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All About Energy

The Death of 1¢ Electricity Rates

Will McGinnis Apr 20, 2017 8:01:00 AM
Will McGinnis
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It's no surprise that most folks in Texas penny electricity rate
are familiar with Power to Choose, a website known to help Texans find their next energy provider and plan. 

 

The PUC changed the default view of the Power to Choose website, removing many of the 1¢ electricity rates. But why? Penny rates seemed like such a great deal. But were they really?

 

What's a Penny Electricity Rate?

A "penny rate" plan is one that showcases a 1¢ teaser rate for electricity use for a fixed term. While it seems like a good deal, there's more to it than that. Unfortunately, the rate can change depending on what your usage bracket, meaning that the 1¢ rate you thought you would be paying comes with some nasty strings attached.

 

Many 1-cent plans charge you a lot more when you fall outside those tiers. For example, one plan that was showing the 1-cent rate only applied to the 500-1,000 kWh/month range. If you went over the 1,000 kWh within that month the rate would jump to a 10¢ rate, making the average rate you pay per kWh 5¢.

To put this into perspective, your supplier claims that it's the ‘lowest rate possible,’ but in reality, it's all smoke and mirrors. The penny rates lure you into signing up with the supplier and these rates are usually offered at the beginning of summer. If it's a hot season, there's a high chance of going outside the specified range, letting enabling the supplier to charge you more for your energy use.

 

heat of the summer

 

How do I know what usage bracket I fall into?

A lot of folks tell me they ‘know’ that they'll only use so much energy each month, but they end up finding it hard to stay within a standard usage tier 12 months in a year, especially in places with cold winters or hot summers. That said, there are a few ways you can determine your typical usage bracket.

 

You can use consultants to research your usage and advise accordingly. Going with a third-party is a great option when trying to organize energy usage, or find low pricing with minimal effort. Third parties have the your best interests in mind since most aren't paid by the providers to advertise on their site or platform.

 

If you'd rather not get outside help, you can take a look at your latest invoices which should show you your energy usage for each month for the past year or so. Some providers also let you see your usage online. By checking your usage bracket, you can pick the best plan for your business.

 

How does this benefit me as a consumer?

Banning penny rates is a step in the right direction. It'll help consumers pick plans that actually have the lowest rates, and are the best plans for their situation.

 

The jury is still out on what to ultimately do about penny rates, but for now the PUC is deciding whether or not to even consider penny rate plans as fixed rate products, or whether the definition of a fixed-rate product needs to be changed for good.

 

Shop Rates Today


References

[1] Paul Ring, Texas PUC Changes Power to Choose Website To Remove 1¢ Credit-Based Offers From Default View, Commissioners Consider Whether Products With Usage Credits Meet Definition of "Fixed," http://energychoicematters.com/stories/20160630a.html

Topics: texas, Power to Choose, texas electricity rates, ERCOT