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Dan Wallach: Energy Pricing 2013

Note: The following is a guest post by my friend Dan Wallach

For the past two years, I’ve written a guest blog post here about electrical rates. Let’s do it again, shall we?

Last year, I switched from a variable rate to a fixed rate electrical plan, to avoid the occasional shocking price hikes that came with variable plans. This year, with my one-year lock-in ending, I decided it was time to look again, so once again, it was back to PowerToChoose.com. To help you sort through the offers, it helps to understand how much electricity you use every month. For those of you with a smart meter on the side of your house, you can get yourself an account at SmartMeterTexas.com. You type in some stuff from your power bill and you’re good to go. Here’s what it said for my monthly power usage over the past year:

WallachGraph1

What you see shouldn’t be too surprising: when it’s hot in the summer, our electric bills go way up to run the A/C. In the rest of the year, we’re using less. (You’ll see the July 2012 bar got cut into two half-bars. This is probably a side effect of when I switched my electrical service from one company to another last year.)

You’ll notice that, for most of the year, we’re running comfortably under 1000 kWh/month. Well, most of the electricity plans available to us have a $10/month surcharge if you go below 1000 kWh. (You have to read those electric fact labels carefully.) What’s the right way to go shopping then? Turns out, there’s a link at PowerToChoose that will let you download all the terms of every electric plan in one giant CSV file that you can load into Excel. I took that data, stripped out everything except the plans offered in Houston through CenterPoint Energy, and then sorted by the 500 kWh/month predicted cost. Estimated prices range from $48/month to $89.70/month.

Cutting to the chase, who’s got the best deal? If you want a fixed rate 12 month term, the winner turns out to be TXU’s “Energy Saver’s Edge 12”. Summer Energy is slightly cheaper with a 6 month term, but then you have to do it all again in 6 month. If you want a “100% green” power source, the winner is TriEagle Energy’s “Green Eagle 12”. At least, that’s who would have the best deal for me, given my electric usage. Just for fun, here’s a frequency distribution chart of these prices, focused on what you’d pay for 500 kWh/month, which is the more relevant number for me.

WallachGraph2

The y-axis tells you how many plans would cost you each given price (within a bucket size of $1.50). I’ve plotted frequency charts for only the fixed-price plans, and I’ve separated out the renewable ones (typically “100% renewable”) from the others. I’m not entirely sure what to make of this except to say that there are a whole lot of uncompetitively priced plans out there, and the gap between “100% renewable” and other plans has largely disappeared from the market, unless you’re looking for strictly the lowest priced plans out there.

At least in my case, the TXU cheapo plan looks like the way to go. Even then, if you read their fine print, I’d get assessed a fee if I ever went below 500 kWh/month, but since that hasn’t happened at all in the past year, I’m not going to worry about. I always find it perverse when I have a disincentive to make my house more power efficient. Say I replaced a bunch of our power-hungry halogen bulbs with LED bulbs. I might drop below 500 kWh/month in the winter and end up spending more money. That’s fantastic.

But wait! I downloaded all of this data on May 30 and that’s when I told TXU to switch me. Somehow, their computer switched me from the “TXU Energy Saver’s Edge 12” plan to the “TXU Energy e-Saver 12”. Sounds similar, right? In fact, the 500 kWh/month estimated cost for the new plan is $74/month versus the $54/month that I was expecting. Talk about bait and switch! My guess is that TXU rolled out new plans on June 1 and silently moved me from the original, competitively priced plan to the new, embarrassingly uncompetitive plan. It’s a good thing I had all the original data saved when I called, and then had to talk to a supervisor, and so forth. After 41 minutes of “we’re terribly sorry for the inconvenience” and peppy hold music, all I know is that they’re “investigating” and will get back to me in a few days.

Incidentally, Summer Energy, my current electrical provider, is June 3rd’s winner, with an estimated $50/month for 500 kWh/month of usage with a one year lock-in, so long as you use the proper promo code. TriEagle’s “Green Eagle 12” continues to be the cheapest “100% renewable” plan at $56/month. Part of me wants to just dump TXU ($54/month, if everything goes my way) and instead go with one of these others. The other part of me is just curious to see what TXU will do next. Behold the power of electricity deregulation!

(Note to readers: I’ll post an update here in a comment when I finally resolve this mess.)

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5 Comments

  1. I renewed recently and was p-o’d as usual at the surcharge for using under 1000Kw/month; this at a time when the grid operators are warning that they will be short on capacity this summer, and regulators have upped the peak price they will be allowed to charge. Why not give customers some incentive to cut their usage? The cheapest power is that which we don’t use in the first place. Why should the guy who refrigerates his McMansion pay a lower price per Kw than I do?
    The other insult is the teaser rates listed for new customers that are not available if you’re renewing your contract. This is just another way of telling me that their business model is “screwing people.”

  2. Robert Nagle says:

    A year ago, I wrote something which I’d observed to be true for the last 8 years: 1 year fixed rate green plans average 5-10% more than 1 year fixed rate dirty plans.

    Sometimes the opposite can be true; green plans can be cheaper. For my zip code 77057, the “TXU Energy Saver’s Edge 12” (which you touted as the cheapest plan) costs 10.4 cent a kilowatt. I see 3 100% green plans under 10 cents a kilowatt — with the lowest at 9.8 cents.

    Nowhere in your article did you mention that the renewable content of the TXU plan to be a shocking 8%.

    Seriously, Dan, do you own stock in a TXU coal company?

  3. Robert Nagle says:

    An interesting question would be how and why rates differ according to zip codes. I would think that rates would be fairly consistent within one area, but perhaps that is not the case at all.

  4. Dan Wallach says:

    I suppose it’s time to give an update. TXU wrote me a series of carefully worded emails imploring me to call them and straighten things out but saying nothing at all interesting, like “wow, we totally screwed up and here’s what we’d like to do.” I decided to ditch them and switch to TriEagle’s “renewable” plan. Yes, I’m paying the 10% premium over the “regular” plan.

    To address Nagle’s comment, please understand that when you buy a “renewable” plan, you’re not actually buying from windmills versus coal-burning plants. No, the electrons streaming into your house are being pumped by the same exact mix of electrical generators, regardless of who you select as your provider. What you’re buying are magic cookies, sold by the windmill people, brokered by your electric provider, and bundled into your bill. So yes, I’m now a magic cookie customer. In theory, I’m incentivizing more windmills, since they can both sell electricity and magic cookies. In practice, if you want to reduce nasty pollution from power plants today, then consume less power.

  5. CaptainK says:

    WAKE UP TEXAS CONSUMERS. Contact your legislative representative and DEMAND that since the Texas PUC keeps whining about the lack of reserve power, there should be a LAW that makes it ILLEGAL for Texas Retail Providers to PENALIZE consumers if they don’t use more than 500Kwhr/month. Someone ought to go to JAIL…this is criminal. No electric provider should be allowed to charge a monthly FEE because a consumer did not use enough electricity.

    These monthly usage fees are nothing but pure profit because they cannot disguise these charges any other way. They amount to a 22% increase cost for consumers that use 500kwhr/month.

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