Before you sign up for a new product or service, do you read the fine print? If you’re like most people, the answer is no.
Unfortunately, there are sometimes important details hidden within that text — especially when shopping for electricity — that you need to know. These hidden details can be really important when it comes to understanding exactly how much you’ll pay for the services you want to use.
When it comes to shopping for electric plans, the same logic applies. Reading the fine print before signing on the dotted line will help you to determine whether or not you’ve actually found the best rates or deal on the market. It is definitely in your best interest to review this information carefully before signing any contract.
Disregarding or ignoring this information could take you by surprise when you receive your first bill, at which time it’ll be too late to do anything about it.
Where’s the Fine Print?
The “fine print” for electric plans is something called the Electricity Facts Label (EFL).
The Electricity Facts Label (EFL) is a document that contains all of the details that pertain to a specific plan. We list EFLs for every single plan we offer on our site. While the information offered in an EFL is generally presented in a similar way by providers, the affixed fees, charges, and “gotchas” can vary greatly.
All Public Utility Commissions require electricity providers to offer an EFL to help you make informed decisions regarding your electricity service.
Some of the details that an EFL can outline for the consumer include:
- Length of the contract
- Contract terms governing the plan
- Information on items or products purchased
- Any fees (applicable if the contract is broken before the end date)
- Information on applicable fees
- Renewable energy facts (if applicable)
- Price of energy use per kWh
- Additional information on electricity charges
- Pricing terms between the utility (Transmission and Distribution) and the electricity supplier
As a consumer, you have the right to request for this information prior to signing any contract or other binding documentation.
Choosing a Plan with an Electricity Provider
Overall, the information in an EFL reveals basic details of the plan. Let’s say you just found a great plan from an electricity provider in Dallas. The EFL is for a fixed plan and outlines 12 months of renewable energy with a cancellation fee of $150.00 for only 7.5 cents per kWh.
Sounds great, right?
One major reason for carefully reading EFLs is that when you dig a little bit deeper into this particular EFL, you might learn that the 7.5 cents per kWh price is only applicable if your average monthly use reaches 2,000 kWh. If you use less than 2000 kWh, you will have to pay a much higher price. For example, if your average monthly use only reaches 500 kWh you might have to pay something like 12.4 cents per kWh. This is a much different rate than advertised!
In this example, you aren’t actually receiving a very competitive rate at all.
How Much Electricity Do You Consume?
Many plans offered by electricity providers are based on average monthly consumption.
In fact, the consumption is often based on tiered amounts, and the more you consume, the less you need to pay. Therefore, before you start investigating rates and plans, it is a good idea to understand how much electricity you consume each month. This information will help you to really narrow down exactly how much you would pay based on the EFL details.
Deceptive Rates on Comparison Websites
There are some other comparison websites out there that offer rates and plans for customers to browse, but offer unrealistic rates like 1 or 2 cents per kWh. Some providers game their systems by setting a dishonest upfront rate (to attract more eyeballs), but then hide the terms and conditions of that rate in the EFL — the cliff notes being that the rate is pretty much unobtainable. You generally have to use an extraordinary amount of electricity, or you have to fulfill some other condition or requirement that’s not practical, to actually get the advertised rate.
Other Important EFL Rates
In addition to the Average Monthly Usage and Rate details on the EFL, it is also important to check out the applicable rates from the utility. These rates are often defined as TDU or TDSP with a line for a flat rate per month as well as a per kWh fee.
What this means is that in addition to the monthly per kWh rate that you pay (based on amount consumed), you also need to add up these utility charges. For example, let’s say that you consume 500 kWh per month. In this scenario the electricity provider charges 5.9 cents per kWh. In addition, the utility delivery charge is $6 plus 2.8 cents per kWh. This means that your charges are actually 8.7 cents per kWh consumed per month plus the $6 delivery charge.
While the examples illustrated above might frighten you a little bit, don’t be — the vast majority of energy providers are upfront and honest about the rates and fees they charge. In addition, if you call us at 800.974.3020 and reference a particular plan (or want help finding one), we can give you a simple breakdown of all applicable charges and fees you can expect. We rely on word-of-mouth and want to make sure you’re satisfied with your shopping experience.