Texas Electricity: Minimum Usage Charges

Posted on Posted in Ambit Energy, Amigo Energy, Bounce Energy, Centerpoint, Champion Energy, Cirro, Direct Energy, Dynowatt, First Choice Power, Gexa Energy, Green Mountain Energy, Kinetic Energy, Mega Energy, MX Energy, Reliant Energy, Southwest Power & Light, Spark Energy, StarTex Power, Stream Energy, Tara Energy, Texas Power, TXU Energy

Earlier this week, I got an email from a Texas Electricity Ratings reader, suggesting I write an article about Minimum Usage charges. We’ve discussed Minimum Usage charges in the past here, but to clear things up, in short, they’re additional charges that are tacked onto a person’s bill if they use less than a certain amount of electricity per month.

The tricky part is that the charges and the thresholds for the charges are different for every REP (Retail Electricity Provider). Which is what the reader asked me about. I thought it was a great idea, and I should have thought of it myself a long time ago. So I ran through most of the major providers operating in Texas and researched to put together a list of the minimal usage charges for each provider, as best as I could find. So below is a guide to the minimal usage charges for Texas electricity.

Ambit Energy: $9.99 for less than 1000 kWh per month
Amigo Energy: Depending on the plan it is $9.95 of $6.95 for less than 1000 kWh per month
Bounce Energy: $4.95 for less than 1000 kWh per month for almost all of their plans, except intro plans are $6.96 per month for less than 1000 kWh.
Champion Energy: $4.95 for less than 500 kWh per month
Cirro Energy: $5.25 for less than 1000 kWh per month
Direct Energy: I couldn’t find a Monthly Fee in their Terms of Service or EFLs
Dynowatt: $6.95 for less than 1000 kWh per month
First Choice Power: $5 for less than 650 kWh per month, plus a $4.95 base charge
GEXA Energy: Seems to simply use a sliding rate per plan for different usage w/o a minimum charge
Green Mountain Energy: Didn’t seem to see any minimum usage charge in the EFL or Terms of Service
Mega Energy: $12.96 for less than 1000 kWh per month
MX Energy: Seems to simply use a sliding rate per plan for different usage w/o minimum charge
Reliant Energy: $9.95 for less than 800 kWh per month
Southwest Power & Light: I didn’t see minimum usage but they had a $7.95 monthly meter fee.
Spark Energy: $8.99 for less than 1000 kWh per month
StarTex Power: $4.99 for less than 500 kWh per month
Tara Energy: $6.95 for less than 500 kWh per month
Texas Power: $10.00 for less than 1000 kWh per month
TXU Energy: TXU uses a base $4.95 charge and sliding rates for less or greater than 1000 kWh, per plan.

Also, I’d like to point out a few other things about the list above. First off, just because I didn’t find a charge doesn’t mean there isn’t one…I just could have missed it looking through the documents. Additionally, all the EFLs I looked at were from plans in the Centerpoint service area. I looked at at least 2-3 plans for each provider to get an idea of consistent charges listed…I did NOT pour through every EFL from every single provider. This is simply to give people and idea of what to expect, and hopefully be helpful. Also, it’s important to note that for the guys that don’t have any minimal usage charge, chances are high they simply tacked it onto their sliding rate scale. But if you find a great price on a guy with no listed charges, then absolutely go for it.

One last note, Stream Energy’s EFL was…weird. Despite advertising their tiered pricing for rates on a 500, 1000, and 2000 kWh scale like everyone else in the market, the fine print of the EFL says their actual tiers are:

The Price is a tiered
pricing structure, based on the following tiers: i) up to 699 kWh depicted in the EFL as Average Monthly Usage of 500 kWh, ii) 700 to 1,499 kWh depicted in the EFL as Average Monthly Usage of 1,000 kWh, and iii) 1,500 to 2,499 kWh depicted in the EFL as Average Monthly Usage of 2,000 kW

So just keep in mind that you have to use a bit more electricity to get to their cheaper electricity rates.

Any questions?

