If we’re being honest, most people don’t read the Terms and Conditions box before checking it off. However, there’s a difference between reading the fine print for you to create a Spotify account and your electricity plan. One is a luxury service that costs a few bucks a month, while the other literally keeps your lights on (and that music playing).
This is why we recommend learning how to read and understand the Electricity Facts Label (EFL) – also known as the “Terms and Conditions” for every electricity plan in Texas. When you can interpret this document, shopping for affordable Texas electricity plans becomes much easier — and faster!
Finding the right electricity plan that fits your life and budget isn’t rocket science, but digging into the details can be intimidating. To help you better understand Electricity Facts Labels, we want to discuss the eight key terms that matter most.
But first, let’s talk about what exactly is an EFL and why they exist in the first place.
What is an Electricity Facts Label?
An Electricity Facts Label (EFL) is a document regulated by the Public Utility Commission of Texas (PUCT) that requires all retail electricity providers (REPs) in Texas to provide certain details about every plan they offer. We call these details disclosures, and they’re what you need to look at when choosing a plan. These include base charge, average price per kWh, delivery charge, energy charge, type of product, contract term, termination fee, and renewable content—all of which explain in detail below.
EFLs are similar to the nutritional facts labels on food. Just like you’d want to know how many calories are in a serving of chips before you eat them, you’d want to know about how much your electricity bills will cost before you sign a contract.
When the Texas electricity market deregulated in 2002, there was practically no limit to how consumers could pay for power. As the saying goes, you have the power to choose. Ultimately, however, the main goal of energy deregulation was to promote competition among REPs, which in turn would lead to lower energy prices and faster development of energy technologies, such as wind and solar.
However, with that diversification of energy products came lots of questions and, frankly, really odd plans—some even include tickets to football games. Thus, the PUCT needed a way for consumers to make apples-to-apples comparisons easily without any marketing mumbo-jumbo getting in the way.
Enter the Electricity Facts Label, a standardized format that all electricity companies must use so that you can understand how their plans work.
Important Terms on an EFL
There are two sections to an EFL: Electricity Price and Disclosure Chart. The Electricity Price section helps you understand how much you might pay each month, while the disclosure chart lets you know information, such as how long your plan is; the type of rate you’ll pay; and how much, if any, of your plan is from renewable energy.
Average monthly use
|This is an estimate of how much electricity you use. Simply review a few of your most recent bills and calculate an average. Note: during summer months, your bill is typically much higher because of the energy required to cool your home.|
|If you have a fixed-rate plan, the energy charge is the actual fixed rate you pay to your REP for electricity.|
|This is a flat fee your REP charges you each billing cycle (per month) no matter how much electricity you use. Note: not all REPs assess a base charge.|
|Also called a TDSP fee, this is what your Texas Transmission and Distribution Service Provider charges you to physically deliver your electricity through the wires, poles and cables. The four TDSPs are CenterPoint Energy, AEP Texas, Oncor Electric Delivery and Texas-New Mexico Power. Note: your REP doesn’t determine this price; the PUCT regulates this charge and applies it to all plans. The delivery charge consists of a monthly flat rate plus a rate per kWh of usage.|
If you’re looking at an EFL, it will be easy to spot these, as we’ve written them exactly how they appear on the document. Once you identify these numbers, you can actually estimate your bill! Here’s how you’d calculate it if your average monthly usage was 1,000 kWh:
(1,000 kWh x energy charge)
(1,000 kWh x delivery charge per kWh)
flat rate delivery charge
Your Bill (not including a few small taxes)!
The Disclosure Chart is important for several reasons: If you prioritize sustainability and the environment, you’ll want to hone in on that renewable content section. Or if you know you don’t want to deal with switching often, then you want to look for a plan that has a 36-month contract.
Type of product
|This indicates whether you have a fixed- or variable-rate contract. Learn more about the pros and cons of each plan type in our blog post, How to Shop for Electricity in Texas.|
|This will tell you how long you are required to stay in your contract without paying an early termination fee. It also locks you into a fixed rate. Once your contract period is over, you will go on a month-to-month variable plan.|
|Also called a cancellation fee, or an ETF, this is the charge you would incur on your last bill if you end your contract before it expires. It can range from no fee at all to hundreds of dollars. .|
|If you’re environmentally conscious, this is one of the most important sections. This indicates how much of your electricity plan is sourced from renewable energy sources such as solar or wind. For example, all of Chariot’s electricity plans are 100% renewable!|
EFLs Help Consumers Find the Right Energy Plan
Ultimately, the EFL should help guide the energy decisions you make, not complicate it. Despite how confusing these sheets may look, the eight determinants on the EFLs provide crucial information you need as you purchase a new electricity plan for your home!
Have you made it all the way down this article and are still confused? We don’t blame you! That doesn’t mean you have to be left in the dark, though. Contact us, and our excellent customer care team can personally walk you through one of our EFLs. We want to help you better understand how it all works — and possibly make the planet a little greener while we’re at it.