As electricity deregulation markets have matured around the country over the last several years, electric suppliers have gotten tricky on how they present their offers on contracts. In short, the energy supply charge should include several components including the energy commodity, capacity, line losses, ancillary charges, and sometimes transmission charges depending on your specific market. Many suppliers will show a rate that just includes the energy commodity charge, and then pass on the extra charges through another category on the bill.
Why do they do this?
Simply put, they do this to make their rate look lower than their competitors. For example, one supplier might give a rate that includes everything for 7.5 cents. Another supplier might give a rate that just includes energy commodity for 6 cents. At first the 6 cent offer appears to be great. However, when you get the bill you will see a line for the 6 cent charge followed by an additional section that has another 3 cents for all of the addition charges. So in the end, that 6 cents is really 9 cents.
How do they get away with this?
It is all in the electricity contract!
It is extremely important to take the time to review all electricity contract offers to ensure that you are getting a true apples to apples comparison.
One of the reasons ElectricityWatch.org was set up was because I went through such a deceitful practice. I signed an electricity contract for a fixed rate of 7 cents when in reality I ended up paying 8-9 cents per month. During this time I could have paid a fixed rate of 6.65 cents.
Though everything is in the contract, many electricity companies have gotten very smart as to how they word their electric contracts so that the consumer overlooks important factors relating to the rate. If you would like us to review your business electric contract, feel free to post a comment with the request and we will contact you to do so.
Keep in mind this is for business electricity customers. Residential customers are protected by their state utility commissions from such practices. Businesses, however, are expected to do their own due diligence.
If you are living in Texas and have noticed in recent months that your monthly electric bill has become higher, it may be time to start looking for a new electricity contract. The reason for the recent upswing in your electricity bill may very well be due to the fact that your old electricity rate contract has expired.
The Texas electricity market is the most active deregulated electric market in the country. However, what many Texas electric rate payers do not understand is what happens in many cases to their rates when their electric contract expires.
Usually a person will sign a fixed rate electric contract for a set term, for example twelve months. When the contract expires, the electricity company chosen by the customer will continue to service the customer usually on a marked up rate. The longer you go without signing a new contract, the greater the chance your rate will continue to rise.
Electricity customers have thousands of “rolling customers” on their books. Rolling customers are customers who have expired contracts. The electricity company continues to serve the customer but instead of charging a fixed rate, they are able to charge almost anything they want, as stipulated in the original contract. At the point it become a game of economics for the electricity company. They try to determine what the maximum rate is that they can get away charging you before you will look for a new competitive rate.
Right now electricity rates are very low. If you are paying over 10 cents per kilowatt hour you should look into securing a lower fixed rate. Champion Energy is offering low fixed electric rates below 9 cents for customers in Texas.
Recently, we helped customers who were previously with TXU get off of rates as high as 15 cents transferred onto fixed rates of 8.6 cents, a 43 percent savings; all because the customers had gotten “comfortable” with TXU who raised their rates over time to well above the current competitive electric rates.
Texas residential customers who have had their contracts expire could be paying too much on their monthly bills. Nearly every competitive electric provider who offers term contracts has a clause built in that causes customers to stay with the provider after the contract has expired at rates determined by the supplier. The business strategy for the electric providers is that a large enough percentage of their market share will forget to sign a new contract allowing them to up the rates to a premium.
Two summers ago, electric rates in Texas for twice as high as they are today due to higher natural gas prices. Customers who signed fixed electric rate contracts during that time became customed to paying a high electric rate. As these contracts expire, providers continue to charge the high rates hoping that their customers have forgotten that they can now shop for a lower rate.
If it has been awhile since you shopped the electricity competitive market we encourage you to see if your contract has expired. Just because you are still receiving a bill from an electric provider you chose last year does not mean that you are still on contract.
For the lowest Texas residential electric rates today, email us with your city name and ask for rates. As of this week, fixed rates have been found below $0.09 per kwh. Many Reliant and TXU customers are paying over $0.15 per kwh.
