Understand Promotional Rates

Posted on Posted in Indexed Rate, PUC/ERCOT, Special Promotions, Variable Rates

It’s Monday, so that means it’s time for us to take a look at the market prices for Month To Month plans and what the market is shaping up this week for shoppers. But first, I got an email from someone last week who was angry and asking me some questions about her electricity rate increasing, and since it’s probably the most common theme I see on the website, I’m going to address some of that email here. It deals with Month to Month plans specifically, so this is also a good fit.

Someone sent me an email upset that their rate had gone up substantially a month or two after they had signed up with a new provider. They signed up for a rate around 9 cents per kWh, and their new bill was charging them at 11.5 cents per kWh. This person understood that with a month to month plan, their kWh was going to change, but they didn’t expect this kind of jump, and they were particularly upset when they logged back onto the internet and saw that the same company was actually offering CHEAPER month to month rates currently than the one they had signed up for a couple months ago. So what’s the explanation?

In short, many of the Month to Month rates that people see in, both on my website, as well as any other website (such as Power To Choose) are Promotional Rates. They only last a month, maybe two months, maybe three. And then at that point, customers will be switched to a higher month to month rate. Basically, it’s a discount on your first X number of months of electricity. So what can you do about it? Not much, other than continue to educate yourself and try to understand the ins and outs of the Texas electricity market. An electricity provider is required to inform a customer if their rate is promotional, and for how long, in their Electricity Facts label for the particular plan that they are interested in purchasing. Basically, it amounts to reading the fine print. Take 5 minutes to look over the electricity facts label and see if the rate is a promotional rate or not. Not every REP uses promotional rates. But at the same time, not every low rate you see is going to be permanent.

This post ended up running a bit longer than I expected, so I’ll update the market prices in another post here in a few minutes.

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