Homeowners and apartment dwellers beware when shopping for your next electricity rate! Currently, there are many short term rates that are advertised at lower than 4 cents per kWh, but you MUST read the fine print! These look like fantastic rates, but don’t be fooled! If you will be using exactly 1,000 kWh every month, these are great offers! But if you do not use exactly that amount, they may cost you more than rates that do not rank as well on the power to choose website. The only way to know if these are good offers for you is to calculate the monthly cost using the actual rate applied to your anticipated usage (NOT the advertised average rate!) and then add in all of the extra charges they will apply. You can use your past 12 months of usage history because your usage from year to year will be similar, and the extra charges are usually explained in the Electricity Facts Label*.
The Public Utility Commission requires every rate offered to have an Electricity Facts Label (EFL) that, among other things, shows the average rate per kWh when exactly 500, 1,000 and 2,000 kWh is used. They publish these offers on their Power to Choose website, which ranks the offers according to the lowest average price per kWh when exactly 1,000 kWh is used. You can change the settings to rank the offers by 500 or 2,000 kWh, but running the numbers with your usage is still the best way to identify the best rate for you.
Furthermore, if you choose a short term rate (3-6 months), be mindful of what time of year the rate will expire! The price of electricity in Texas is impacted strongly by the price of fossil fuels, which in turn are impacted by many factors, particularly the weather locally and nationwide. In fall, winter and spring, storms locally and in the gulf can disrupt production, refining and distribution, driving prices up. Nationally, the fossil fuels used to create the steam that turns the turbines to generate electricity at our power plants is also to heat buildings throughout the country. So, a cold weather in the northern tier of the country will drive up electricity prices here in Texas. A 3 month rate starting in October will end in late December/early January. If the winter is mild, prices may be only moderately higher then than they are now. A 6 month rate will end in late March, early April when rates typically have not yet eased off of their winter highs.
A 9 month rate locked in now will end in June/July. While summertime is generally when electricity prices are at their highest in Houston, many companies allow you to lock in a rate well in advance of the service start date; anywhere from 14 to 90 days, depending on the company. There are a handful of 9 month offers available now that are worth serious consideration and that can be locked in during the time of year when rates in Texas are most favorable.
It can be difficult, and is certainly time-consuming, to run the numbers and most people typically evaluate 5 offers or less before guessing at the one that appears to be the best. Lantern Power watches market trends and signals and proactively sends you recommendations when favorable, actionable opportunities arise for your home and business.