Teresa McUsic

When choosing electricity plan, check for minimum-usage fees

Many Texas power providers charge minimum-usage fees on electricity plans.
Many Texas power providers charge minimum-usage fees on electricity plans. Courtesy of Oncor

While operators of the state electric grid are asking Texans to ease up on their electric usage to conserve power during the summer heat, many electric retailers are charging you more if you do conserve. At the same time, other retailers are giving you credits if your usage surpasses certain thresholds.

Minimum-usage fees and credits are creeping into the complicated formula behind choosing a retailer for your household energy. Consumers need to be aware of the charges when shopping for electricity.

A look at the 341 plans available to those in the Oncor service area on the Public Utility Commission’s PowerToChoose.org website showed that most providers have such a fee or credit for minimum usage.

The practice is so predominant that the PUC has a special link on each provider’s plan, located under its pricing details tab, so consumers can see what type of minimum-usage fees might be added to their bills.

The fees average $10 to $15 when a household falls below certain usage, usually 1,000 kilowatt-hours (kwh) a month.

“It’s a key concern,” PUC spokesman Terry Hadley said. “How can you encourage conservation if you are charging a minimum fee for not using electricity?”

The fee also unfairly hits lower-income and elderly households that don’t consume as much electricity because their homes are smaller, said Jake Dyer, policy analyst for the Texas Coalition for Affordable Power, an alliance of cities that buy electricity for government use.

“It’s basically a question of fairness,” he said. “If you cut down on electric use, you shouldn’t be punished for it.”

This past legislative session, Rep. Sylvester Turner, D-Houston, introduced House Bill 2254 to ban such fees, but it failed to get out of committee, Dyer said.

By year’s end, however, the PUC will build a filter for minimum-usage fees into the PowerToChoose website, Hadley said. In the meantime, consumers should check their usage history on their bill or smart meter page (www.SmartMeterTexas.com) and fill out the first of three questions on the PUC website to determine which plan best fits their needs.

While some plans have minimum-usage fees, other retailers offer a credit when your electricity volume exceeds certain marks.

One TXU plan offers a $30 credit if you use more than 800 kwh a month. Our Energy offers an $80 credit if you use more than 999 kwh. The offers are for new customers only.

Some plans have a split rate depending on usage. On the PUC website, Green Mountain’s 12-month fixed-rate plan says the energy charge for the first 1,000 kwh is 1.5 cents per kwh but moves to 8.8 cents if you use more than 1,000.

Reliant has a similar plan available at 1.2 cents for lower usage and 8.2 cents for higher usage.

“It’s really impossible to shop and compare apples to apples,” Dyer said, noting that complaints to the PUC were up last year for the first time since the early days of deregulation. “There’s still a lot of confusion in the market. There are so many fine-print details. Little charges make it difficult to make sure you are comparing apples to apples.”

Dyer advises looking at your electric plan every time the contract ends.

“The retail provider has to advise you when the deal is up,” he said. “Don’t go on autopilot and just renew — look for better deals.”

Just be sure to include minimum-usage fees in your formula when shopping.

Teresa McUsic’s column appears Saturdays. TMcUsic@SavvyConsumer.net

Questions to ask when shopping for electricity

▪ Does the rate include all costs? To estimate your monthly bill, ask about nonrecurring fees and other charges and taxes not included in the average kwh rate.

▪ Does the plan require minimum usage? Most plans assess a fee if you don’t use a certain amount, and it may not be listed separately on your monthly bill. Some companies offer credits or fee waivers. Fees are listed at PowerToChoose.org.

▪ What happens when my contract period expires? Many plans default to a month-to-month basis if no new contract is in place. The default price will likely be higher.

▪ What is the renewable-energy content of the plan? Plans vary from 5 to 100 percent renewable energy.

▪ What is the contract length? It varies from one to 36 months. Month-to-month plans generally have a variable or indexed rate rather than a fixed rate.

▪ What is the company’s complaint record? The PowerToChoose website shows this number based on six types of complaints, including billing, slamming and cramming, over the past six months.

Sources: Public Utility Commission, PowerToChoose.org