How to Read an Electricity Facts Label (EFL)

Knowing how to read an Electricity Facts Label (EFL) is the key to finding the right electricity plan for your home or business. Hunting for the right electricity plan can be an intimidating proposition. Confusing rates, lengthy legal documents, and perplexing fees can lead to your electricity bill being higher than you expected.

When you understand an Electricity Facts Label you’ll know exactly what to expect from your electricity plan. And, the added tools on the ElectricityPlans.com site can help you make sense of the math.

What is an EFL?

EFLs are standard disclosures required by the Public Utility Commission of Texas (PUCT) for every electricity plan offered by a Retail Electricity Provider (REP) in Texas.

The EFL, along with the Terms of Service and Your Rights as a Customer document, make up your contract for electricity.

The PUCT standardizes the format and contents for the EFL. Although it might seem like a lot of paperwork, these are important documents. Their goal is to protect residential and small commercial customers from unexpected surprises on their electric bills.

When you go to read your electricity bill, the charges should match what you agreed to on the EFL. And when your energy charge is exactly what you expected? Then you’ll be glad you read the EFL.

Too many people don’t read the EFL — and they get a big surprise when the bill comes in, because they bought a teaser rate.

What’s on the EFL?

EFLs are clogged with information, from the rate you’ll pay for electricity to disclosures about the plan.

The Electricity Facts Label includes these items:

• Energy Rate – price per kWh for electricity
• Average Rate – price per kWh based on usage levels
• Base Charge – whether there’s a base monthly charge or minimum usage fee.
• Delivery Charges – charges from your local utility company. Sometimes these are included with the energy rate.
• Contract Length – number of months in your contract agreement
• Type of Plan – fixed, variable or index
• Early Termination Fee – fee that you will pay if you cancel your contract before the end of your contract term.
• Percentage of Renewable Content
• Contact Information for the Retail Energy Provider

The Pricing Disclosure section is the section that most people focus on. That will show prices for 500 kWh, 1000 kWh, and 2000 kWh usage levels. These are the average electricity prices per kWh at those usage levels.

The prices listed for 500 kWh, 1000 kWh, and 2000 kWh are not ranges of pricing and they are not your energy rate.

These prices are average rates. That means, this is what you’ll pay for electricity plus delivery if you use exactly that much power. For more information, see Why Does Texas Have Three Electricity Rates?

How is the Average Price per kWh Calculated?

Every EFL displays the average price per kilowatt hour for 500 kWh, 1000 kWh, and 2000 kWh usage levels.  So if this isn’t a unit price for electricity, what is it? It’s an average rate for all delivery and energy charges based on the kWh used in a billing cycle.

There are 3 primary fees that make up this calculation:

• Energy charge
• Delivery Charges from the Transmission and Distribution Service Provider (“TDSP”)
• Other fixed monthly charges

Some REPs combine the energy charge and TDSP fees and call it a ‘Bundled Energy Charge’.  Other REPs choose to show energy and delivery separately on the bill. Be aware that even if you pick a plan that is a bundled energy charge, the REP may still pass through any changes in delivery fees.

Energy Charge

The energy charge is the price you pay for the electricity you use. It is the price that your REP charges for your electricity.

TDSP Fee (Delivery Charges)

The PUCT approves TDSP fees for your area. No matter which REP you choose, this fee is a pass-through charge and it is the same for everyone in your delivery area (but could be bundled into your rate).

The TDSP’s are able to change their delivery rates based on rate cases and tariffs that they present to the PUCT. The PUCT then reviews and approves these new delivery fees.

Typically, delivery fees change on March 1st and September 1st of each year. The TDSP fee is the price you pay to have electricity delivered to your home.  

There are 2 components to this fee: a fixed monthly charge, and a variable monthly charge based on your kWh usage. Texas deregulated TDSP’s include CenterPoint, Oncor, AEP Central, AEP North and Texas New Mexico Power.

Other Fixed Monthly Charges

Other fixed monthly charges may include a monthly base charge, minimum use charge, or daily use fee. These charges are fixed monthly fees that are billed by your REP. They are common but not required fees.

Other electricity plans may include tiered rates, bill credits, or flat bill amounts. The EFL shows all of these items. And your electricity bill calculation will include these items.

How is the Electric Bill Calculated?

A typical electric bill calculation with information from the EFL looks something like this:

(Energy Charge x kWh used) + Fixed TDSP fee + (Variable TDSP fee x kWh used) + Other Fixed Monthly Charge = Estimated Electricity Bill

To calculate your average price per kWh:

Estimated Electricity Bill/kWh used = Average $/kWh

It is very important to understand how your electricity bill is calculated. That way your bill won’t be a surprise. Be aware of usage credits, tiered energy charges, time of use factors, and minimum use fees (to name a few) that are disclosed on the EFL. These credits or charges could cause your energy rate to be much different than expected depending on your energy usage.

For example, here’s a calculation for a tiered rate electricity plan:

(Energy Charge 1 x 1-500 kWh used) + (Energy Charge 2 x 501-999 kWh used) + (Energy Charge 3 x 1000+ kWh used) + Fixed TDSP fee + (Variable TDSP fee x kWh used) + Base Charge – Bill Credit For Use Over 1000 kWh = Estimated Electricity Bill

As you can tell, these plans get very confusing. And unfortunately, if you just look at the advertised rate per kWh at a certain usage level? You won’t get the full picture of the electricity price you will pay on your bill.

That’s why ElectricityPlans.com does the math for you.

Understanding EFLs Prevents Electric Bill Shock

We don’t expect you to be an EFL expert. After all, math like this can get pretty complicated. And it’s hard to know exactly what you will pay when you just glance at the EFl.

Here’s how we help you understand your plan options:

• At ElectricityPlans, we have combed through the EFLs for every plan we offer.
• The Plan Details and Pricing link on the plan shopping page displays the important EFL details about the selected plan so you can compare rates.
• We clearly outline the components of your electricity bill calculation so that you can accurately estimate your monthly bill.
• We’ve read the EFL for you and extracted the details you need to make a well-informed decision about your next electricity plan

Or… just use our Electricity Bill Calculator.

EFL Electricity Bill Calculator Shows Your Rate at Any Usage Level

With the Electricity Bill Calculator feature, we do all the math for you to find the best rate and understand your electricity bill. It’s basically an Electricity Facts Label calculator for any amount of electricity usage. Instead of shopping at 500, 1000 or 2000 kWh, you shop at the level of electricity that you use every month.

Just type in your usage and we’ll recalculate the EFL for each plan to show you the cheapest electricity rates for your home. And, we’ll show you an estimate of what you will pay each month based on your usage.

Here’s an example of the bill calculation and EFL calculation results you’ll get when you type in your usage level.

Want to dig into the EFL calculation to see the math? Click on Plan Details and Pricing in any of our plans and you will see full details of the charges. Plus you will have access to the EFL and other documents. And you can use the EFL calculator / electricity bill calculator to see your price per kWh on every usage level.

Start shopping for electricity by entering your zip code.

Frequently Asked Questions About EFLs