Friday, May 23, 2014

Electricity: The power (may be) yours

It's one of our biggest expenses (other than food and baseball), but our choices in electricity retailers is something I (stupidly) hadn't looked into until this year.  Here in Tejas our energy was selectively deregulated in the early 2000s opening up the marketplace in some areas to hundreds of "retailers" who resell energy delivered to homes via a service provider (Oncor energy in our case).  In a nutshell, the service provider creates and maintains the infrastructure and sells the energy to retailers who handle the customer side of things.  More info can be found here, including a map indicating which states have deregulated electricity and/or natural gas:

Until one May evening last year when one of those annoying solicitors knocked on our door (at dinnertime of course) resulting in dogs barking and babies crying, I hadn't thought much about what we were paying for electricity.  We were on a plan I signed up for with TXU energy when I moved into our house in 2005 and had long since forgotten what the rate was, but this young man (who was probably in high school and had never paid for his own electricity) reminded me that I had the POWER to CHOOSE!  

I don't buy anything from someone who knocks on my door, especially the guy selling $100 magazine subscriptions for "charity", but the brief interaction led me to the interwebs where my research (and spreadsheets began).  After spending an hour one evening parsing through 2 years of emailed electricity bills while sipping on one of my favorite brews, I had enough data to conclude that we were paying way too much for electricity at an average of about $.12/kwh and at times up to $.135/kwh when our usage was low!  Our typical usage is under 1000kwh/month 9 months out of the year (we have gas heat and hot water) and ~1500kwh July-September when our A/C is battling the 100+ degree Texas heat although we did eclipse the 2000kwh mark a couple of months in 2012 when the temperature was over 100 for a record number of days and my wife was incredibly pregnant with our twins. 

Armed with my newly collected data I headed over to to find our new money saving electricity plan.  Understanding your usage is a very important part of shopping for electricity, there are big differences in pricing depending on which bucket your household falls into and you need to find a plan that best matches how much energy you use.  Some quick math (usage * rate = monthly usage charge) will give you a good idea of monthly savings, for example our 1000kwh/month usage at our old plan's $.12/kwh = $120/month whereas a new plan at $.09/kwh would only cost $90 ignoring taxes, fees etc. leaving us $30 for Redbox movies and $1 drinks from McDonalds (can you say date night??)

Some plans will also charge a base fee if your usage drops below a certain threshold so be aware of that and check the fine print if you're a low energy user.  This is something I looked closely at since were the (fortunate?) recipients of a new HVAC system last November and I'm betting we can beat those numbers supplied by our 25 year old system this coming summer.  That said, in our case focusing on the lowest cost for the sub 1000kwh bucket while balancing costs above that was the best route.  There are also options for fixed, variable and market plans as well as contract durations, earlier this year we signed up for a 3mo contract with a new company to test them out and got a $.0525/kwh rate to boot!

There are lots of fees and other variables associated with energy costs so be very careful to review and understand them all, having a good understanding of the Electricity Facts Label is a good place to start and gives you a good way to compare plans you're considering giving you a good understanding of what the average cost will be for each usage bucket including fees etc.  It's also a good idea to monitor pricing in your area over time, here in Texas rates usually go up in May and can skyrocket over the summer (be careful with market and variable rate plans!) but are typically pretty low in January.  I'm kicking myself a bit for not doing a 1yr plan instead of a 3mo earlier this year but the $.0525 rate was too hard to pass up and I was a little weary about locking in for too long with a retailer that didn't have any reviews.  In the end, after our 3mo plan ended we locked in a plan for the next year at $.096/kwh which is about 20% lower than the 6 month plan we were on last year, not too bad for a few minutes of poking around on a website.

One other thing to note, you have access to special promotions using websites like and in my experience you'll see higher rates when going directly through a given retailer's website so keep that in mind as well!

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