How do tiered rate plans impact TXU Energy bills?
If you think all the electricity you buy costs the same amount, you may be wrong. Some retail electricity plans have consistent pricing for all usages, but most don’t. Even when they do, the base charges assessed by most transmission and distribution utilities (TDUs) such as the Houston area’s Centerpoint Energy make the average price of electricity vary slightly at different usages.
Fixed-rate electricity plans with base charges assessed by the retail company impact the average price per kWh in the same way. The base charge is applied to all customers equally; therefore, this charge increases the average price for lower usage customers as compared to higher usage customers.
Tiered rates and bill credits can make drastic differences in the price of electricity consumed at varied usages. With some plans, crossing into a new tier can mean a large increase in that month’s bill. Conversely, earning a bill credit can cause a hefty decrease for an electricity bill. When you subscribe to one of these plans, it is important to understand your normal usage. Remember that usage varies as the season’s change. This affects how the tiers and bill credits align with your usage pattern. Tiered rate electricity plans could cost you more than necessary if you’re not careful.
TXU Energy offers Texas electricity customers two-tiered rate plans. You may decide one of them is right for your home.
Fixed-rate electricity for one year
The TXU Energy Clear Deal 12 plan is a tiered plan, unlike other tiered plans. In most tiered plans, a customer pays a set rate for a range of electricity usage with the plan including several ranges — or tiers — where a customer’s monthly usage fits. Any usage within a given range pays the same dollar amount on the electricity bill. This TXU Energy plan doesn’t fit this usual mode.
This plan has two pricing tiers where customers pay different rates per kWh. For the first 1,200 kWh of usage, customers pay a relatively low rate per kWh. For electricity usage beyond 1,200 kWh, customers pay a relatively high rate.
Using the Centerpoint Houston-area electricity facts label (EFL), a customer pays a $9.95 base charge assessed by TXU Energy. Centerpoint also assesses a $5.47 base charge + $0.045982 per kWh charge. There’s also a $30 bill credit that kicks in at 800 kWh making the average price even less for electricity between 800 and 1,200 kWh. The consequences of not reaching the bill credit with this plan aren’t severe like most other plans that include bill credits in their pricing structure. You can still get a good price if you use less than 800 kWh in a billing cycle.
With all these charges and the bill credit factored in, a Houston customer using 1,000 kWh of electricity pays an average rate of 10.5 cents per kWh. The average rate is 13.2 cents at 2,000 kWh.
The 1,200 kWh threshold makes a big difference. If your normal usage stays below the 1,200 kWh mark, this 12-month fixed-rate plan could suit your needs. Understanding your EFL is critical to ensuring you get a good deal on deregulated electricity.
Two years of price locked electricity
The TXU Energy Clear Deal 24 plan has the same pricing structure as the plan described above but with higher prices. In exchange for a longer price guarantee for the customer, TXU Energy charges higher prices and a near double early termination fee. Under the same circumstances outlined above, a Houston customer pays an average rate of 11.5 cents per kWh at 1,000 kWh and 14.4 cents at 2,000 kWh.
Do you understand your electricity plan?
The first step to reducing your monthly electricity expense is to understand how your current plan’s pricing responds to your usage pattern. If you’re happy with how your electricity plan impacts your bill, explore plans on our website. You can compare electricity plans from TXU Energy and other companies because TER shows the most important information prominently and has innovative electricity plan picking tools to guide you. TXU Energy tiered rate plans may be right for you, or you could find another power plan that better meets your needs.