Reliant’s New Unlimited Electricity Plan: A Closer Look

Recently Reliant Energy announced a new electricity plan for Texans, the Reliant Predictable 12 Plan. As the Houston Chronicle outlined, the plan calls for customers to sign a one-year electricity contract at a flat, monthly rate, regardless of electricity usage. This kind of plan is normal in other industries, specifically cell phone service providers, but it is the first of its kind in the Texas electricity space. I’m no stranger to questioning some of Reliant’s past electricity plans, so I figured it was worth the time to take a closer look at this new “unlimited plan.”

The Plan

On the surface, the plan is pretty straightforward. Customers will pay a flat fee to Reliant every month to receive unlimited electricity service. So whether they use five or five thousand kWh in a month, their bill will be the same. The appeal (or the demographic Reliant claims to be appealing to) might be older folks on a fixed income, or perhaps younger college graduates who have to make very careful budgeting plans each month. Customers visit Reliant’s website, input their address, and select the Reliant Predictable 12 Plan. They will be then be given a monthly estimate, presumably based upon the historical usage of the building in question, and possibly some other factors. Easy enough, right?

The Results

I’ll caveat this portion by saying two things: 1) The price given by Reliant when I input my address is very likely just an estimate of my monthly rate 2.) It’s impossible for me to know what anyone else’s estimates would be without putting in their addresses. That being said, what I can certainly do is analyze that plan with my own address. I live in a two-thousand square foot town-home, fairly new construction, and with a 2 year old A/C unit that is on the lower end of energy efficiency. Here were my results:

Your Predictable 12 amount is $150.00 per month.

Average Monthly Use 5000 kWh 4000 kWh 3000 kWh 2000 kWh 1000 kWh 500 kWh
Average Price Per kWh 0.03 0.04 0.05 0.08 0.15 0.30

Now, lets explain what that means. The math is simple, just multiply the kWh by the Average price to get your monthly average. The first thing that should jump off the page is that the 1000 kWh plan is LITERALLY the exact same price per month as the 500 kWh user. Use 500 or 1000 kWh? Who cares, pay Reliant $150. In fact, if you stretch the math onward, you’ll see that 4 of the 6 possible rates per usage come out to…exactly $150. The other two come out at $160. So basically, Reliant is going to make sure they are making $150 a month on these customers, whether they’re living in a 1 bedroom studio the size of a broom closet or a 5,000 acre compound with a private zoo.

I suppose this should immediately disabuse anyone of the notion that this kind of plan makes sense for a budget conscious retiree or recent college graduate. The .3 rate they quote for someone using 500 kWh is more than three times the cheapest plan available on Power To Choose, and double the most expensive fixed rate plan in the 500 kWh range. In fact, it’s more than twice as expensive as all but one of the five Reliant plans listed on Power To Choose. Personally, I don’t think it’s very budget friendly to charge double or triple rates just so you know exactly what your monthly bill will be, but that’s just me.

And it gets worse. Again, I can only compare this bill to my own historic electricity usage but I pulled my bills to make a comparison. Thanks to Reliant’s easy math, my yearly bill on their plan would be $1800. But looking at my past 12 bills, I can immediately tell this is a bad proposition. Over the past 12 months, I had exactly one bill that was higher than $150. My bill for last July clocked in at $157. So one bill, in the hottest month of the year, topped the $150 Reliant would look to charge me every month. Of course, I also had 7 bills less than $100, including 5 bills under $60. The total cost of my last 12 months of electricity was $1148.45. That’s $651.55, or 36% less expensive than Reliant’s Predictable 12 Plan. That seems like a pretty expensive premium to pay just to know exactly what your electricity bill will be each month. Anyone who can afford that probably isn’t worried about budgeting their monthly bills in the first place because they are affluent, and the irony is they can still get a better deal simply by doing nothing.

 

Other Considerations

The price tag alone isn’t the only thing to consider. As we’ve demonstrated above, despite being tagged as a “budget friendly” plan, this isn’t a plan that makes sense for anyone who is financially concerned about their budget. On the lower end of the spectrum, the plan is extremely expensive.

There are also a couple energy efficiency points. First off, it appears that Reliant is estimating the monthly rate at least in part on past usage. But what happens if someone were to spend money outfitting their home with new energy efficiency appliances? Any possible energy savings or improvements would be lost on their bill simply because the plan doesn’t take into account actual usage. And in this day and age we’re making improvements on the energy efficiency of home appliances and electronics by leaps and bounds. But none of that would matter to any customer on this electricity plan.

