When Texas became a deregulated market in 2002, The Public Utility Commission of Texas (PUCT) developed a website to educate consumers and promote deregulation. The site matured and in 2012 received a massive overhaul and became the PowertoChoose.org that Texans know today. A large-scale marketing campaign ensued to promote brand awareness and the PowertoChoose.org site soon became the place for Texans to shop for electricity. The site developed a large following.
Unfortunately, today some electricity providers take advantage of the weaknesses in the site in order to attract customers. As a result, the PowertoChoose.org has evolved to be far from an unbiased source of electricity plans with the consumer’s best interest in mind despite the PUCT’s good intentions. Learn more about the ways certain providers are exploiting this site and how consumer’s can avoid these pitfalls and find a better way to shop for electricity.
What are 5 common misconceptions of PowertoChoose.org?
While the PUCT is not actively marketing Power To Choose, it remains the primary resource for consumers to shop for residential Texas electricity. Why? It boils down to brand awareness and customer perception. Let’s break down some of the common misconceptions or ‘myths’ of Power To Choose:
Myth #1: “Power To Choose lists all Texas electricity providers”
From the beginning, Texas residential electricity shoppers have come to PowerToChoose.org to shop for electricity, mainly because the site was the first to offer comparison shopping among the many Texas electricity providers.
Also, since PowerToChoose.org is a site run by the state of Texas, residential electricity shoppers often assume that it has a complete listing of all electricity providers.
From the Power To Choose site:
“Welcome to Power to Choose, the official and unbiased electric choice website of the Public Utility Commission of Texas. This website is available to all electric providers to list their offers for free. Compare offers and choose the electric plan that’s right for you.”
The operative word here is “available”. As of June 2017, Texas has 87 (not including alternate DBA names) registered, active residential electricity providers according to the Public Utility Commission of Texas. However, Power To Choose only shows up to 55 (depending on the utility delivery area) of these providers according to the 2017 Scope of Competition of Electric Markets in Texas, also put out by the PUCT. Why? Here are a couple of compelling reasons.
First, many providers simply don’t want to play the rate game on Power To Choose.
While it may sound odd since the site is the de facto Texas electricity comparison site, many electricity providers shy away from the site because of the confusing and manipulative rate pricing games being waged on the site by their competitors. For smaller, less well-known providers this site is a golden opportunity because it’s the primary way that they can compete with the larger, more established electricity providers. However, in order to compete, some providers feel the need to manipulate the offer rate at a specific, advertised usage level in order to attract customers. Customers run the risk of signing up for an unbelievably low rate only to get burned by the fine print or an outrageous renewal rate.
Electricity providers are frustrated by the questionable business practices that have emerged as a result of the battle to be listed on page 1 of the Power to Choose search results. A provider cannot sustain a business by offering electricity rates that are actually below the regulated utility delivery rates. Many electricity providers don’t want to play this game and choose not to.
Second, the back-end maintenance of Power To Choose is very manual.
This was a common complaint by the electricity providers in the site’s 2016 open feedback sessions with the PUCT. With very limited integration capabilities, some electricity providers have chosen not to list on the site since they must manually make changes to rates, EFLs, and other information for each plan for each utility delivery area.
Myth #2: “All electricity plans offered in Texas are listed on Power To Choose”
Many electricity providers simply don’t see the value of listing all of their plans on Power To Choose anymore. The search results on Power To Choose follow the same psychology as Google’s search results. Each electricity provider who offers plans on Power To Choose tries to design an electricity plan that will appear on the first page.
As a result, the site is dominated by electricity providers gaming the rate at every advertised consumption level. Many providers do not go to the effort to list all of their plans on the site because they have to manipulate the rate in order to rank favorably. In fact, some electricity providers will offer a select few plans on the Power to Choose site only to make more plans available once the customer clicks through to their site.
Quality electricity providers recognize the value of good, long-term customer relationships. If they acquire a customer via a misleading electricity rate, the result may lead to an unhappy customer and distrust towards the provider and the competitive electricity industry as a whole.
Additionally, several electricity providers now offer plans that are designed for specific audiences or plans that promote energy efficiency. Examples include special rates for veterans/active military or plans that offer extras such as smart thermostats that customers can control from their mobile devices. With the search limitations of PowerToChoose.org, these plans simply get buried on the site.
Myth #3: “I can easily compare plans on Power To Choose”
Let’s debunk this by comparing two plans.
Page 1 Plan: 12 month fixed rate electricity plan found on page 1 of PowerToChoose.org.
Page 5 Plan: 12 month fixed rate electricity plan found on page 5 of PowerToChoose.org.
Here’s what you would actually pay for each plan:
Let’s break it down:
- Page 1 Plan is a good deal, but only for a very narrow usage range, the “sweet spot” of 500 – 1000 kWh, which is probably not what the customer intended.
