Deregulation really does create jobs.
When Texas deregulated electricity markets 16 years ago, the Public Utility Commission created the website Power to Choose to help consumers through the power buying experience. But what was promoted as an easy, free way for Texans to pick electricity providers has turned into a such a complex and confounding experience that it is spawning a cottage industry to help consumers navigate the scores of companies and hundreds of plans available.
At least five companies in Texas are providing both free and paid services aimed at helping consumers in Houston and other deregulated markets decipher confusing electricity offers such as free nights and weekends, multi-tiered pricing plans, and credits for high electricity use.
The companies have built computer algorithms that try to ferret out the best deals based on factors such as past electricity consumption, home size, and the number of people living there. In some cases, it’s just a matter of plugging in your monthly electricity into a website calculator. Others provide more comprehensive services, charging a monthly fee to advise customers which plan will save them the most money and then monitor the market so if prices fall, consumers can switch.
This kind of hand-holding is akin to car buying services, which save customers the time, energy and aggravation researching models, doing comparison shopping and negotiating prices. But unlike cars, there’s no difference in the electricity provided by different retailers, making the emergence of these power buying services a sure sign of the complexity of the system.
“The third party guys demonstrate the consumer is getting ripped off by the Power to Choose artificial configuration that the Public Utility Commission has rammed down the throat of Texas consumers,” said Ed Hirs, energy economist at the University of Houston.
The Public Utility Commission recently recognized the shortcomings of Power to Choose, with chairman DeAnn Walker criticizing retail electric providers for misleading pricing plans. Those plans offer rock-bottom rates at 1,000 kilowatt hours, but if consumers use just one kilowatt hour more, the price per kilowatt hour can jump as much as 10 times.
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Jesson Bradshaw, a power industry veteran, saw an opportunity when his friends and family asked him which company they should sign up with for electricity. He sent them to Power to Choose, but he quickly heard complaints.
“I saw how confusing it was,” said Bradshaw, who worked as a power trader and owned the retail power company Amigo Energy until he sold it to Just Energy in 2011.
Four years ago, he and a partner launched the buying service Energy Ogre. The company charges customers $10 each month to find the lowest price plan and monitor rates to see if it makes sense to switch mid-contract. It doesn’t take commissions from power providers.
Bradshaw said his business is not exactly popular among the retail providers, many of which bet that customers won’t shop for better rates when contracts expire.
“They don’t like us informing the customer,” he said. “ If there is a better rate, we move them. We don’t care which provider.”
Mark Axford of Sugar Land signed up with Energy Ogre about three years ago. Axford said the company switches electricity providers at least once a year and makes sure Axford and his wife do not get hit with penalties. The monthly fee is well worth it, he said.
If you want to save, you have to shop, said Axford. “But who has the time to keep shopping for electricity?”
The trade association for retail electricity providers in Texas said it recognizes that the buying services may help customers sort through offers. But it’s important to note, said Julia Rathgeber, president of the Association of Electric Companies of Texas, that these companies are not subject to oversight by the Public Utility Commission. It’s still up to consumers to decide whether plans are right for them, she said.
Got that? If you’re paying too much for electricity, it’s your own damn fault. Never mind how confusing or time consuming the shopping process is. There’s no reason I can think of why the state couldn’t provide, for free, the kind of easy, at-your-fingertips information that these entrepreneurs have done. Why wouldn’t we want to do that, if the goal of deregulation was to lower prices for consumers? The answer to that is left as an exercise for the reader. In the meantime, here’s the sidebar that tells you how to find the best deal for yourself:
MORE INFORMATION
Companies that help consumers find the best power deals:Texas Power Guide
Website: TexasPowerGuide.com
Awesome Power Texas
Website: AwesomePowerTexas.com
Geek Your Rate
Website: GeekYourRate.com
Energy Ogre
Website: EnergyOgre.com
Real Simple Energy
Website: RealSimpleEnergy.com
You might also want to go back and look at some guest posts my friend Dan Wallach wrote about picking power plans. Good luck.
I’ve been with Green Mountain for close to 25 years now. Putting my $ where my mouth is.
Meanwhile, I shop around every year or two, and not only benefit from low prices, but I help pay for the coal, natural gas, and nuke plants that keep Fly’s lights on when the Sun doesn’t shine and the wind doesn’t blow, so I can feel good about that.
I got your back, Flypusher!
I don’t know that I would trust a state agency to navigate that process for me, if they were even offering. The Lege is so far in debt to industry lobbyists that I would never believe they weren’t cooking the books. In the meantime, I can walk away from Energy Ogre if I ever feel like they aren’t saving me more than they cost. Sadly I can’t walk away from whatever venal dipshit gets appointed to the PUC.