You Have the Power to Save Money on Your Electric Bill 

By Marc Maxwell

Now may be a good time to review your electric bill. Rates for electricity have dropped in the past year largely because of falling natural gas prices. If you don’t know what rates are available, or what you are already paying, it’s time to have a look.

There are currently 7 fixed-rate plans available in our area for 10¢ per kwh or less, and that price is guaranteed for 12 months. Compare that price with the average cost per kwh listed on your bill.  Some consumers can save 40% or more just by switching to a more competitive plan.

You can compare rates for all electric companies at www.powertochoose.org, a website that is operated by the Texas Public Utility Commission.  Simply enter our zip code and all of the rates that are available in Sulphur Springs will pop up on the screen.

Many elderly consumers are especially susceptible to paying over-inflated rates.  Sometimes they stay with their longtime electric company out of a sense of loyalty.  Others simply lack the computer and internet experience to be able to compare rates easily.  Regardless, any consumer who hasn’t ever compared rates should take a look at what else is out there.  After all, you’re not married to the power company, are you?

Yeah, but are the other companies reliable?

Actually, it makes no difference who you buy the power from because the company you buy the power from does not deliver it, Oncor does. Whether or not your power goes out, it’s Oncor’s issue.

The company that you buy the electricity from just generates the electricity and then pumps it into the electric grid. Then somewhere on the grid is your electric meter.  When you turn on the air conditioner your meter spins, and accountants figure out which power company gets paid for the electricity.

So how does Oncor get paid? A portion of the bill that you pay each month is passed on to Oncor to pay them for transmitting the electricity to your home.  You’ll never see it, but it happens, and the rate that you pay includes Oncor’s share. The important question is, what rate are you paying for it all?

To answer that question, take a look at your bill.  Electric companies are required to disclose the rate that you paid for electricity each month.  Somewhere on your bill you will find the words, “cost per kwh used” or something very similar.  Compare that number with the listed rates on www.powertochoose.org.  Are you paying too much?

Caveat Emptor…

Not all listed rates are fixed rates; many are variable. The lowest rate on the site may not stay low for long depending on what happens to natural gas prices and coal prices.  If the prices for natural gas and/or coal rise, so will a variable rate. Currently the lowest monthly variable rate (StarTex Power) is 9.4¢, while the lowest 12-month fixed rate (Champion Energy) is 9.8¢. In a few months, that variable rate may be higher than 9.8¢.

But what if natural gas prices fall?

Natural gas prices could fall farther, but that is not very likely.  Take a look at the following graph.  It shows natural gas prices over the past year.

If that doesn’t convince you, consider the following. Electric companies are charging a higher rate for long term contracts than they are for short term contracts.  For example, a six-month fixed rate commitment with StarTex Power will get you a rate of 9.6¢.  If you want to get a 12-month commitment it will cost you 10.0¢, and a 24-month commitment will cost quite a bit more at 11.2¢. The electric companies think that rates are going to go back up.

Hold on, not so fast there.

Before you make the switch to a new electric company, you should first know whether your current company is going to charge you an early termination fee for leaving.  If you previously switched from TXU, or even if you switched to a different rate within TXU, you may be subject to early termination fees if your contract has not expired. If you are subject to an early termination fee, it may or may not be worth it to change. You will have to do the math to determine if the switch is worth it.

For example, I’m currently paying 12.8¢ per kwh.  I am 7 months into a 24 month fixed rate contract, and my early termination fee is $295.  I could switch to the StarTex 24 month plan at 11.2¢ per kwh and save 12.5%.  That works out to about $584 over the remaining term of my contract.  The only question now is “am I willing to pay the extra $295 now so that I can save $584 over the next 17 months?” It’s a pretty good deal, but Cirro Energy has in interesting 18 month fixed rate plan at 10.9¢   Hmmmm…

To help cover the cost of early termination fees some electric companies are offering a cash bonus to sign up.  Just this weekend, Reliant Energy offered to pay me a $50 “welcome bonus” if I signup for their 18 month fixed rate plan at 11.5¢.  Perhaps you got the same letter in your mailbox.

One more thing…

Some electric companies charge a monthly “meter charge” or “customer charge”, while others do not. For example, StarTex Power does not charge a monthly fee for its 9.4¢ month to month plan, but Ambit Energy charges a $9.99 monthly fee if you use less than 1000 kwh per month.  Know before you buy.

Thankfully, all electricity in Texas comes with an energy facts label, much like nutritional labels at the grocery store. On the label you will find information about:  the length of the contract, early termination fees, the type of rate (fixed or variable), the rate itself, whether there is a monthly charge (and how much), and how much you should expect to pay for 500 kwh, 1000 kwh and 1500 kwh.

You can also find out what proportion of the electricity is generated from coal, natural gas, nuclear, renewable  and other sources.  So, if green is your thing, check the facts label. It’s on the website. www.powertochoose.org

If this all seems a bit too complicated, come by and see me at Main Street Farmers’ Market on August 1st, 8th, 22nd or 29th.  I’ll be there from 8am to 2pm, and I’ll have my laptop computer with me so we can compare rates.  There is no charge, and neither I nor the City has anything to gain from it.  Well, ok, perhaps you’ll buy some produce or seafood or something while you are at the market. One more thing, don’t forget to bring your bill with you.