33 thoughts on “Texas Electricity: Minimum Usage Charges

  1. I am a winter Texan so I am only there for three months Jan/Feb/Mar. Seems to me that with the latest push to conserve electricity, that the companies should make it more attractive to not use any at all. In my case I have Cirro Energy which bought out Simple Energy. With Simple I paid nothing for the months with no usage. No with Cirro it is $6.95+taxes so my monthly bill for no usuage is $17.19….

    Unfortunately when I did similar to you and examined each companies documents I missed the fact I could have gone with Ercot and paid $3.15/mth for no usage with the plan being 10c/kwh as I am paying with Cirro.

    Live and learn…soon as my contract is up, but not until next July..I will be switching. I would encourage anyone changing companies to contact the provider and find out exactly what they will be paying for certain amounts of usage or not.

    1. Jim,

      Education is the biggest thing that is lacking in the deregulated market. Lots of people just don’t want to take the time to figure out how it looks, and to understand what to look for in the fine print. I applaud you for doing your due diligence.

      I do have a question, however. You said you could have gone w/ ERCOT? ERCOT is the governing (or one of) body of Texas Electricity. They don’t offer any kind of electricity plans – To My Knowledge at least. Are you sure it was them you gong have gone with for $3.15 a month? If so, I’d be curious to hear more details about that.

      1. Sorry…meant to say Epcot Energy…I think there is one other as well where someone is paying $3.15, I think it is the one that is like a co-op.

        Jim

    2. Jim,
      I am in the same boat as you. I use very little electricity and Simple Power was the greatest because our bills were a consistent rate each month, regardless of the power consumed. Simple Power was the only power company that I loved since it was simple, straight-foward pricing. Now with Cirro, we all have to play the game again, and it sucks (plus, Simple used to let me pay with an American Express, now Cirro only allows Visa or MasterCard…*angry face*). Let the search resume :(. Big thanks to the writer of this blog for compiling this list.

  2. Hi,

    I just found this site and was hoping for assistance. I am in sticker shock…I had less usage this month on electricity, and yet my bill was over double the amount of the maximum we have ever had..it went for 0.116 for July bill to 0.244 pr kwh…I am wondering if they can more than double the rate in a month? Is there any regulations regarding monthly rate jumps? Suggestions/guidelines/ideas???
    ThankYou..

    1. Lori,

      First I’d need some details as to what kind of plan you have. Obviously, it’s not a fixed rate plan. So it’s a variable or indexed plan. No, there is no rules or caps about rate hikes for variable plans. They are at the sole discretion of the electricity company, although they all keep pace w/ the price of of electricity on the grid. As for indexed plans, they’re tired directly to the grid prices for electricity with a mathematical formula.

      The thing is, in either case for you, your bill is almost certainly an anomaly of the record breaking heat the past month in Texas. If you have an indexed plan, you’re paying a percentage on top of what the REP’s pay to buy electricity, and this past month the spot market has had energy spikes that have made electricity 60 times it’s normal cost. If you’re on a variable plan, your REP almost certainly raised their rates to cover the cost of having to buy your electricity on the spot market. I actually wrote an article explaining what this market is doing to REPs and what’s happening to cause rates like this recently. You can read it here:

      http://texaselectricityratings.wordpress.com/2011/08/09/texas-electricity-crisis-explaining-the-market-dangers/

      But in short, what has happened to you isn’t an instance of price gouging or anything nefarious. The market is just extremely tough right now. Customers that aren’t on fixed rate plans are at risk for getting bills like yours. There was actually an article/report that touched on this issue on ABC earlier this week. That link is here:

      http://abclocal.go.com/ktrk/story?section=news/consumer&id=8322928

      Sorry. But I hope this helps explains some things for you and give you some clarity on why this is happening. Personally, I always try to stay on a fixed rate plan, preferable that I sign up for in December or January, when the rates are the lowest in Texas.

  3. Great blog. I have a question with regards the minimum usage charges hopefully you can answer. Actually, I just realized my first point of confusion is whether minimum usage charge is the same as base charge. E.g. I’m looking at Pennywise EFL and it states the following:
    Base Charge: $9.95 per billing cycle < 1000 kWh
    Does that mean that if my usage for the month 999 kWh I would pay almost $10 more than if the usage was 1000 kWh?
    For a minimum usage charge I would never expect that be the case, but for base charge that's not clear to me. Thanks in advance.

