Bill credit electricity plans are among the most popular in Texas. These are the electricity rates that look amazingly low at the advertised rate of 1000 or 2000 kWh. But dig into the details and you may find you’re paying a higher price per kilowatt hour than you expected. We call these plans a Texas teaser rate. And while they can be good for some consumers, they can be a big red flag for others.
Key Takeaways / TL:DR
- A Texas Teaser Rate is an electricity rate that looks good at a specific advertised level of usage, but has a higher effective rate per kWh if your usage varies.
- Bill credit plans can be considered teaser rates, since the advertised rate is low, but your average rate will be higher unless you use a specific amount of power.
- The best way to avoid a teaser rate is to buy a basic fixed rate electricity plan. You’ll pay the same rate per kWh for your energy. And the average rate per kWh will only vary because of monthly fixed fees from the utility or retail electricity provider.
Table of Contents
- What is an Electricity Teaser Rate?
- What is a Bill Credit Electricity Plan?
- Who Benefits from a Bill Credit Plan?
- Pros and Cons of Bill Credit Plans
- How to Evaluate a Bill Credit Plan
- What’s our Recommendation on Plan Type?
What is an Electricity Teaser Rate?
Definition of Texas Teaser Rate: A Texas teaser rate is an electricity rate that looks good at a specific advertised level of usage, but the specifics of the plan make it very expensive if you go outside a certain usage level.
Texas is the only deregulated state to show three rates for each plan. The initial intent for requiring the three rates was to give electricity shoppers an estimate on the all-in energy and delivery rate per kWh across common usage levels (500, 1000, and 2000 kWh).
However, many Retail Electricity Providers (REPs) create electricity plans with complex math formulas that show a great rate at one of those specific usage levels. But unless you use exactly that amount of power each month, you’ll pay more.
Bill credit plans and tiered rate plans can be considered a Texas teaser rate.
What is a Bill Credit Electricity Plan?
What is a bill credit electricity plan? A bill credit electricity plan gives you a usage credit when your electricity usage hits a specific level of usage in kilowatt hours each month. These plans may also include a base monthly fee or a minimum usage charge if you don’t use enough.
Electricity providers offer bill credits strategically at exactly 500, 1000 or 2000 kWh to create a low advertised rate per kWh. The advertised rates are what you pay if you use exactly that much electricity in a billing cycle. But use more or less than that and your average price per kWh is a lot different.
Here’s a graph for a typical bill credit electricity plan designed for consumers that use 1000 kWh per month. The bill credit gives you a low average price per kWh at that specific usage, but the math works out to a higher rate per kWh if you use more or less than the targeted level.
Who Benefits from a Bill Credit Plan?
Who benefits from a bill credit plan? You may benefit from a bill credit electricity plan if your usage stays within a certain range all year long, typically 1000-1500 kWh. To benefit from a bill credit plan, it’s important to understand your monthly electricity usage.
Consider the example below for a bill credit plan offering a usage credit of $125 for usage of 1000 kWh or more. The average rate of 9.9¢ kWh looks attractive, but the energy price is 16¢ per kWh, plus delivery charges. What will this customer actually pay?
Here’s how that breaks down for the average customer using 13,425 kWh annually.
| Monthly kWh | Average Price per kWh | Estimated Bill | |
|---|---|---|---|
| January | 700 | 22.6¢ | $158.26 |
| February | 650 | 22.67¢ | $147.30 |
| March | 750 | 22.6¢ | $169.21 |
| April | 800 | 22.5¢ | $180.16 |
| May | 1,200 | 11.9¢ | $142.80 |
| June | 1,500 | 13.9¢ | $208.52 |
| July | 1,800 | 15.2¢ | $274.24 |
| August | 1,900 | 15.6¢ | $296.15 |
| September | 1,700 | 14.8¢ | $252.34 |
| October | 1,000 | 9.9¢ | $98.98 |
| November | 700 | 22.6¢ | $158.26 |
| December | 725 | 22.6¢ | $163.73 |
| TOTAL ANNUAL | 13,425 | 16.8¢ | $2,249.95 |
As you can see, this customer does not benefit from a bill credit plan. While they average 1100 kWh a month, in almost every month they will pay more than the advertised rate of 9.9¢/kWh at 1000 kWh. At the end of the year, they paid an average of 16.8¢ per kWh when they expected to pay less than 10¢ per kWh.
