How Do Tiered Rates and Bill Credits Work in Texas?
Comparing Texas power plans can be confusing sometimes. Some months the advertised rates and average bill estimates align, but other times – like right now – those figures don’t seem to correlate. So, why does that happen? The short answer is a tiered rate and bill credit in a Texas electricity plan can have wildly different bills with small changes in power usage.
Tiered Rates for Different Customers
Though similar, tiered rate plans and bill credit plans work differently. Tiered rate plans have usage windows where all power used within a range results in one rate. For example, a plan may charge one amount for usage up to 1,000 kWh. Then, you pay nothing for the next 500 kWh (up to 1,500 kWh total usage). Following that, you pay a rate for each kWh consumed. Therefore, you have three tiers: 0 to 1,000 kWh, 1,000 to 1,500 kWh, and 1,500+.
The only two tiered rate plans available on Texas Electricity Ratings serve two separate customer bases. The Solar Value 12 plan from TXU Energy has two tiers: 0 to 1,200 kWh and 1,200+. This plan targets low usage customers. The first tier’s rate is 14.1 cents, and the second is 19.7 cents. However, high usage customers are better served by the 12 Month Flat Tier Product from Constellation. It has two tiers with descending prices: 0 to 500 kWh (25.8 cents) and 500 to 1,000 kWh (12.9 cents).
Texas Bill Credit Milestones
Bill credits are usage milestones that correspond to a discount on your electric bill. For instance, a bill credit plan may offer a $75 discount when a customer uses 1,000 kWh in a billing cycle. Some plans even have two bill credits. Usually, customers reach those bill credits at 1,000 and 2,000 kWh, but those milestones vary plan to plan.
The bill credit plan with the lowest rate is the Frontier Saver Plus 12 from Frontier Utilities. While the rate is just 12.3 cents per kWh, the average bill is $196. This plan offers one $125 credit at 1,000 kWh.
If you want a lower average bill, check out the Savvy Value 24 plan from TriEagle Energy. Though its rate is higher at 16.7 cents, the average bill is just $167. The plan barely qualifies as a bill credit plan with one small $30 bill credit at 2,000 kWh. For all intents and purposes, it is a straightforward pricing scheme with a little bonus for high usage customers.
Can You Save Money with These Plans?
People always want to save money on electricity. Thus, many consumers find tiered rate and bill credit plans advantageous to them. Understanding your normal usage is key in determining whether these plans are right for you. A good rule of thumb for tiered rates is your normal usage should almost always fall within a free tier. It’s even better if your usage falls toward the high end of a free tier. As for Texas plans with a bill credit, your normal usage should fall just above the mark for earning all the plan’s bill credits.
Choosing Your Plan
Maybe tiered rates and bill credits are right for you. Or, you might benefit from other pricing structures. The best way to find out is to shop for plans at http://www.texaselectricityratings.com/electricity-rates.