- Page 1 Plan’s price more than doubles when usage hits 1001 kWh ($41 @ 1000 kWh, $99 @ 1001 kWh).
- When usage reaches 1001 kWh, Page 5 Plan is a lower priced plan and becomes a much better deal.
- For the Texas electricity market, average residential electricity consumption varies nearly 150% over the course of a year. The likelihood of a customer staying within Page 1 Plan’s “sweet spot” of 500-1000 kWh/month is highly unlikely (and that’s what the provider is anticipating.)
- Page 1 Plan has a higher cancellation fee if you get your first bill and decide this plan is not the deal that you expected.
- Page 1 Plan is actually $45 more per month than Page 5 Plan when usage levels approach 2000 kWh/month and the difference goes up from there.
How would the average user be able to easily compare these two plans on PowerToChoose.org? It would be a very time-consuming exercise in making a number of calculations and a price curve analysis based on different usage levels that are relevant to the customer.
Myth #4: “I’ll pay the advertised rate for the usage range I selected”
False (unless you either sign up for a prepaid electricity plan OR you happen to use exactly 500, 1000, or 2000 kWh).
The advertised kWh rates are not unit prices or a price/kWh for a range of usage. These rates are simply a price point for a specific usage level based on a calculation that includes an energy rate, a regulated delivery rate, and a possible base charge or minimum use fee. The actual rate you pay is based on these factors and your actual kWh usage.
Unlike other states, Texas has a unique electric rate system where ‘all-in’ electricity prices are quoted for 3 usage levels: 500, 1000, and 2000 kWh. The electricity providers in Texas are required to quote electric rates at these three consumption levels to show the consumer an example of what their average rate would be at the most common usage levels.
Unfortunately, most Texas electricity shoppers don’t fully understand how the three electric rates are calculated and the pricing games that providers sometimes play with them. To compound the confusion, Power To Choose actually uses ranges of usage in their search facet, which leads shoppers to believe that they’ll get this quoted electric rate as long as they stay within a specific usage range.
Based on the example in Myth #3 where the rate more than doubles at 1001 kWh usage, a customer could absolutely be easily mislead if they didn’t read the fine print.
Myth #5: “I can trust the electricity provider ratings”
From the Power To Choose site:
The Company Rating is based on the ratio of customer complaints a company has received in the past 6 months compared to other companies. The more stars a company has, the lower the complaint ratio.
Also, from the fine print on the Power To Choose Retail Electricity Provider Scorecard:
Disclaimer: … Signficant changes in the complaint score may occur from month-to-month for smaller REPs based on only a few complaints… Please note the complaint score is based on a rolling 6-month average of the total number of informal complaints investigated, irrespective of whether or not the company was determined to be at fault or adequately resolved the customer’s complaint… You may wish to also review other resources regarding a REP’s customer service such as your local Better Business Bureau.
In other words, the rating is simply a function of informal customer complaints per 1,000 customers (done to normalize the complaint ratio across electricity providers). These rating scores are a function of the number of informal complaints, regardless of the provider being found at fault. This is fundamentally flawed and these ratings tend to fluctuate significantly, especially for smaller providers.
The ratings also do not take into account third-party quality ratings such as J.D. Power rankings or any unbiased ratings based on benchmarks such as customer retention rates, customer satisfaction, or even company financial strength.
Lastly, PowerToChoose.org doesn’t show scorecard data (the star ranking) for companies that have been in business less than 6 months. This means that a company that’s been in business less than six months (and therefore without any complaint scores) can display any kind of rates they desire and appear on page 1 of Power To Choose search results. That is not in the best interest of the consumer.
Come and Take It … Away
Could this be the beginning of the end for PowerToChoose.org? Do state (or any other) governments need to be in the business of running retail shopping sites? While we certainly believe in consumer electric choice and deregulation in general, we feel that the role of the state PUC is to ensure grid stability and enforce standards that protect consumers. We believe that the role of a government-run website for retail electricity shopping purposes has run it’s course and served it’s purpose.
A Better Way To Shop for Electricity
Sites like ElectricityPlans.com provide a better way to shop for electricity in Texas. At ElectricityPlans.com we provide an impartial, online electricity plan marketplace for Texas electricity shoppers. We audit every plan shown on our site, making sure that all of the fine print is brought to light and customers are not surprised with gimmicks or gotchas.
ElectricityPlans.com offers free tools for shoppers to customize their search for the perfect electricity plan based on their energy consumption profile and their personal preferences. With advanced search facets that include kWh usage levels, plan length, and unique plan features, it’s easy to find the best electricity plan. With ElectricityPlans.com you have all the resources you need to find the best and the cheapest electricity plans in Texas.