We at Texas Electricity Ratings have been telling anyone who would listen for a year now that electricity plans customers can shop for on Power To Choose are misleading. In a recent statement by the chair of the Texas PUC (Public Utilities Commission) it appears that finally someone in a position to do something about the problem is saying the same thing. From Paul Ring at Energy Choice Matters, the specific quote reads:
During today’s open meeting, Texas PUC Chairman DeAnn Walker expressed “concerns” with the posting of tiered rate plans on the Power To Choose website, which have low quoted rates at 1,000 kWh but higher rates outside of certain usage conditions
Staff reported that one product which had a quoted 2.3 cents per kWh average at 1,000 kWh actually had a real-word average of 10.8 cents per kWh through the product’s term, when using usage based on a standard load profile, as opposed to usage of 1,000 kWh each and every month.
Walker said that such products are, “maybe not deceptive,” but they are, “at least misleading”. Walker said that the PUC has been receiving more complaints about such tiered plans on Power to Choose.
While the chair of the PUC stopped short of calling these plans deceptive, we will not. The plans are 100% deceptive. When a plan can show as 2.9 cents per kWh at 1000k of usage, but the kWh charge at 1001 kWh of usage being more like 15 cents, well, that is deceptive. Here is what we had to say about these plans in our Summer Guide to Electricity:
For 1 to 1,000 kWh, you’re paying $27, flat. Now, if you’re living in an apartment, this is a great deal. If you can use EXACTLY 999 or even 1,000 kWh in a month, you’re getting a GREAT deal. The problem is, that some months people will pay less than that even if they own their own home, most months it’s going to go over 1,000 and into the 1,001 and higher range. And the second you hit 1,0001, you are paying 16.8 cents for kWh (this is not a great rate). If you use 1,400 kWh in a month this summer, your bill is going to be over $220. That is an extremely high electricity bill for that usage.
This is the kind of thing you see more and more of on Power To Choose…plans that manipulate the pricing just so they can look super attractive to advertise to customers. All they have to do is make 2 out of those 3 boxes at the top look attractive, and a customer can be easily fooled. At 1,001, that rate is 16.8 cents. Sure it will average out lower the closer someone gets to 1,999, but most people don’t understand that. At the end of the day, plans like this are designed to look attractive to customers who don’t read the fine print, and the reality is that those attractive rates displayed will be extremely difficult to achieve.
So yes, as you can see we have long been critical of these kinds of plans as they have been displayed on Power To Choose. And it is exciting to think that the people who run the free, state -sponsored-shopping-space are starting to seriously consider more oversight into the types of plans that can easily mislead customers and set false expectations. The healthiest thing for a deregulated electricity market is for customers to:
A.) Trust they are getting a fair shake from providers
B.) Customers actually have a chance to save money by leveraging a competitive marketplace.
Right now, having plans like those on Power To Choose gives them a de facto stamp of approval and it also endangers both of those two things for Texas consumers. On top of that, they can potentially land Texans into expensive plans that don’t fit their lifestyles. Texas Electricity Ratings has worked hard to fight against that kind of outcome since we went into this business in 2009. The reviews we solicit from customers hopefully encourages other customers to do research and their own due diligence on specific electricity companies, and we actively work to curate the plans we show on our website to prevent plans like this from showing. The idea is to create a real marketplace where shoppers are armed with all the information they need, and a fair selection of plans, to find the best electricity plan for their individual needs. Having Power To Choose clean up the predatory plans that do exist on their website is another step in helping Texans maximize the advantages of a deregulated electricity market, whether it be to find cheap electricity plans or a 100% green plant to reduce their carbon footprint. Proudly, we have been doing that here for years, but we are strongly in favor of anything that helps Texans find great electricity plans.