    1. Jeronimo,

      I pulled up an Electricity Facts Label from Pennywise. In this instance, yes, Base Charge is the same as Minimum Usage Charge. In regards to your second question, yes, if you use 999 kWh for a month, then you’re going to drop an additional $10 for not going over 1000 kWh. It isn’t a sliding scale. It’s also the same thing for a minimum usage charge with other REP’s.

      It’s funny you mention Pennywise Power. I’m writing an article about them that I plan to post soon, talking about who they are and why they might exist in this market.

      1. Thanks a lot for the reply. I understand why it is easier for the REPs not to have a “sliding scale”, but that’s just not a fair system. That’s a bit different for a minimum usage charge, where you don’t have these “consumption zones of unfairness”. This is going to get my provider comparison more interesting. 8 months of the year I’m in the 500 kWh range, and 4 months a bit over 1000 kWh.

  4. Great information. I am in Grayson-Collin Coop, so we have no choice. We also have no incentives for conservation or solar installations. I have to pay $18 a month as a base charge plus about $0.105/kWh (plus sales tax of 2% and a franchise fee of 4%). I don’t use much electricity so my effective rate when including the base and fees is about $0.14/kWh.

  5. Any electric companies out there at present charging no minimum (base) fee? It is a shame that users who conserve energy well pay the brunt with these minimum charges.

    1. Jack,

      Here’s an article I wrote awhile back about the REPs and existing minimum usage fees. It’s a bit dated, but it was the best I could dig up at the time:

      Also, and I really want to stress this, keep in mind that the minimum charge doesn’t exist on an island. You could find a plan without a minimum charge, but the rates might be higher to the point of still being more expensive than a plan with a minimum charge where you conserve beneath the threshold.

  6. Your website has been most helpful. I’m also an occasional Texas since I’m there for my mom who’s 90 and sometimes needs us there constantly. Both she and I are due to renew with Stream Energy and I noted your specific comment regarding this provider-she’s on medicaid due to financial status. Have you learned anymore about this particular company’s minimum rates and the rate varying with usage?

    1. Nancy,

      I haven’t done any more research, but you should be able to find out that information yourself by reading the Electricity Facts Label of the specific plan your mother is enrolled in with Stream Energy. It will be laid out there. Hope this helps.

  7. Isnt it ironic that the more we spend to make our homes energy efficient, the more / higher our rates are. If anyone at either the power companies or our elected leaders gave a damn about energy conservation; the system would be reversed. Those that use more should pay a higher rate and those that live more responsible and choose to conserve should be paying the lower rate. Now that my friends is how you conserve your resources.

    1. Rob, I understand your point, but that is a pretty unrealistic system. In everything in this world, be it a commodity like oil, electricity, or even the jumbo mayo at Costco, customers get cheaper rates for buying something in bulk, so to speak. Electricity is no different. It’s a commodity. Electricity companies have to buy your electricity in advance of your usage, so they estimate. If you use less than their estimation, they have to eat that difference in cost. Electricity companies don’t want to lose money on having you or anyone as a customer. And with these companies having employees to pay, and man hours spent on a company infrastructure, a minimum usage charge exists for a reason.

      People may not like it, but it’s a pretty standard paradigm in any field, be it electricity or mayonnaise. At the end of the day, the cost savings people realize by making their houses more energy efficient, conserving electricity, are still substantial and almost certainly greater than not doing it, even with a minimum usage charge.

      1. Bob’s point isn’t unrealistic at all. In California, PG&E (Pacific Gas & Electric) has been doing that for decades. By encouraging customers to conserve, they avoided building additional power generating facilities, which saved them a lot of money. PG&E also gave customers rebates for buying more efficient major appliances like refrigerators and air conditioners. The rebates to customers were more than offset by not having to build new facilities. But of course California was always been ahead of the rest of the nation when it came to things like energy conservation and pollution.

  8. This latest poster with his soft touch approach to being billed unfairly is obviously a person whose job depends on positive reinforcement of their usuary.

