Why Texas Free Electricity Plans Aren't Worth It

Why Texas Free Electricity Plans Aren't Worth It

by |

Learn why you should avoid biting into a Texas Free Electricity plan. Avoid rotten deals, compare and shop the best energy deals in the Lone Star state!

Sometimes you don't know a deal's bad until you cut into it. Learn why you should avoid biting into a Texas Free Electricity plan.

Anytime a retail electricity provider announces FREE ELECTRICITY plans, customers get an ear-full about how these great Texas electricity plans can add up to savings. The problem is that these plans wind up costing customers more. That's because when you compare them “apples to apples” with other electricity plans, you not only find out the free plans have rotten rates but also that they downright suck.

Are Texas Free Electricity Plans Worth It?

Free electricity plans try to convince customers that subtracting a big chunk of your usage time will lower your bill. It's a very tempting idea. But at the core of all these free electricity plans is that the energy charge is higher than other plans by 50% or more. You still wind up paying LOTS more for the electricity that you use.

To show how this works, let's dig deeper into the plans offered by two major Texas Electricity providers; TXU Energy and then Reliant Energy.

Texas Free Electricity Providers

TXU Energy has long offered a variety of free electricity type plans. Its best known is Free Nights & Solar Days, a 12 month plan with a rate relying on renewable energy credits. The idea is that customers are billed for solar energy they use during the day and then credited for the amount of wind energy they use at night. Meanwhile, the TXU Season Pass plan is a more recent offering that lets customers take 50% off the energy charge during winter and summer months. The idea here is to give customers a discount when their usage tends to be higher.

Is TXU Free Nights and Solar Days Worth It?

TXU's Free Nights and Solar Days is probably their best known free electricity plan. The rate is indexed to the price of solar renewable energy credits during the day and the price of wind renewable energy credits at night. Solar days last from 5 am to 7:59 pm. Nights begin at 8 pm and end at 4:59 am. Customers are billed for energy they use during the day and then credited at night. TXU argues that customers who shift the bulk of their energy usage to night time stand to save money with the plan. Sure, it sounds logical, but when you tear into the details it's not easy at all.

One drawback is that the plan includes the TXU standard base charge of $9.95. As many electricity customers already know, base charges effectively add on to the price per kWh.

  • 500kWh usage: $9.95/500 kWh = $0.0199 (or 1.99 cents per kWh)
  • 1000 kWh usage: $9.95/1000 kWh = $0.00995 (or .995 cents per kWh)
  • 2000 kWh usage: $9.95/2000 kWh = $0.004975 (or .4975 cents per kWh)

The biggest problem, unfortunately, is that the TXU energy charge is about 17 cents per kWh. That's nearly 3 times higher than the current cheapest fixed rate electricity plans without tiers or bill credits.

Now, while some energy-intensive things can be time-shifted to the evening (laundry, water heating, dishwashing), others won't be. For example, the high rate can be painfully expensive during the winter and summer, especially when daytime air conditioning demand makes up the bulk of your monthly Texas electric bill. After all, no one in their right mind wants to pay 17 cents per kwh for 15 hours when it's 99?°F outside.

TXU Free Nights and Solar Days Teardown

Let's tear into how the plan works for the average Texas residence where the average monthly consumptionis around 1,000 kWh. TXU estimates that 34.30% of electricity usage will be shifted to the nights hours (real-world customer usage will vary) and so is free, along with the accompanying TDU charges. So, assuming a customer uses 1,000 kWh in one month, that means that they will only be billed for 65.7% of their total use or 657 kWh.

The bill breaks down roughly like this:

Usage: 1000 kWh ??" 34.3% (night usage discount) = 657 kWh

Energy Charge: 657 kWh x 17 cents per kWh = $111.69

TXU Base Charge: $9.95

Total TXU charges: $111.69 + $9.95 = $121.64

TDU base charge (Centerpoint): $5.47

TDU delivery charges: 657 kWh x $0.040512 = $26.61

Total TDU charges: $32.08

Total bill: $121.64 + $32.08 = $153.72

Now, if you divide $153.72 by 1000 kWh, that rolls out to 15.37 cents per kWh. Customers can easily pick much better electricity plans ??" even with other TXU plans.

