Education Center > How to Read your Texas Electricity Facts Label (and Why it Matters)

How to Read your Texas Electricity Facts Label (and Why it Matters)

Whether it's we're signing up for insurance, a cell phone, home mortgage, or iTunes, we're always encouraged to read the "fine print.” This is a good policy to follow when you're choosing which Texas retail electricity provider (REP) will provide service to your home and/or business. The fine print in question is almost always located in a document called the Electricity Facts Label (EFL).

Every single plan from every single electricity company in Texas is required to have a unique EFL associated with it that breaks down the specific facts of the plan. This is because most of the concerns and frustrations that Texas residents experience happen because they don't quite understand how deregulation works in the Texas electricity market. Companies want to make sure that customers have all the information necessary to answer questions like:

  • How much will I charged for the electricity I use?
  • Does this plan come with a contract?
  • How long is the contract for this plan?
  • Is there a fee if I break the contract?
  • What else will I be charged by this electricity company?
  • Is this a fixed-rate plan or a variable-rate plan?

All of these answers and more are located in the EFL. Every customer should read this document if they're interested in any electricity plan so that you can learn exactly what you'll get and what you'll have to pay when you choose that plan.

The Electricity Facts Label (EFL) is a standard format sheet required by the Public Utility Commission of Texas that provides Texas consumers with important information on prices, contract terms, power generation sources, and emission levels. Similar to the nutrition labels on food products required by the FDA, the EFL is essentially a comparison vehicle to help customers make informed decisions about their electricity service. In short, the EFL provides you with the following information:

  • Pricing for your energy usage per kilowatt-hour (kWh)
  • The breakdown of that pricing between the REP and the Transmission & Distribution Service Provider (TDSP, also known as the utility company)
  • Contract terms
  • Product description
  • Fee information
  • Renewable energy details

Let's look at a Terrific 12 EFL from Bounce Energy. Specifically, there are three sections on every EFL, and the first one is the "Electricity Price” grid.

Breakdown of rates

In this first image, we see a three-column chart that details the breakdown of the rate by average price per kWh by Transmission and Distribution Utility (TDU, also known as TDSP).

  • The price you are charged for your electricity usage always depends upon which utility company services your area and how much each REP can purchase electricity for a given service area.
  • In this chart, you see the difference in average rate based upon 500, 1,000, and 2,000 kWh of electricity usage in a given billing cycle.
  • As the document states, the average rate "is an example based upon your energy charge, base charge, and the applicable recurring transmission and distribution utility (TDU) charges in your service territory.”
  • This chart is best served as a guide, as it reflects the prices you see on the plans page.
Pricing per 2,000 kWh

In this second image, we see the true breakdown of the average rates you see in the first image.

  • For example, the first image shows the average rate for the plan in CenterPoint if you use 2,000 kWh of electricity to be 10.2 cents per kWh.
  • With the second image, that rate is displayed to truly be 6.2047 cents per kWh to Bounce, a flat monthly delivery charge of $9.45 to CenterPoint, and 3.4862 cents per kWh to CenterPoint.
  • You also learn that you'll be assessed a $6.95 Base Charge if you use less than 2,000 kWh in a billing cycle, and a $9.95 Base Charge if you use less than 250 kWh in a billing cycle.
  • Thus, the math works out to be: [(2,000 kWh * 6.2047 cents per kWh) + $9.45 + (2,000 kWh * 3.4862 cents per kWh)] / 2,000 kWh = 10.2 cents per kWh.
Other Key Terms and Questions

In the brief second section, the "Other Key Terms and Questions” will explain information about the average price detailed in section one and encourage you to read the Terms of Service statement for the REP providing this plan.

The third section is called the "Disclosure Chart,” and it covers the following:

  • Plan type,
  • Contract term length,
  • Termination fee amount,
  • Whether or not your price can change during your contract period,
  • How much it can change
  • What other fees might be associated with your electricity bill
  • Renewable energy percentage
  • Company contact information
Disclosure Chart Disclosure Chart - fees Disclosure Chart - renewable energy

I know, I know - you've just been presented with lots of information. Truthfully, there can be lots of fine print with a decision like this, so I want to help you understand exactly what you're paying for your electricity and the other details of the plan. I never want people to be frustrated with their electricity service, and I certainly don't want customers to feel like they're being cheated by an REP because they don't understand all the rates and fees they're paying.

You should always ask for an EFL for any electricity plan that you find interesting, and the REP should always give it to you. With this information, you can always have for an "apples to apples” comparison between electricity plans and companies so that you can make an informed decision as you shop for the Texas electricity company that best meets the needs of your home and/or business. By understanding all the information presented on an EFL, you will gain a better understanding of how the Texas electricity market works.

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