Electricity customers in Texas are searching for a Power to Choose alternative. And it’s no wonder. The Texas Power to Choose site has long been called the Power to Confuse. There are hundreds of plans to choose from, multiple rate structures to decipher, and fine print gotchas in most plans. The Public Utility Commission of Texas (PUCT) is not happy with the games that retail energy providers are playing. They have publicly blasted electricity providers for taking advantage of consumers. Now they are taking action to address these issues.
What’s the Problem with Power to Choose?
The problems of Power to Choose are well known and documented. As a Power to Choose alternative shopping site, we’ve helped you unwind the 5 biggest myths about the Power to Choose and we’ve written about how to detect teaser rates.
The Power to Choose site was created to help Texas consumers shop for electricity, and to serve as a central place for education. Prices are shown in an apples-to-apples fashion with all rates shown at 1000 kWh monthly. In theory, this allows consumers to compare across multiple plans, regardless of the plan structure.
In reality, many Retail Electricity Providers (REPs) game the system, creating plans that look fantastic if you use exactly 1000 kWh. But stray off the 1000 kWh and your actual effective rate is far higher.
For example, on 8/19/18 when we reviewed the Power to Choose, we found a 12 month plan offering 4.9 cents per kWh assuming 1000 kWh a month in the Houston market area. But if you used 1001 kWh a month? Your effective rate would be 18.8 cents per kWh. Ouch.
What’s Changing on the Power to Choose?
On August 9, 2108 , the PUCT announced three changes to the Power to Choose state-sponsored electricity shopping site, designed to address the common problems on the page.*
Reduce the Game Playing
- Issue: Offers are tailored mathematically to land on the first page of Power to Choose when sorted by price. They show a low average price at 1000 kWh monthly usage. However, when applied to typical customer usage patterns, these plans cost significantly more on average over the term of the contract.
- Recommendation: Expand the definition of the existing “Pricing and Billing” filter on the PTC such that these plan types can be filtered from the search results. When activated, this redefined filter would exclude plans that have a minimum usage fee or credit, as well as plans that charge a different amount per kWh depending on how many kWh are used.
- Implementation timeframe: August 20 ,2018
Limit REP Offerings
- Issue: Some REPs post multiple offers on the Power to Choose with very small differences. This allows a single REP to take over the results page on the Power to Choose site, effectively blocking other competitors. Some REPs have as many as 30 or more offers displayed on PTC. This type of flooding behavior limits the effectiveness of the Power to Choose site.
- Recommendation: Limit the number of plans that a REP may post on PTC at any one time to five per plan type (fixed, variable, indexed). Doing so will encourage REPs to use its available postings wisely, rather than repeating very similar offers to strategically dominate search results.
- Implementation timeframe: September 2018.
Educate Consumers on How to Use the Power to Choose Site
- Issue: The Power to Choose site is difficult to navigate, and the site lacks consumer-friendly instruction.
- Recommendation: Add a series of user friendly PDFs and videos intended to guide and inform the customer through the shopping experience in a manner that efficiently narrows the search results to the type of plan that customer prefers. The current “Narrow Your Search” function on the home page of PTC contains information that would be valuable in drafting these helpful tools.
- Implementation timeframe: September 2018.
Will the Changes Help?
We’ll see, but the PUCT has gone down this road before. Several years ago, they implemented a consumer check box feature to show only plans without a minimum usage fee/credit and plans without tiered pricing. In the short run, it improved the shopping process. However, that change led to today’s situation on Power to Choose with misleading tiered rate plans. Retailers quickly developed plans that could circumvent the PUCT’s changes. We think the same thing is likely to happen again. Queue the PUCT’s game of electricity plan Whack-a-Mole.
None of the changes really address the root cause of customer confusion – Why Does Texas have Three Electricity Rates? Few customers understand the three rate structure and many blindly follow the three rates, thinking that those are the exact rates that they’ll be paying for a range of usage. Even if customers know their electric usage history, the three rate structure lends itself to gaming and unintentional sticker shock in many circumstances.
The reduction in the number of plans shown for each REP is a good step. It will help to eliminate the “take the page” approach that some REPs have undertaken, where they have multiple similar plans listed.
Also not included is any mention of oversight of Power To Choose. Currently, REPs enter and publish their own plans through the Power To Choose site without an approval process. Who will preemptively monitor the site for any new teaser rates or other misleading plans? To date, the only changes on Power To Choose come from repeated customer complaints and lengthy hearings.
Education? That’s always good. But if you need videos to show someone how to use your website? Maybe that’s why consumers are searching for a Power to Choose alternative.
Best Power to Choose Alternative
We developed ElectricityPlans.com as an alternative to Power to Choose. We carefully evaluate plans, and only show plans that are fair deals for the consumer, complete with transparency regarding bill calculations as well as rate history.
ElectricityPlans.com lets you easily compare rates and plans. And if you need more help shopping, our PlanScan service will evaluate your bill and make recommendations based on your electricity usage patterns– all at no charge.
No one likes to be tricked, and no one likes to pay more than they bargained for. The best way to shop for an electricity plan is to use an alternative shopping site, like ElectricityPlans.com.
*Information from Energy Choice Matters