers in the Lone Star State have been free to choose what kind of Texas electricity plan works for them. That means for ten years, consumers throughout the ERCOT region haven’t had to wait for regulators and utility bean counters to strike a bargain in a closed room on how much you were going to pay for your electricity. Nor have you had to conform to a one-size-fits-all kind of service. Instead, energy consumers have enjoyed the ability to select plans that fit their needs backed by great incentives and convenient services such as monitoring your usage and paying your bills on-line.

In short, you’re free to choose your electricity plan and provider. Don’t think its a big deal? Just ask consumers in the 35 states that don’t have electricity choice if they like being tied to one utility when rates go up or isn’t interested in improving customer satisfaction. Ask them if they like their utility thinking of them as just one more part of “the load”.

So this July 4, fire up your grills, set off the fireworks, and reaffirm your freedom to choose! Ten years of Texas electricity choice remains revolutionary!

Low Natural Gas Prices Are Still Fueling Lower Electricity Rates – Time To Compare and Shop!

If you’ve been thinking about shopping for a new Texas electricity provider but have been holding off because natural gas prices rise during the summer and so do electricity rates, listen up.

Now is still a good time to shop for lower electricity rates.

Yes, natural gas prices are expected to rise this summer — BUT not nearly as much in previous years. That’s all because of big glut of natural gas currently in storage. It’s at a 5 year high. Even with more generators all over the nation burning a record-setting 26 billion cubic feet per day (Bcf/d) for powerburn there’s already a record 3,000 Bcf in storage. Sure, natural gas prices have been on the move, rising from within one week from about $2.50 to $2.60/mmBTU due mainly to reduced production levels. However, prices have averaged below $3/mmBTU since January, 2015. Current monthly averages are expect to stay below $3.00/MMBtu through the end of 2016 because price levels will encourage production increases. That will help keep both natural gas and electricity prices low going into fall.

What does that mean for electricity prices? The US Energy Information Agency (EIA) states residential expects the U.S. residential retail electricity in June to average 13.0 cents/kWh and stay about the same for the rest of the year. Texas residential electricity prices are down from 11.63¢/kWh in March 2015 to 11.25¢/kWh this March. With ERCOT forecasting a “slightly greater potential for a mild summer” with slightly cooler temperatures along the Gulf, there’s a very good chance that Texas electricity rates will not vary much for the rest of the year.

So, what are you waiting for? Get out there and start shopping for the best Texas electricity deal now! You can save money by keeping an eye out promotional rates and comparing incentives or reward programs. Remember: annual average rates are expected to rise 2.5% in 2017. Snagging a low, long-term fixed rate plan might be just the ticket to saving you money.

What 3 things do I need to know to shop for Texas electricity this summer?

Shopping for a retail electricity provider during the summer in Texas can be frustrating and confusing. And if you don’t have a basic understanding of what drives prices in the ERCOT region, you could wind up paying more for electricity. While learning that sounds complicated, you really only need to know three things when you’re shopping for Texas electricity this summer. Oddly enough, one of them is the weather.

Summer Weather

A typical Texas summer was once characterized as the only season where asphalt pavement is normally a liquid. Cities like Austin, Dallas, Houston, and others normally reach over 95°F and are stifled by humidity. This summer, the National Oceanic and Atmospheric Administration (NOAA) forecasts that the entire Great Plains region will face the possibility of above-average temperatures. In science-speak, that roughly means there’s a better than 30% chance for above average versus equal chances or below average. BUT because of all the rain, soil moisture in Texas is very high (in some locations, it’s practically saturated). In these conditions, temperatures tend to stay cooler due to the process of the moisture evaporating from the soil. As such, NOAA has lowered the probability for above-average temperatures for Texas.

ERCOT forecasts near-normal summer temperatures mixed with heat waves. So, there could be some hot stretches when ERCOT asks consumers to dial back their usage in order to help prevent outages. Doing so also helps prevent wholesale prices from skyrocketing. To sum up, Texas summer weather will be brutally hot and miserably humid at times but well within “normal”.

Natural Gas

Natural gas generates over half of the electricity in ERCOT. If natural gas rates go down, you can expect your electricity rates to drop. The same relationship happens if natural gas prices rise. Since the natural gas industry has the agile maneuverability of a super tanker in a head wind, you can usually spot pricing trends while they’re still a long way out. That usually gives you a firm idea of what electric rates might be like for up to three months in advance.

