Here’s how you can lower your electric bill, but make sure you read the fine print

If your monthly electric bill seems too high, it probably is.

Many Dallas-Fort Worth residents are paying much more for electricity than they could be — hundreds of dollars per year, in many cases, according to research from a consumer advocacy group.

Why? Because too few residents are taking advantage of a deregulated industry that was set up years ago to lower their utility costs, but so far hasn’t worked.

The good news is, it’s not too late to shop around for a better electricity plan. Residents who want to take advantage of better deals for their electrical power can do all their comparison shopping online at a state-run website called PowerToChoose.org, and then switch plans with the press of a button.

Usually, the research and the switch can be done in a matter of a few hours, although advocates encourage residents to take their time — days, or even a couple of weeks, if necessary — and read the fine print on the plans before making a decision.

Bottom line: There are amazing electricity deals out there, but finding the right one for each household takes a little bit of research work.

“A lot of consumers just want to come home and turn on the lights and not worry about whether they have hit their 1,000-kilowatt hour threshold,” said R.A. “Jake” Dyer, a policy analyst for the Texas Coalition for Affordable Power. “The market is complicated. For the average consumer, and even lawyers, the fine print can make you go crazy.”

But for those willing to put in the time, the payoff can be huge.

“I’ve used it 3-4 times. Review the plans carefully, but with some work, I’ve definitely gotten good deals,” Bedford resident Chad King, an area resident, said on Twitter. Reached later by direct message to amplify on his tweet, King estimated he saved more than $1,000 a year by shopping for bargain electricity.

Big difference

On average statewide, residents of deregulated areas such as Fort Worth pay an average of just over 12 cents per kilowatt hour, while those in areas where retail electrical power is still regulated — such as Austin and San Antonio — pay about 10.8 cents per kwh, according to a coalition report published in July.

For a typical four-bedroom home that hypothetically might use 2,000 kwh per month, the difference in those two rates could be $240 per month versus $216, not including taxes and fees that can add $40 to $50 to monthly bills.

That’s the equivalent of a Fort Worth resident paying $288 annually for electricity more than residents of a deregulated area (again, not including taxes and fees).

But many electricity plans for the Fort Worth area can be had for much, much cheaper — as little as 2.8 cents per kwh, depending upon the amount of power used. Customers who find such a plan that fits their electricity usage could end up saving more than $100 to $180 per month.

(See tips below on how to shop around for a deal.)

The back story

In 2002, after several years of negotiations among lawmakers and those in the industry, Texas deregulated the retail portion of the electricity market within its borders for customers in many major cities, including Fort Worth, Arlington, Dallas and Houston.

Some other cities, including Austin, El Paso and San Antonio as well as many rural areas were not deregulated, and continue to receive their electricity from a municipality or a cooperative.

Deregulation didn’t change the method in which electricity reaches homes. Each region of the state still has a provider, and in North Texas that service is still provided by Oncor.

Oncor is also the company that comes to your neighborhood if an electrical line is severed or a transmitter blows. Nothing has changed in terms of how electricity gets from the grid to your home.

Deregulation occurs at the retail level, before the electricity is generated either by coal, solar, wind or some other source and placed into the grid.

Dozens of companies buy electricity wholesale — each paying whatever rate they can negotiate with the generators — and then tries to sell it to customers, often using promotional rates and other creative methods.

For example, some companies sign deals with windmill electricity generators and sell the energy to customers who are willing to pay a little extra for renewable power.

Others offer customers sweet deals to sign a 6-, 12- or 24-month contract, with the hope that the customer will stay for several more years after the promotional rates come to an end.

Some companies offer really cheap rates for the first 1,000 kwh used each month, but much higher rates for usage above that level. Others offer rebates for customers who use more than 1,000 kwh per month — sort of an incentive to burn as much power as possible.

Weird, isn’t it?

That’s what happens when companies are free to buy wholesale electricity at whatever rate they can get, and in turn sell it to Texans however they wish.

Why don’t more people switch?

The main reason for the differential appears to be that residents in deregulated areas either don’t trust, don’t understand or simply don’t want to take the time to comparison shop, consumer advocate say.

Also, the Texas Public Utility Commission, which oversees the industry, has been criticized in the past for operating a website known as PowerToChoose.org which many users found confusing. However, the number of complaints has dropped as improvements to the website have been made, and many consumers now say they find the information more navigable.

About 80,000 to 90,000 unique visitors per month are now visiting the website, commission spokesman Mike Hoke said. He didn’t have specific numbers of how many customers actually are switching their provider based upon their comparison shopping.

“We are happy to have people using it, and encourage people to shop frequently and find the best deal they can,” Hoke said.

In 2016, the number of complaints or inquiries filed by Texans with the Public Utility Commission dropped 31 percent (4,835) compared with the previous year, according to the Texas Coalition for Affordable Power. That’s a further sign that bugs in PowerToChoose.org have been worked out, state officials say.

Some for-profit services have popped up that, for a fee, will analyze electricity usage in a home and help residents figure out which plan fits their needs.

Texas Power Guide, for example, charges $10.

How to shop around

Prices range wildly on PowerToChoose.org, sometimes varying from 2.8 cents to 16 cents per kilowatt-hour.

Here are some tips for shopping around:

• Take your time — Recognize that it will take a minimum of a few hours to familiarize yourself with the electricity plan options out there. You may have been spending too much on monthly electric bills for years, so it won’t hurt to take a few days to make sure you understand what plans are out there and how they work before making a switch.
• Before starting your shopping, find out how many kilowatt hours you have used during the past 12 months. This is available on the bills of your current provider, or at SmartMeterTexas.com.
• Search for low prices, but also make sure you understand the terms. For example, a company known as Veteran Energy offers flat monthly rates of $31 for anyone using up to 1,000 kwh of electricity, but for any amount over 1,000 kwh the rate is 13 cents. (That’s probably still a good deal, in many households, but perhaps not for those who use more than 2,500 kwh per month in the summer.)
• PowerToChoose.org gives customers the option of selecting search criteria. For example, customers can “show all plans” or “plans without minimum usage fees/credits.” Some plans offer big bonuses for customers who use a certain number of kwh, but penalizes those who don’t — and that’s OK, as long as you understand which plan most likely fits your situation. If you just want to simplify things and search for a good, flat kwh rate, choose the “plans without minimum usage fees/credits.”
• Electricity retailers pay a monthly fee to Oncor for delivery of the electricity to your home. When shopping for a plan, make sure you understand whether the retailer includes this cost (typically in the $40 range) in your quote or passes it on to you as a separate monthly fee. If you sign up for a plan and don’t realize the fee — known as a transmission and delivery and utility fee (or TDU) — is paid separately, the monthly bill could be more than you expected.
• When searching online at PowerToChoose.org, take a look at the “company rating” area that allows customers to search companies based upon their customer ratings of one to five stars. By limiting your search to companies with a four-star or five-star rating, you could reduce the likelihood you’ll be stuck with a company that has poor customer service, or one that is likely to go out of business during the term of your contract.

(If a company does go out of business during the term of your plan, you might be switched to another company without your permission. However, you have the option of going back to PowerToChoose.org and shopping for a new plan. This was more of a concern during the early years of deregulation but is the source of fewer complaints today.)

This report includes information from the Star-Telegram archives.

This story was originally published January 22, 2018 at 1:25 PM with the headline "Here’s how you can lower your electric bill, but make sure you read the fine print."