Is TXU's Season Pass 12 A Good Deal?

The TXU Season Pass 12 plan that discounts 50% from the energy charge between December 1st 12:00 a.m. through February 28th 11:59 p.m. (89 days) and June 1st 12:00 a.m. through August 31st 11:59 p.m. (91 days). True, it sounds great, even apart from the base charge. After all, that's a total of 180 days of half-priced electricity. Unfortunately, the deal begins to sour when you look closely at the effect of the energy charge.

Season Pass 12:

Energy charge = 13.3 cents per kWh or $0.133

1000 kwh x 0.133 = $133.00

TXU base charge: $9.95

TXU total charges: $142.95

TDU base charge (Centerpoint): $5.47

1000 kWh x $0.040512 = $40.512

Total TDU charges = $45.982

Spring & fall bill = $188.932 ( or 18.8 cents per kWh).

Winter & summer bill (minus 50%) = $94.46 (or 9.446 cents per kWh)

Now here's the thing: the energy charge of about 13 cents per kWh is several cents above average. After factoring in the base charge and the TDU charges, the price rises to about 18 cents per kWh. So even if it only applies to the other 185 days of the year, the rate is substantially higher than average. What's worse is that it's applied during low usage fall and spring months. Customers wind up paying more per kWh even when their usage would be low. And though the summer and winter discount of 50% sounds generous, the rate still rolls out to nearly 9.5 cents per kWh. Yet, even at that rate, there are still better rates available…and not all come from plans with bill credits or rate tiers.

The big take-away with the TXU Season Pass 12 is that customers might pay lower-ish rates during high-use seasons. But during the typically low-usage seasons (shoulder months), they pay too much. Compared apples-to-apples with other 12 month plans, it looks like customers wind up paying back TXU for their winter and summer discount. And that sucks.

Are Reliant Energy Pick Your Free Plans a Good Deal?

Reliant Energy recently launched a new Texas electricity product campaign offering customers three “Pick Your Free” power plans. As with other Free Electricity plans, all three offer to discount or deduct large chunks of usage time from the customer's bill:

  • Truly Free 7 Days takes off the 7 highest usage days during a 28 day (or longer) monthly billing period.
  • Truly Free Weekends applies no charges between 8:00 PM Friday to 12:00AM Monday.
  • Truly Free Nights applies no charges from 8:00 PM to 6:00 AM every day.

All three of these plans sound like good deals at first glance. There's no base charge, there's no energy charg during free periods, and there's no TDU charge during free periods. Plus, all three plans include a free Google Nest Hub bundled in with the plan. But, as with the TXU plans, the rotten part of the deal lurks in the energy charges.

  • Truly Free 7 Days energy charge = 17 cents per kWh*.
  • Truly Free Weekends energy charge = 17 cents per kWh*.
  • Truly Free Nights energy charge = 20 cents per kwh*.

* approximate average for all TDU service areas.

As with the TXU plans, it's really hard to save money during the so-called discount time periods when customers are paying prices that are 50% more or higher during non-discounted time periods.

Compare the Cheapest Fixed Rates

Let's compare these three plans to the Champion Energy Services Champ Saver-12 plan which is a 12 month fixed, medium-priced flat-rate plan (no base charges, no bill credits or tiered rates) that has an energy charge of 7.3 cents per kwh (Centerpoint). For a full month's usage of 1,000 kwh, the Champ Saver 12 bill breaks down thus:

Total Usage: 1000 kwh

Total Energy Charge: 1000 kwh x $0.073/kWh = $73.00

Centerpoint TDU charges

TDU charges: 1000 kWh x $0.040512 = $40.512 + $5.47 = $45.982

Bill Total: $73.00 + $45.982= $121.982

Truly Free 7 Days

Now, when we look at this plan, basically you get a free high-use day every four days during a 28 week billing period. That means you get 7 days free in total. Sounds good, right?

