Awhile back, I wrote a very critical piece focusing on Reliant’s Cap and Save Plan. My issues with the plan were that while it was advertised as a flexible plan that would rise and fall with the market rates, the reality is that due to their math it ensured that the plan would never be sold at a fair market rate, even if the cost of natural gas were free. I felt like this was a pretty shady thing to do, so I wrote about it and tried to educated Texans about the hazards and lack of upside with choosing this plan.
So why am I bringing this up now? Well, that’s because Reliant is back at it again with another plan that, well, I find questionable. This time the plan in question that has me scratching my head is the Reliant e-Sense Cash Back Nights and Weekends. Naturally, Reliant is pushing this plan with a huge barrage of television and radio commercials, talking about the great savings opportunity that will be presented to customers. And the vehicle for these potential savings is recycled from some cell phone plans from the early part of the decade: Savings for Nights and Weekends.
Unlike the cell plans, it’s not free electricity for nights and weekends, just discounted. So lets take a look at the discount, exactly. Looking at the Electricity Facts Label, it looks like the plan starts with a basic electricity rate of 12.9 cents per kWh. Then, for every kWh per hour used between the hours of 8 p.m. and 8 a.m., customers are refunded one cent of their final electricity bill. Ok, so there’s going to be some cash back here. In fact, lets just make this easy by once again pasting their formula:
Price per kWh =((Monthly Billed kWh Usage x Energy Charge per kWh) + (Cash Back Discount Usage x
Cash Back Discount per kWh) / Monthly Billed kWh Usage
So lets run through the math here, just like we did last time with the Cap and Save plan. Lets say that a customer uses 1,000 kW of electricity in a month, at 12.9 cents. You do the math on the first half of that equation, and it comes to $129 dollars for the energy charge. On the second half of that equation, lets say that 1 half of their electricity usage from the month happened during the night and weekend cash back window, so 500 kWh. That math comes out $5. When you add it all together, you’re talking about an entire bill of $124 for the energy charge. Reliant estimates that the average kWh using this play would be 12.3 cents, indicating that a household on this plan should be using 60% of their electricity during the discount window. That’s pretty ambitious.
So how does that stack up to other plans? Well, lets take a look around the marketplace at 12 month fixed plans. If you substitute Tara Energy’s plan, the total bill would be $95, beating Reliant’s plan by $29. Amigo Energy checks in at a total bill of $96. Gexa Energy would be $99. StarTex Power would be $99. Direct Energy would be $99. Spark Energy would be $99. Dynowatt would be $100. Bounce Energy would be $102. Champion Energy would be $103. Are we starting to see a pattern here? Every single one of these 12 month plans are substantially cheaper than Reliant’s e-Sense Cash Back Nights and Weekends Plan, even AFTER the discount is applied. And here’s two more pieces of information that will blow your mind. At least, they blow mine. 1.) Even if 100% of a customer’s electricity was used during the discount windows, the energy charge would still be $119. That’s still more than $15 more expensive than the highest bill I listed above. 2.) Reliant Energy ALSO offers a regular 12 month electricity plan, with a, wait for it, rate of 9.8 kWh. That means they already have a plan where a customer would have a bill with an energy charge of $98. So they can afford to offer the electricity cheaper. They just also have this much much higher plan, which they spend millions marketing in media advertisements to customers, in hopes of getting a premium. I will say this, the plan SOUNDS like a good idea. But it’s just a gimmick.
To break this down further, there are 71 electricity plans in the Centerpoint footprint that require a 12 month contract. 67 of those plans would be less expensive than an average of 12.3 cents per kWh for the Nights & Weekends plan Reliant claims will be your average kWh. None would be more expensive than the 12.9 cents per kWh that is the base energy charge with no discounts. Also, all of the other plans this expensive are 100% green energy electricity plans, which are typically more expensive. Even if the “discounted” electricity rate was in force 24 hours a day, instead of just a 12 hour nighttime savings window and weekends, at 11.9 cents per kWh, the Nights & Weekends plans would still be more expensive than all but 4 electricity plans available in Houston and the surrounding areas.
So I ask: Where exactly is the discount here? Even in the best case scenario, this plan isn’t even anywhere close to a competitive market price. In fact, it’s the opposite, it’s at the highest end of the pricing spectrum. The lowest rates on the market at the time this article was written were 8.8 cents per kWh 12 month fixed rate plans. At 2.1 cents difference between the two, that’s just under 25% of a premium to pay for the “discounted” plan. And lets not forget that to earn that “discount” people have to work to ensure they’re using a bulk of their electricity late at night or weekends. So you’re reward for having to deal with the hassle of scheduling things like laundry, washing dishes, and surfing on the internet at odd hours is that you receive a “discount” that is really almost 25% higher than the lowest rates on the market. That seems, well, the opposite of smart. And the opposite of fair. Especially since Reliant offers a 12 month plan at a competitive market rate.
Reliant will almost certainly say that they’re offering this plan for the same reason that they offered the Cap And Save plan: They’re responding to feedback from certain groups and people who say they are interested in a plan like the e-Sense Cash Back Nights and Weekends Plan. Ok, maybe some groups are interested in a plan that gives them discounted electricity during certain hours of the day. But I do not believe that any group wants an electricity plan that under no circumstances or during any period will be exceptionally more expensive than any of the other comparable plans on the marketplace. In my opinion, at the very best plan represents an interesting concept that is absolutely lacking on proper execution. Because if cheaper options exist, even from Reliant themselves, then why offer this plan at all?
So what do you guys think about this new plan from Reliant Energy? Does it seem fair to you?