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  • Writer's pictureGabe C

Are You Paying What Your Electricity Company Offered?

Paying What Your Electricity Company Offered
Understanding an Electricity Bill

Do you really know how to read your electricity bill? As posted last week, it’s important to understand the components of an energy bill (the energy charge and the delivery charge). If we don’t know how to read our energy bill, how can we know if we are charged correctly? This week's post is about what the energy charges are and how to figure out if the energy company is honoring what they offered when we sign up with such an energy company.

Paying What Your Electricity Company Offered? - How is home energy charged?

When we call an electricity company, they will tell us that they have the best deal around. They will talk about how clean they are, how competitive they are, and that they have the best customer service.

Yes, some of these things matter, however, at the end of the day, we just want to save money.

So, there are 2 ways you may hear about an energy rate; bundled and just the energy charge.

Energy Charge

This is what the electricity company charges us for the electricity we use. This will not include the delivery charges (explained last week). This is about 50% of the electricity bill.

Electricity Rate Bundled

This is where the salesperson gives us a quote for the energy charge and the delivery charge together. Not including taxes.

I believe that having the quote of an energy rate bundled is closer to reality than just knowing the energy charge. As an example, if I get a quote only for the energy charge at 5 cents per kWh, and I use 1000 kilowatts, I may think that my energy bill will be around $50 plus tax, right? This is wrong. If I get a quote for a bundled energy rate of 10 cents per kWh, and using the same 1000 kilowatts, then my energy bill will be around $100. This is correct.

Why do the sales agents give quotes just to offer the energy rate? It’s simple, just to crush the other competitor's quotes. What Your Electricity Company Offered?

How to know if the electricity company is offering a good energy rate? Remember that knowledge is power.

  1. Ask for the energy rate,

  2. Ask about the delivery rate,

  3. Always ask for the bundled rate,

  4. Take some time and search for other companies’ rates,

  5. Dig deeper and look for the EFL (Electricity Facts Label) for each plan you are interested in,

  6. Know your average energy usage and see where you will land.

Know your average energy usage and choose the correct energy plan

You may think, a rate is a rate and that is it. So sorry to tell you but all energy plans change depending on our energy usage. Above all, there are energy plans suitable for apartments, others are good for houses and other energy plans are better for large houses or trailer homes.

The Electricity Facts Label or EFL - Paying What Your Electricity Company Offered

This is a document that all electricity companies must publish for every energy plan they offer. This is where it shows the actual energy rate and the delivery charges. These documents are, somewhat, hidden. Here is how to find these documents; find an energy plan you are interested in, and search for the Electricity Facts Label or EFL link. After you click, a new window will open with a PDF file as shown in the image below. Do you see What Your Electricity Company Offered?

EFL Example 1
EFL Example 1

On the first ELF, you can see the different charges if your average usage is 500, 1000, or 2000 kilowatts per month. As you can see, if you use less energy, they charge you more, it looks fantastic when you use an average of 1000 kilowatts in one month. However, if you try to save energy and your energy usage is around 500 kilowatts it’s almost triple.

In this case, if you use 1000 kilowatts your bill will be around $80. However, if you use 500 kWs, your energy bill will be about $95. This means that you used half the energy but you are paying more.

If you see the bottom of the image, this is a 12-month agreement. Do you think you can average 1000 kilowatts every single month of the year living in Texas?

Free Nights – Solar Days Energy Plan

Details Free Nigns Electricity Charges
EFL Example 2

The magic of the word “FREE”. So sorry but this gimmick has been out there for years. If you see the average usage prices, this is crazy expensive. So, if your average energy usage is 500 kilowatts, your bill will be around $120.

I have heard many friends telling me their electricity rate and they tell me some ridiculously low rate. Then I realize that they are just saying the energy rate, not including the delivery charges. This is very confusing since we all pay for the delivery charges. My friends think that they have the deal of the century but unfortunately, they are far from the truth. I don't think that is What Your Electricity Company Offered?

An easy formula to know how much you are really paying for your electricity

Total due divided by the total energy used.

Please do not include late fees or anything like that.

To conclude.

Do your research and find an energy plan that suits you. Find an EFL that the kilowatt rate fluctuation between monthly energy usage is not that dramatic. We can’t predict Texas weather; we can’t know if we will use 1000 kilowatts all year long. However, we can avoid large bills by saving energy and knowing how much energy we use every day with prepaid electricity. Prepaid electricity will tell you your daily energy usage, this way you know if an energy-saving effort is working or not. With contract plans, you can only know your monthly energy usage. What Your Electricity Company Offered?

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