Pros and Cons of Bill Credit Plans
If you’re considering this type of electricity plan, make sure you read the Electricity Facts Label and understand what you’re getting. Bill credit plans have pros and cons.
Upside of Bill Credit Plans
- Potential for savings. If you consistently use enough electricity to earn the bill credit, this could lower your electricity bill.
- Lower average rate. You could enjoy a low average price per kWh if you use the minimum usage level.
Downside of Bill Credit Plans
- High price per kWh. You’ll pay a high price per kWh and a high bill if you don’t hit the usage threshold.
- Higher electricity rate. They make up for the bill credit by charging a higher energy price.
- More complicated plan. The complex math makes it harder to understand what you’ll actually pay.
Bill Credit Electricity Plans in Dallas
| Plan Name | Term | Rate/kWh |
|---|---|---|
| APG&E SimpleSaver 6 | 6 | 9.0 ¢ |
| Chariot Energy GridEdge 6 | 6 | 9.1 ¢ |
| Cirro Energy Simple Bill Credit 12 | 12 | 9.9 ¢ |
| 4Change Energy Maxx Saver Value 12 | 12 | 9.9 ¢ |
| Cirro Energy Simple Bill Credit 24 | 24 | 9.9 ¢ |
| Discount Power Bill Credit Bundle 24 | 24 | 9.9 ¢ |
| Discount Power Bill Credit Bundle 12 | 12 | 9.9 ¢ |
| APG&E SimpleSaver 14 | 14 | 10.1 ¢ |
| Rhythm Saver 12 | 12 | 10.2 ¢ |
| APG&E SimpleSaver 12 | 12 | 10.3 ¢ |
| Gexa Eco Saver Plus 8 | 8 | 10.4 ¢ |
| Gexa Eco Saver Plus 12 | 12 | 10.4 ¢ |
| Frontier Saver Plus 12 | 12 | 10.4 ¢ |
| Chariot Energy GridEdge 36 | 36 | 10.8 ¢ |
| Chariot Energy GridEdge 12 | 12 | 10.8 ¢ |
| TriEagle Energy Sure Value 12 | 12 | 13.9 ¢ |
| Veteran Energy Valor 12 | 12 | 14.0 ¢ |
| Constellation 12 Month Usage Bill Credit | 12 | 14.6 ¢ |
| TXU Energy Clear Deal 12 | 12 | 14.9 ¢ |
| Cirro Energy Smart Value 12 | 12 | 15.5 ¢ |
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How to Evaluate a Bill Credit Plan
Here are steps you can take to see if a bill credit plan works for your electricity usage.
- Understand your electricity usage and how it varies month to month. You can download your usage from your current account or Smart Meter Texas.
- Select up to three plans you are considering and click Compare Plans. This tool lets you compare plans side by side.
- Within the Compare Plans tool, enter your usage for each month and we’ll automatically calculate the effective rate per kWh and estimated bill. Make a note of it, similar to the chart above.
- Review what your bill and average price per kWh actually is with each plan.
Will you pay what you think you’ll pay? If not, you’re better off with a basic fixed rate electricity plan. You can select this option under Plan Features.
PRO TIP: The more complex the math, the less likely it is that you’ll pay the advertised price.
What’s our Recommendation on Plan Type?
Our recommendation for the best electricity plan is a basic fixed rate with no gimmicks and no complex calculations. You’ll pay around the same price per kWh for your usage. Your average price per kWh will only vary because of (1) fixed monthly charges from the delivery company or (2) any based charge from your electricity provider.
Bill credit plans are some of the most popular electricity plans in Texas, which is why we include them on our site. You can shop all types of electricity plans on ElectricityPlans.com, because we support your power to choose the plan that’s right for you. Just make sure to use the tools we provide to find the best price for your home.
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Want to learn more about how to shop for an electricity plan in Texas? Learn more by reading The Definitive Guide to Shopping for Electricity in Texas
