In a deregulated energy market like Texas, companies strive to differentiate themselves through customer service, branding, pricing, and plans offered. However, sometimes energy companies offer deals or plans that sound too good to be true.
While some may work in your favor, others will cost you more in the long run. In this article, we expose common plan Texas energy plan gimmicks and explain why they may not be the best choice for your budget:
- Free Nights and Weekends
- Bill Credits
- Bullseye Plans
- Variable Rates
- Wholesale Rates
Free or Discounted Nights and Weekends
Free or discounted nights and weekends plans sound great in theory, but in practice, they’ll likely end up costing you more in the long run.
While the hours advertised as free or discounted really are, most electric companies charge inflated rates during the day to cover these costs, which can lead to higher bills overall.
Moreover, the definition of “nights” and “weekends” can be deceiving. Many customers are surprised to find out that the “night hours” aren’t always all night, and the “weekend” periods aren’t always the entire weekend, thus limiting the free or discounted time frame.
In other words, your “free” time could be from 7 pm to 7 am or from 11 pm to 5 am, depending on your contract. The time frame specified in your contract might make it more challenging to take full advantage of those discounted hours.
Who Can Free Nights and Weekends Rates Work For?
These plans might work for those who can shift high-usage activities to the free periods, and who don’t work from home during the week. However, to ensure savings, it’s important to check the terms and be very flexible with energy use.
To save big, these plans require you to change your energy usage habits dramatically. Many Texans sign up for these plans but are not able to realize savings on electricity. In most cases, you are better off with a simple fixed rate plan.
Bill Credit Plans
Bill credit plans offer credits and rewards for using a certain amount of energy each month. But to make these plans worthwhile, you need to consistently be within a specific usage range. If your usage regularly falls outside that range, the plan could end up costing you more because the baseline rates are often higher.
Also, keep in mind that seasonal changes and extreme weather events can have a big impact on your energy usage and your bill. During low seasons, the average rate of use is around 700 kWh per month, while during peak seasons, it can easily double to around 1400 kWh. This means that customers can end up with a much higher bill when their usage falls outside the specified range due to external factors like weather.
Who Can Bill Credit Plans Work For?
These plans can work for individuals who consistently use a set amount of energy each month. However, it’s important to keep in mind that external factors, such as seasonal changes and extreme weather events, can greatly impact your energy usage and bill. If your energy usage regularly falls outside the specified range due to these factors, a bill credit plan may not be the best choice for you.
With bullseye plans, your average price can vary significantly at different levels of energy usage.
If you use the right amount of energy, you can secure a low energy charge. However, if you go over or under the specified usage amount, you’ll be moved to a higher, more expensive tier. This pricing structure is quite common in the Texas energy market.
The defining feature of a bullseye energy plan is that there is no guarantee on the price you pay per kWh – the price changes dramatically based on your actual energy usage. These types of plans can include varying rates, flat fees, and usage credits.
Who Can Bullseye Plans Work For?
Tiered rates can work well for individuals and families who use a consistent amount of energy each month and are able to manage their usage within a specific range. If you can monitor your energy usage and stay within your tier, tiered rate plans can offer price stability and the potential for lower average rates. But keep in mind that shifts in energy usage from lifestyle changes or extreme weather events can push you into the higher-priced tiers, dramatically changing your bill.
Variable rate plans are known for their unpredictability, as they can change based on market pricing, which is influenced by a variety of factors, with demand being the main one, following a typical seasonal curve. Retailers have the discretion to alter pricing without notice, often leading to higher bills for customers.
Who Can Benefit From Variable Rates?
While they might work for those who are looking to save on their energy bills during certain seasons, these plans come with risks and aren’t for everyone. For those who are willing to take on more risk and monitor the market closely, variable rates may be worth considering, but it is generally recommended to opt for more stable rate plans to avoid surprises on your energy bill.
Real-time wholesale rate plans were common on the consumer Texas energy market prior to the winter storms of 2021, where they were featured as variable rate plans by a number of retail electricity providers such as infamous retailer Griddy. The fallout from the 2021 winter storms lead the Texas Legislature to ban wholesale electricity plans to consumers and small business customers.
While wholesale energy plans may seem to have some benefit for those who consume most of their energy during off-peak hours, these plans were extremely risky for the average user. The real-time rates are highly volatile, luring unsuspecting customers in with below-retail costs during off-season shoulder periods only to find summertime and wintertime price spikes quickly wiped out the savings accumulated over several months.
Which Texas Electricity Plan Is Best?
For the majority of Texans, a simple fixed rate energy plan will be the cheapest. You can rely on BKV Energy to offer the most affordable simple fixed rate plans.
We hope this guide has been helpful in showing you how to spot common energy plan gimmicks and find the best electricity rates. And if you’re looking for even more guidance, check out our other post on how to choose an energy provider and the right plan. With our expertise and range of options, we can guide you through this process and help you choose the best (and cheapest) electrical plan for your needs.