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Top 5 Things to Know About Electricity Rates

Posted on by Everything Energy 5 minutes

You may think about your electricity bill during a particularly hot summer day. But do you know just how much you’re paying to power your home? It can be a bit intimidating to dive deep into your energy bill if you’ve never examined it closely before. However, it’s a good exercise in knowing where your money is going and what you pay per kilowatt hour (kWh) of usage. (A kWh is a unit of measurement equaling the amount of energy you’d use if you kept a 1,000-watt appliance running for an hour.)

Once you have that information, you’ll be able to shop for better electricity rates and compare plans more effectively.

So, if you’re up to the task, let’s take the mystery out of electricity rates once and for all. We’ll start with the five most important things to know.

1. You can find your electricity cost on your EFL

The Electricity Facts Label (EFL) for the electricity plan you’re enrolled in has a lot of useful information (and a lot of lengthy but necessary legal language). The trouble is, many consumers don’t take the time to read through this part of their contract. But once you’ve seen and understand one EFL, you’ll be able to navigate this document swiftly. That’s because the Public Utility Commission of Texas (PUCT) standardizes the format of EFLs to help residential and small business customers avoid unexpected surprises on their electricity bill.

When you pull up the EFL for your plan, you can see a lot of different items included on it. These items will help you determine your actual electricity rate. You can use that information to compare it to other energy plans available to you.

2. Your type of electricity plan is important

Do you have a steady electricity rate every month, or does your rate fluctuate monthly? It depends on what type of electricity plan you signed up for. On a fixed-rate plan, you have the same energy charge for the entire length of the contract. On a variable-rate plan, however, the price you pay per kWh is determined by market or other factors considered by the electricity provider. Some people like to lock in a rate. Others prefer the flexibility of going month to month and being able to switch whenever they want. 

For customers who sign up for a fixed-rate plan, pay attention to the contract expiration date. If your electricity contract expires and you take no action, electricity providers may enroll you on a default month-to-month plan with a variable rate. 

You’ll want to know what type of plan you’re currently on before you start comparing your plan to other electricity rates. If you don’t know, just check your EFL! 

3. Your bill may have more charges than just cost per kWh

You’ll be able to find your cost per kWh pretty easily on your EFL (usually called the Energy Charge). However, that’s only part of the story of your electricity rate. You may also run into items such as a base charge and delivery charges that need to be factored in when calculating your rate and comparing plans. So, let’s break it down:

base charge is a flat, monthly fee sometimes charged by your energy provider, regardless of how many kWh you use. 

Delivery charges, also called TDU (Transmission and Distribution Utility) delivery charges, come from your utility company to cover the cost of moving electricity from the generation plant to your home.

For additional terms and charges you may see on your electricity bill, check out this guide from the PUCT.

4. Your monthly usage may affect your average electricity rate

On your EFL, you’ll find a Pricing Disclosure section. It lists the average price per kWh if you used 500 kWh, 1000 kWh and 2000 kWh. Unless otherwise noted, the average price per kWh includes any base charges and delivery charges. That’s why the lower usage rates often have higher average kWh costs: they have the other charges factored in and averaged out over a smaller number of kWh.

Knowing your average monthly electricity usage will allow you to make accurate plan comparisons. Plus, it will help you avoid unexpectedly high bills for the length of your contract term.

FYI: When you shop electricity on Everything Energy, you can filter plans based on your monthly usage.

5. You can shop for better electricity rates online

Thanks to the deregulation of the Texas energy market more than 25 years ago, you get to choose your electricity provider. That means providers compete to earn your business! So not only can you shop and compare energy plans to get the best electricity deals, you can also search by other factors important to you. From plans that use wind and solar power to those that offer free nights or weekends, gift cards, airline miles, energy-saving gadgets and more, the perfect plan for your family and lifestyle is out there. 

Now that you know the five most important things about electricity rates, you can shop, compare and enroll. Check out Everything Energy’s advanced search tools that help you zero in on your next electricity plan.

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