Another energy efficiency point to consider is responsible conservation. This plan doesn’t exactly encourage customers to be on their best behavior. It doesn’t really matter if they would leave their electricity on all hours or run their A/C at 65 degrees in the middle of August…because no matter what the bill is going to be the same. So in that regard if someone is looking to raise a dozen penguins in their home year round, well, this is the electricity choice for you! That’s hardly a positive considering the state of Texas is facing an uphill battle to build new electricity generation plants even as our population continues to boom. Of course, Reliant likely doesn’t care about that since their parent company, NRG, currently owns a huge percentage of Texas’s electricity generation and can only make more money from any electricity shortages.

Conclusions

I think it’s safe to say that Reliant Energy’s Predictable 12 Plan probably isn’t the best option for anyone even remotely concerned with their monthly electricity bills. For all but the largest users of electricity, the rates are extremely high. Anyone who can afford $1800 a year on electricity service probably doesn’t have to concern themselves much with their monthly utilities budget. However, for a small niche of customers wealthy enough to want to build snowmen in their living room year round this plan might make good sense. But an average customer like myself can save more than $600 a year just by paying for the electricity I actually use.

Power Generators Continue Campaign to Squeeze Texas Electricity Customers Dry

In a turn of events that stuns absolutely no one, the energy generators in the state of Texas are once again attempting to leverage more money from the customers and retail electricity providers to line their pockets. And naturally, they are using the alleged, worst case scenario of an “energy shortage” in Texas and the fears surrounding it as their vehicle to increased profits. From the DMN article: Continue reading “Power Generators Continue Campaign to Squeeze Texas Electricity Customers Dry” »

Is There an Texas Electricity Market Bubble?

I’ve written before about my concerns about how Texas electricity companies are selling electricity plans at a loss, and I’ve written before about my thoughts on electricity companies potentially going out of business during summer months. Now, I’d like to take a look at something based on both of those concerns combining to cause  Continue reading “Is There an Texas Electricity Market Bubble?” »

PUC Rules Electric Companies Can’t Alter Fixed Price Rates

After the PUC voted to raise the market cape earlier this summer (with more cap raises coming in upcoming years), there were a lot of concerns about whether or not Texas electricity companies would alter the rates of their fixed rate electricity plans because of increased costs on their end. This was a controversial concept, since they would essentially be breaking their contracts with their customers. The only REP that actually Continue reading “PUC Rules Electric Companies Can’t Alter Fixed Price Rates” »

Loren Steffy Shines His Light on Raising Electricity Market Cap

In the past, I’ve had some pretty divergent opinions about deregulation and Texas Electricity with Loren Steffy, the chief energy writer at the Houston Chronicle. His latest article is no different, as I can’t help but roll my eyes at the usual swipes he can’t seem to help but take at the retail electricity market.

However, the subject of his latest article, Continue reading “Loren Steffy Shines His Light on Raising Electricity Market Cap” »

My Experience With a Smart Meter

I lived in an apartment for years that had a smart meter, and despite the fact that I write about them regularly on this website, I never really paid much attention to them myself. However, I recently moved into a home with a lot more electricity usage. On top of that, I saw this quote in an article in the Fort Worth Star-Telegram last week, which I found really fascinating:

Continue reading “My Experience With a Smart Meter” »

ERCOT Price Market Cap Changes Appear Politically Motivated

I’ve written before about the potential crisis in Texas due to the lack of new generation plants. Basically, not many new energy generation plants are being built, or even planned, at a time when Texas’s population continues to explode and our electricity needs along with it. The problem is that because of the deregulated electricity system, all new plants must be built by private investors instead of by taxing customers or raising electric rates. And right now the low cost of natural gas and the lack of guaranteed profits have investors leery of risking the construction of new plants in Texas.

A commonly referenced solution Continue reading “ERCOT Price Market Cap Changes Appear Politically Motivated” »

Austin Contributor Backwards on Electric Deregulation

I was perusing an article from Carol Penny, a local contributor for the Austin American Statesman, and I couldn’t help but think one thing: at least the article was published under the “Opinion” category. Sheesh. Opinions don’t need factual support, so she has that going for her, I suppose… Continue reading “Austin Contributor Backwards on Electric Deregulation” »

Texas Electricity, TCAP, and a Biased “History” – Part Four

Yes, I’m still writing blog posts about TCAP’s recent release of their “history” of deregulated electricity in Texas which they have been still pushing out heavily through PR channels the past couple weeks. I know I initially said I didn’t want to do a 10 part series on this topic, but I never said it wouldn’t take me four or five sections just for me to get through the broad strokes. Which brings us to Part Four. As things stand, I’ve gone through the “Facts” the document claims to examine as well as their “Major Findings” section. In this post I’m going to evaluate their “Recommendations” section. And after that I may or may not write a couple posts looking at some of their more hilarious pieces of “data,” as well as a closer look at TCAP the organization.

Continue reading “Texas Electricity, TCAP, and a Biased “History” – Part Four” »