Texas Deregulated Electricity Primer

by | Aug 26, 2015 | Deregulated Electricity, ONCOR, Texas Deregulated Electricity, Texas Electricity

I saw this nice little article in the Texas Monthly today as a primer of things customers should know about deregulated electricity in Texas. It’s a great premise,  and the three things they listed are certainly things Texas customers need to understand, but I’d definitely expound on a few things that Texas electricity customers should be aware of when looking for electricity providers.

So in addition to Kilowatt Price, How to Switch electric companies, and where to shop for electricity, here are some more in-depth things customers should understand and evaluate:

Understand Your Usage:

When shopping for a new electricity provider, most people just look at the advertised rate. But most plans, regardless of how long you sign up for, actually have three DIFFERENT rates based upon usage. So if you use between 500-1,000 kWh a month, you’ll pay one rate, between 1-2,000 kWh you’ll pay another rate, and an additional third rate for anything above a 2,000 kWh threshold. So depending on what your monthly usage is, and whether you live in an apartment or house, you’re going to look at the different rates at different thresholds while you shop. You can find the different rates for different thresholds on an Electricity Facts Label.

Minimum Usage Charges:

Dovetailing with the point above is Minimum Usage Charges. These have become a bigger deal in recent years, and it’s easy to understand why. The premise behind minimum usage charges is that at certain prices, and electricity provider will actually lose money on a customer unless they use a certain amount of electricity per month. Hence, if you don’t meet a certain threshold of usage (it’s different for every provider), they’ll charge you a flat fee (also different for each electricity provider). So again, you need to be aware of your usage, and the penalties with not meeting certain thresholds. It is important to note that not ALL plans have minimum usage charges. Again, this is information that will be disclosed in the Electricity Facts Label.

Contract Expiration:

One of the most common complaints I see on Texas Electricity Ratings is people complaining how their rates shot up at the end of their contract. Now, electricity companies are required by law to notify customers when their contracts are up, but that stuff can be placed at the bottom of a bill, or tossed altogether if people pay online and don’t open their bills, etc. It’s better just to KNOW that when your rate is up, if you don’t lock in another contract, a provider is probably going to double your rate by placing you on a month-to-month plan without a contract. So plan accordingly and know in advance when you need to start shopping for another electricity plan.


Transmission/Distribution Service Providers (TDSPs):

Another great point of confusion I see is people lauding their electricity provider for not having any power outages, or slamming them when there are too many outages. I also see lots of furious people at their electricity providers for “delivery charges” (among others) that appear on their bills. The fact is, this has nothing to do with the company they pay for their electricity service.  That all falls under their TDSP. In Texas, the TDSPs are Oncor, Centerpoint, AEP-Central, AEP-North, Texas-New Mexico Power. These companies are responsible for maintaining the poles and power lines, and the general infrastructure that delivers the electricity from the grid to our homes. Those charges we see on our bills are the fees we pay to TDSPs for grid upkeep. It’s good to know where those charges come from, and what they are for exactly, before customers get angry at their electricity providers.

That’s just a few of the things that I see lots of confusion over in regards to shopping for electricity, as well as shopping tips to help Texans understand exactly what they’re getting. Hopefully it helps out anyone when it is their time to shop for a new electricity provider.

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