What does that mean for right now? Cheap, abundant natural gas is expected to exceed coal as a fuel for generating electricity (called “power burn” in the industry) through out the US, especially since above-average summer temps are expected in other parts of the country. In Texas, new natural gas-fired generators are already being built which will become operational between this summer and 2018. Even though natural gas storage is at near record levels, natural gas prices are slowly inching upwards. The July contract rose by 13¢ from $2.468/MMBtu to $2.595/MMBtu.

Are electricity ratings rising, too? Not as fast as they could be. One growing trend in the mix is that homeowners are using less and less energy. This is reducing sales by REPs and having an impact on their prices.

Know Your Own Electric Usage

Most Texas Electricity websites give you a way to track your monthly bills. If you have a smart thermostat, you already probably have a decent idea of your home’s energy usage. By looking at your bills and examining your energy consumption each month, you can get a decent ball-park idea of how you use energy in your home. You may also already know what things you could do to improve your home’s energy efficiency through such things as using LED bulbs, installing more insulation, air sealing your home, and even turning off electronics when they’re not in use.

Now that you know how Texas electricity pricing is affected by weather, natural gas price, and how you use energy, you’re all set to start comparing plans of the best retail electricity providers that fit your home and lifestyle.

The Texas Flood of 2016 & Your Electricity Bills

El Niños bring cool, wet weather in Texas by blowing persistent and extended Pacific jet stream across the state. While this helps kill off hurricanes, it amplifies storm tracks across the southwest and Texas bringing more rain into the Lone Star State — up to a foot or more on average. And this El Niño has been particularly strong.

However, the real culprit behind the recent flooding was a weak low pressure sauntering across the state, sucking in sea-level moisture from the Gulf. Weather Underground says the low is going to “trudge toward central and eastern Texas by Friday, then stall out before drifting southwest” when it will likely be dragged off by another weather front this weekend. Only then will Texas get a chance to dry out. It may not last long as NOAA forecasts more precipitation moving back into the state from the Gulf by next Sunday.

In the past week, parts of Texas and Oklahoma have received daily rainfalls of 7 to 11 inches —something like 400 to 600% ABOVE NORMAL. The US Geological Services reports flooding in all of Texas’s major river basins. At least three reservoirs are forced to release water due to exceptionally high levels.

Over the next thirty days, southeastern Texas will probably face cooler than average weather and elevated chances for heavy rainfall primarily along Gulf. With soil already saturated, it looks like many parts of Texas could remain soggy through Independence Day.

Apart from inconvenient outages this year’s flooding is unlikely to have an immediate affect on electricity rates. However, since there has been damage to transmission lines, there could be restoration costs that could be passed on in part to customers (see SECURITIZATION FOR RECOVERY OF SYSTEM RESTORATION COSTS). This expense would show up as future bill surcharges and would be shared by all customers of the effected TDSPs.

Meanwhile, this El Niño is predicted to run of steam. The first signs are already present. In May, a band of cooler water surfaced in the Pacific Ocean at the equator. As more sea surface water cools, the more the El Niño fades, shutting down the rain-maker express. The trouble is that as El Niño fades, its high level eastward-blowing winds will slacken. And it’s these winds that suppress hurricane formation in the Atlantic.

Yep, it’s never dull in Texas! Stay tuned!

Texas Electricity Hits New Wind Milestone on Thursday

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Texas Deregulated Electricity Primer

I saw this nice little article in the Texas Monthly today as a primer of things customers should know about deregulated electricity in Texas. It’s a great premise,  and the three things they listed are certainly things Texas customers need to understand, but I’d definitely expound on a few things that Texas electricity customers should be aware of when looking for electricity providers. Continue reading “Texas Deregulated Electricity Primer” »

Champion Energy Wins Customer Satisfaction Award for 2015

After falling to Green Mountain Energy last year in the annual J.D. Power & Associates award for customer satisfaction, Champion Energy has regained the top spot in the coveted customer survey. Congratulations Champion Energy Services! This marks Champion Energy’s 5th finish Continue reading “Champion Energy Wins Customer Satisfaction Award for 2015” »

Energy Future Holdings to Sell ONCOR

As I’ve stated for years, the bankruptcy of Energy Future Holdings has been inevitable. It was coming ever since the bottom dropped out of the natural gas market due to innovations in fracking. And finally, it looks like we can finally see how the Texas electricity market might look once the inevitable finally happens and we survey the surviving landscape. Continue reading “Energy Future Holdings to Sell ONCOR” »