Read an Electricity Facts Label

Before signing any contract, whether you are buying a house or buying a new cable package, it is important that your read the tiny fine print. This is where some of the most important information on any agreement undoubtedly lies, but this is also the section of most contracts that many people overlook.

If you are signing up for a new energy plan, then it is important that you take the time to read the fine print. This fine print can usually be found in one section of your contract known as the Electricity Facts Label (EFL). Not only taking the time to read this label, but knowing how to read this label can help you make a smarter decision on any energy plan you are considering and truly learn about what it is that you are signing up for with your new energy plan.

Every Electricity Facts Label will be different, depending on the individual provider. However, most labels are directed into several different sections and organized in a similar manner. Learning to read an EFL is similar to learning to read the nutritional labels on the back of food items. You can buy a contract without reading the label, but if you don?t you will not be fully informed of what it is that you are actually getting.

Overall, all EFLs detail the same basic information and provide customers with the following:

  • Information on how much they will be charged for their electricity
  • The breakdown of pricing between the Transmission and Distribution Service Provider (utility) and the Retail Energy Provider
  • Insight on the type of contract terms governing the plan
  • The length of the contract
  • Description of the products being purchased
  • Fees for breaking the contract
  • Pricing for energy use per kilowatt-hour
  • Contract terms and details
  • Information on fees
  • Renewable energy details

All of this information will appear on the EFL, and while different labels may look different, they are required to follow a similar breakdown and format so that consumers can easily read all of the necessary information on contract terms and pricing.


The first thing you will see on any Electricity Facts Label is the heading. This is a pretty self-explanatory area of the EFL, but it is important. This is where the company will list the date of the start of your contract, the name of your provider and the type of plan that you have signed up for.

For example: If you started a new contract on January 1st, 2015 with ABC Energy for a Commercial Fixed Plan, all of this information should be clearly listed on the header.

Read the header first. If this does not reflect the right information, there is no point in continuing to read the label. While it shouldn?t be difficult for your provider to sign you up for the right plan, when they have thousands of customers, mistakes can be made so make certain all of this information is correct.

Electricity Price

This is perhaps the most important section of the EFL. Here you will see all of the charges that you will be billed including generation costs, transmissions, fuel prices and customer service fees. If you signed up for a contract that came with any promotions or incentives, this information will also be listed in this section of the label.

Typically, you will see a chart that features all of that provider?s service areas or utilities, and then the average price per kWh. You will need to know what region you are in. If you do not know this information, call your current provider to find out.

You will also see both a flat rate and a per kWh rate for TDU or TDSP. This is the transmission and distribution rate that the particular utility charges suppliers in the area.

For example, if you are using a Texas supplier and live in the utility region known as AEP Texas North. You may see a line that says AEP Texas North, and then lists the Average price per kWh for those who use approximately 500 kWh, 1,000 kWh or 2,000 kWh. You will also see a TDU flat right per month and a TDU per kWh fee.

If you use 500 kWh per month, for AEP Texas North, you can look to the chart and see the utility charges 5.9 cents per kWh, the TDU monthly delivery charge is $6.00 and the delivery charge per kWh is 2.8 cents. From there you can do the math to find out that you will pay 8.7 cents per kWh plus $6.00 a month for electricity.

Typically, the more energy you use a month, the lower your individual kWh will be. You may also find that customers in different service areas may be paying more or less than you for their monthly energy. This is actually quite common as different utilities have different delivery charges.

Other Key Terms and Questions

For most customers this area of the EFL will be very short and to the point. Some labels may include all of the details of their fees, deposits and terms. Others may direct you to the Terms of Service statement, which should come with your contract, for information on the company?s deposit policies and individual fee breakdown.

Disclosure Chart

This is perhaps the most revealing part of any EFL. Here you will see some of the more specific details of your contract, including the following information:

Type of Product: This is where it will list whether you have a fixed or variable rate contract.

Contract Term: This is the length of the contract that you signed.

Do I have any termination fees associated with terminating service? Here the company will simply state ?yes? or ?no.? If there are early termination fees, which most companies will have, they will list the one time fee you need to pay in order to cancel your service early.

Can my price change during contract period? Most companies will not change your price during your contract period, but they may list something such as ?No, except for the reasons described in Terms of Service.? If you see this, make sure to read the reasons detailed in the ?terms of Service? portion of your contract.

If my price can change, how will it change and by how much? Typically you will see a boilerplate statement such as ?Delivery and ERCOT charges are subject to change solely to reflect actual changes in such costs to [insert supplier name here].? This basically means there are instances detailed in the Terms of Service that could change your fees slightly. Most companies will not give you examples.

What other fess may I be charged? This section is important. Typically, this is where the company will list your monthly service charge. They may also include a statement such as ?You will be charged a monthly service fee of $10 and other charges listed in the Non-Recurring Fees section of your Terms of Service.? Again you will need to be able to reference your Terms of Service portion of the contract. Other contracts may include an overview of fees such as: Late Fees, Disconnection Notice Fees, Insufficient Fund Fees, Processing Fees and Collection Fees.?

Is this a pre-pay product? Most contracts are not, but if you signed up for a plan that allowed you to pay upfront, it will say ?yes.?

Does this REP purchase excess distributed renewable generation? This basically means, does the provider buy extra renewable energy. You will only see ?yes? if you specifically signed up for a plan or with a provider that buys more green energy?

Renewable Content.  Here the provider will list a percentage that will tell you how much of your energy will be generated from renewable sources. Below this it will also show you the statewide average so you can see how the company compares to other providers in the state.

Contact Information

Every EFL will close with a footer that has all of the provider?s contact information on it. This is typically the best way to contact the supplier directly for more information. Make sure to reference the numbers and direct lines listed for the most prompt and accurate service.

If you know how to read an EFL you can make certain that you are buying the right energy plan and that you aren?t singing up for a contract you don?t truly understand. While most people won?t find anything shocking in their EFL, it is always important to read over the fine print first before singing up for a new contract.