Competitive Providers Are Pricing But It Is Sometimes Confusing
Spark Energy serves Residential and Commercial Customers in Texas and have recently been pricing very competitively. Deregulation in Texas has begun to show some positive affects for Residential customers as the rates have dropped about 1 penny per KWh over the standard highs. With deregulation coming Jan. 1, customers should be ready to shop around for the best electricity provider.
TERESA McUSIC
In My Opinion
Choosing an electricity company these days is getting as complicated as picking a cellphone plan or a variable-rate mortgage.
There are long-term contracts out to five years. Or short-term ones that go month to month. There are plans that track natural-gas prices or use renewable energy. They have features like locked-in rates and lower summer rates. Some plans go up during peak summer months, and some go down.
And those are just the offerings from TXU.
On Jan. 1, TXU’s rates will no longer be regulated in North Texas, and industry observers hope electricity prices in Texas will drop as competition heats up.
But, in addition to the eight plans offered by market leader TXU, 16 other electric retailers offer more than 30 plans — a big field compared with the handful of plans and providers available when deregulation started in 2002.
Consumers have close to 50 plans from which to choose — with different rates, perks and, in some cases, hidden or high fees.
You may need a spreadsheet to find the best plan.
“There is no simple process for side-by-side comparisons,” said Tim Morstad, utility specialist for the state Office of Public Utility Counsel, which represents consumers’ interest before the Texas Public Utility Commission (PUC). “People have to do their homework.”
TXU customer Karen Kaiser recently called the Star-Telegram to complain about the process. She said TXU’s marketing company hung up on her when she asked about its $100 preferred-customer bonus. Then, when she called TXU to complain, she held for nearly an hour and never got a satisfactory answer, she said.
“It’s been frustrating,” she said. “I would like to change because of the experience I’ve had with TXU, but I’m a creature of habit.”
That may sum up the feelings of many of the 2.2 million customers who have stuck with TXU during the past five years, despite the retailer’s price increases.
TXU’s plethora of plans is daunting, TXU spokeswoman Sophia Stoller said.
“Customers have different wants and needs,” Stoller said. “For some, a price guarantee or savings is very important. Others want flexibility.”
And she acknowledged that the process is confusing.
“Even my friends and neighbors tell me they don’t know where to start,” Stoller said.
Although comparing rates, reading the fine print in contracts and guessing whether the company you choose will be around for years are hassles, no one can tell you the best choice.
But there are some common trends and cautionary words from the few experts out there to help consumers decide:
Prices among some competitors are going down. Three providers offer rates that beat TXU’s “price to beat” of 15 cents per kilowatt-hour by as much as 23 percent. The leader last week was Houston-based Spark Energy at 11.5 cents per kwh for a three-month plan or 11.9 cents per kwh for a 12-month plan.
These figures were gathered by calling the company. The rate on http://www.powertochoose.com/ was not updated as of Friday to reflect these rates. So if you see a good rate, call to the company to confirm.
Other low-price leaders include StarTex Power, National Power and Gexa Energy — all Houston-based retailers with rates 17 percent to 19 percent lower than TXU’s price to beat.
The lower rates reflect today’s price of natural gas, Morstad said. TXU, which has had a regulated price, was allowed by the PUC to raise its rates as natural-gas prices increased, but it has not lowered rates as gas prices have dropped.
No rate increases for three years. TXU customers who don’t sign up for any plan and remain a TXU customer won’t see higher prices for three years, Stoller said. On Jan.1, the company will put these customers in its Flex Protect plan at the rate of 15 cents per kwh that will not go up for three years but could go down, Stoller said. Customers can switch out of this month-to-month plan anytime without penalty.
Peak/off-peak rates continue for most TXU plans. All of TXU’s plans except its EarthWise renewable-fuels plans will have peak and off-peak rates that are higher in the summer, when electricity demand is high, and are lower the rest of the year. Stoller said that formula is built into the rate averages that consumers see when they sign up for a plan. TXU is the only retailer that has this peak/off-peak formula in its average.
Don’t lock into long-term plans. With deregulation on Jan. 1, TXU will no longer need the PUC’s permission to change rates, and the price-to-beat program will go away. Consumer advocates like Carol Biedrzycki, founder of the Texas Ratepayers Organization to Save Energy, say locking in your electricity for any period at any rate above 12 cents per kwh is a mistake. The marketplace is likely to see a lot of price changes next year.
Use the Web to compare plans. Consumers without Web access are hindered by relying on limited information from mailers or marketing companies. Some of the best deals today are from companies like StarTex, which has no advertising budget, according to Robert Zlotnik, the company’s chairman and chief executive.
All electric retailers have Web pages to describe their products, services and contracts, and the PUC has a list of retailers and prices at http://www.powertochoose.com/, a good starting point for research. The PUC will also print out current offers and mail them to you.
Call the Texas Electric Choice hot line toll-free at 866-797-4839.
TXU’s plans are listed at www.txu.com/plans. Stoller confirmed that the marketing company hired to call TXU customers will initially offer just three of TXU’s plans. Customers should ask about others, she said.
Built-in consumer protections remain. The Texas Legislature offers protections such as no cost for switching to another retailer and automatic moving of your account if your company leaves the market. You won’t lose power for even a day, and most companies in today’s marketplace have been active for several years. Also, remember that TXU Electric Delivery will repair lines and handle emergencies no matter which retailer you use.
Global-warming concerns. To buy renewable energy, look for plans noted with a green check mark at http://www.powertochoose.com/, or go to http://www.powerscorecard.org/ to see environmental ratings of electric retailers.
Perks. Retailers offer cash bonuses, airline miles and discounts on merchandise (such as in TXU’s Energy Rewards) for signing up, but keep your eye on the rates. When the perks are gone, your summer electric bills will remain.
Read the contracts. Some retailers add costly fees that others don’t. Spark Energy, for example, has an $80 fee for restoring power on a delinquent account that has been updated — a fee Biedrzycki says may not comply with PUC rules. Spark also charges $50 for sending a termination notice. Another common fee is for canceling a long-term contract. If your credit is good, most companies waive the deposit requirement.
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