If you are shopping for electricity based on the advertised rate or one of the three electricity rates shown on the Electricity Facts Label, stop. You might pick the electricity company advertising the lowest rate based on 500 kWh, 1000 kWh or 2000 kWh. But you could soon discover it’s not as straight forward as you’d hoped. Because unless you read the find print you may choose the wrong plan.
Before you blindly click on the plan with the lowest advertised rate, read this article.
Why Do Electricity Facts Labels List Prices for 500, 1000 and 2000 kWh?
Texas has three electricity rates, a price at 500, 1000 and 2000 kWh, on every electricity plan because your bill will include not just your energy costs but also your delivery costs. The Public Utility Commission of Texas (PUCT) requires that plan must show the average electricity prices on an Electricity Facts Label as a way to compare plans regardless of their rate structure.
These rates at 500, 1000 or 2000 kWh a month are not unit prices and do not correspond to a range of energy usage. Instead, they tell you the price you will pay at a specific level of usage. Since your Retail Electricity Provider (REP) will bill you for both energy and delivery, the average price calculation includes energy, delivery, and any bill credits, monthly charges or tiered rates that are included in the plan.
The crazy part? None of these are the average electricity bill in Texas. The average electricity usage is 1,146 kWh per month, according to the US Energy Information Administration (EIA). The math on the electricity rate can be complicated. It’s important to read the details on energy plans to make sure it’s right for your home.
What do the Three Electricity Rates Mean?
The three electricity rates on the EFL are the average price per kWh for three specific usage levels: 500 kWh, 1000 kWh, and 2000 kWh. These rates are not unit prices and they do not correspond to a range of energy usage. These rates are the price you would pay per kWh if you happen to use that exact amount of electricity in one billing period, which is nearly impossible.
The three electricity prices are the all-in average rate that incorporates all of these items:
- Energy rate: the price per kWh you pay to your REP.
- Delivery rate: the price per kWh delivered that you pay to your TDU/delivery company
- Delivery charge: the monthly fee you pay to your TDU/delivery company
Then depending on the structure of your electricity plan, you may also have:
- Monthly based charge: your REP may charge a monthly service fee.
- Minimum usage charge: you may pay a service fee for not using at least a certain number of kWh.
- Tiered rate energy charges: your plan may charge different energy rates depending on your usage.
- Bill credit: a credit that kicks in when you hit a certain usage level
- Time of Use credit: free or discounted electricity at certain times.
Whenever you have a fixed fee or bill credit, the more electricity you use, the lower your average price will be, because the fixed charge is “spread out” more across the per kWh charges.
ElectricityPlans.com makes it easy to shop based on your electricity usage. Just enter your monthly usage in our Electricity Bill Calculator. We’ll quickly calculate your estimated monthly electricity bill and your average rate.
Shopping tip: Your electricity provider is required to put your average price on your electricity bill. It will usually say, “The average price per kWh you paid for electricity this month was X.” Shop based on your usage level to compare offers to what you are currently paying.
Shop for Electricity Based on Your Usage
Don’t ever choose an electricity plan based on the advertised rate at 500, 1000 or 2000 kWh. You can see your average price per kWh and estimated bill just by entering your average monthly usage. Our Electricity Bill Calculator will automatically recalculate all the rates for you. We’ll show your average monthly electricity price per kWh and your estimated electricity bill. And, we’ll re-sort all the plans to show the cheapest electricity rates for your home.
Here’s what to look for under advanced search.
Plus, you can select “Plan Details” on each electricity plan you’re considering to see how your bill is calculated. Each plan has a one line description to highlight any unusual features. These may include bill credits, minimum use charges, or flat-fee electricity up to a certain usage level.
Plan Types Where You Absolutely Must Shop Based on Usage
We know finding the right electricity plan can be overwhelming, but we do everything possible to level the playing field and make sure you have the information you need to make an educated choice.
These are the types of plans where you absolutely must shop based on usage:
- Bill Credit Electricity Plans
- Tiered Rate Electricity Plans
- Fixed rate plans with minimum usage fee or monthly charges
The math on these plans means that the advertised rate at a specific usage level will look great. But type in your average usage level and you’ll see your effective rate is a lot different.
We always recommend Basic Fixed Rate Electricity Plans as the best option. Simple, no gimmicks electricity plans work the best for most consumers. If your usage fits a narrow band every month, for example 1000 – 1300 kWh or 2000-2200 kWh, you may consider bill plans.
Shop Texas Electricity Rates by Zip and Usage
Learn More About Electricity Shopping In Texas
We know that this can be confusing. That’s why we created ElectricityPlans.com to begin with. It’s also why we wrote The Definitive Guide to Electricity Shopping in Texas. Give it a read and you’ll understand more about shopping for electricity!