For a 1,000 kwh usage amount, that breaks down roughly into 35.714 kWh each day for a month. In early April or late October, you're not likely to use 35.714 kWh every single day for heating/cooling, laundry, etc. So, let's say that for simplicity that you have 7 days where you do use 35 kwh. Under this plan, the total cost (both the energy charges and TDU charges) for those 7 days would be eliminated.

So, to break it down:

Total Usage = 1,000 kwh

Total Discount: 7 days x 35 kwh = 245 kWh.

Discounted Usage Total: 1,000 kwh ??" 245 kwh = 755 kwh

Total Energy Charge: 755 kWh x $0.175998 (CenterPoint) = $132.87849

Centerpoint TDU charges

TDU charges for the 755 kwh = 755 kWh x $0.040512 = $30.58656

TDU base charges = $5.47

Total TDU charges: $30.58656 + $5.47 = $36.05656

Bill Total: $132.87849 + $36.05656 = $160.93509

Here, the Champ Saver 12 plan is cheaper by $38.95309??" even though the customer gets billed for consuming MORE electricity.

Truly Free Weekends

Now, the Truly Free Weekends plan applies no charges between 8:00 PM Friday to 12:00AM Monday. That works out to about 6-8 days per month (assuming 3 to 4 weekends per month). Here, the idea is to get the customer to move as much of their high-use electricity activities to the weekends. And while you can't shift all your heating and cooling needs there, Reliant Energy estimates that customer usage on the weekends makes up around 32% of their total usage.

For a 1000 kWh usage, 32% equals 320 kWh. So, assuming a customer uses 1,000 kWh in one month, that means that they will only be billed for 680 kWh of use. The bill breaks down like this:

Usage: 1000 kWh -32% = 680 kWh

Total Energy Charge: 680 kWh x $0.169636 (Centerpoint) = $115.35248

Centerpoint TDU charges

TDU charges for the 680 kwh = 680 kWh x $0.040512 = $27.54816

TDU base charges = $5.47

Total TDU charges: $27.54816+ $5.47 = $33.01816

Bill Total: $115.35248 + $33.01816 = $148.37064

Compared to the Champ Saver 12 plan, the Truly Free Weekends plan costs the customer $26.38864 more.

Truly Free Nights

Lastly, l the Truly Free Nights plan applies no charges from 8:00 PM to 6:00 AM every day. Seriously, that sounds really good. Every single night you get 10 hours of free electricity. Over the course of a full month of 30 days, that adds up to 300 hours. That also sounds pretty good until you remember that we're only talking about time and not actual watts being used (watt hours). Still, Reliant Energy estimates an annual reduction of 42% of usage for this plan. That means for a monthly usage of 1000 kWh, customers get 420 kWh free and are only billed for 580 kWh hours.

The bill breaks down like this:

Usage: 1000 kWh ??" 42% = 580 kWh

Total Energy Charge: 580 kWh x $0.205834 (Centerpoint) = $119.38372

Centerpoint TDU charges

TDU charges for the 580 kwh = 580 kWh x $0.040512 = $23.49696

TDU base charges = $5.47

Total TDU charges: $23.49696+ $5.47 = $28.96696

Bill Total: $119.38372 + $28.96696 = $148.35068

Again, compared to the Champ Saver 12 plan, the Truly Free Nights costs customers more money: $26.36868. Truly disappointing!

Shop the Cheapest Texas Electricity Rates

Compared to just one plan from of a bushel of cheap Texas electricity plans, both TXU Energy and Reliant Energy Free Electricity plans are awfully rotten. They put the customer through all sort of grief to change their habits and shift their energy usage so they can save money. Yet, no matter how much usage gets shifted, Texas electricity customers still get stuck paying appallingly high energy charges that inflate their monthly bills.

That's why Texas Free Electricity plans suck. To start saving money on the best Texas electricity plans, shop and compare at https://www.texaselectricityratings.com.