    I think in any company, charging for NOT USING electricity is FRAUD and should be ILLEGAL.
    (yes it makes the point clearer to use caps)

    So much for any initiative to conserve electricity, this is completely contrary to conservation objectives. I am a single man, living in a single family household, and feel like I am being discriminated against, because I dont use the 800kWh thats required to avoid the $9.95 “Base Charge”.
    All I can offer is a great big MIDDLE FINGER to RELIANT and the last poster..

    1. Sir,
      You did not order enough french fries with your burger, so we will have to charge you $9.95 visiting fees.

      Sir, you only filled up HALF of your gas tank, that will be an extra $9.95 fee..

  9. Have you done anymore research on this? I did some research like this once before and some companies charge a certain amount to read the meter and some don’t. Besides the fixed and variable rate, it gets a bit silly to have to compare the rest of the details too.
    MOST IMPORTANTLY – Will I have to go to each and every company to find out the cost of electricity for my Dallas home that is used 3 – 6 months out of the year and is under 1000 for 8 months? Will the difference between 9 and 10 cents make up the difference between the extra $70-$80.00 I will be paying for non usuage? Thanks for your help, Janice

  10. StarTex has doubled their Minimum Usage Fee to $9.95/month for consumption less than or equal to 999 kWh. Drop it like it’s hot, drop it like its hot!

  11. Startex has the ability to waive the 1000 KWH minimum usage back to 499. They did that for me on my renewal . It still is a load of Bull that I should have to pay a minimum use fee on electricity that we are being told to conserve from every direction.
    Deregulation of Electricity in Texas is one of the worst things to happen to Texas ever. The minimum usage fee should not be allowed at all IMHO. A fixed monthly service fee of $4.95 for every customer is much more palatable then being told your being penalized for not using enough electricity and would more than cover the loss on a customer base that does not use 500-1000 KWH of power every month.
    The smart people that run the companys are not very consumer savvy in the way they word the Electricity facts labels.

  12. It seems insane in this day and age of energy conservation and the environmental global warming crown talking about your CARBON FOOTPRINT that the energy companies penalize you for conserving energy. Its just non sense. They encourage you to keep the lights on. I guess i will. Last month I tried to keep useage to a minimum with Cirro energy and they charge me an average of 15.98 cents per KwH.. thats CRAZY. I will be changing carriers ASAP

  13. Texas energy companies in Texas go out of their way to ensure consumers do not conserve energy, if consumers do, they get charged more. Tiered pricing is just another scheme to ensure higher profits. Texas has an electricity consumption of $24 billion a year, the highest among the U.S. states. Its annual consumption is comparable to that of Great Britain and Spain, and if the state were an independent nation, its electricity market would be the 11th largest in the world. Sadly most Texas government bodies involved in energy are conservatives.
    http://en.wikipedia.org/wiki/Deregulation_of_the_Texas_electricity_market

  14. Thanks for sharing this information on minimum usage charges levied by various electricity providers. It will serve as a useful reference for customers in understanding what to expect in their electricity bills.

  15. author of site: could you please update for year 2014 the electricity providers in Texas minimum usage fees? Would greatly appreciate it!

    thanks

  16. These retail electric providers, and there must be at least 40 of them in Texas, don’t make as much as the average person thinks. A retail provider needs a lot of residential customers to even turn a profit. The minimum usage fee is simply the cost of doing business.

    A good example would be maintaining your account and keeping the customer care agent paid while he and she sits at their desk taking customer calls. Think of it this way, if you going in for a loan application there may be some type of application fee. They are charging you for their time that you took to get an answer for a loan.

    We live in a first world country. We should appreciate that we have such a convenience of electric power that is not available to most people on the planet. If I had to choose between a $9.95 fee and being without power, I would gladly pay the fee. There is always overhead cost to everything but anyone who has never owned a business probably wouldn’t realize that.

    Bottom line: Read the contract! If you agree to it and go beyond that 3-business day timeframe after switching you could be charged for breaking it. The contract is there to protect you and the electric company. Remember they can’t just go and change your fixed rate during contract so likewise don’t try to back out either.

    We can’t expect any company to honor their word if we don’t honor our own and then run to the PUC & BBB to defend us.

  17. We need an advocate to protect consumers and stop this deterrant for conserving energy. Someone should pass a bill not to punish consumers for conservation (It should be against the law). Power companies should not be allowed to do this with any necessity (water, gas, light).

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