Understanding your Energy Bill: Electricity Facts Label
The “Terms and Conditions” section related to any product or service is always exhaustive to read and understand. Most – if not all – people skip that part. And they should not be blamed. Who has got all that free time to go through those bulky, fatigue-causing paragraphs filled with technical, alien words?
However, as the saying goes – a few moments of patience can save a thousand moments of regret. This is especially true while understanding the Electricity Facts Label (EFL) that comes with your, usually first, electric bill. The Electricity Facts Label is the “Terms and Conditions” section that defines how your electricity provider is going to charge you on a monthly basis.
It is crucial to understand the EFL, so that you may choose an electricity plan that suits your needs and wallet. Electricity providers often design them to look appealing, and that’s how they trap customers. The only way out is to be able to unravel every nitty-gritty about this contract.
Feeling intimidated already? Don’t worry as we are here to make your life easier. Follow along and get from “uh”, to “I got this!” within a few minutes.
What’s an Electricity Facts Label
An Electricity Facts Label is a document that mentions “how” you will be billed by your energy provider. Every Retail Provider is mandated by the Public Utility Commission of Texas (PUCT) to disclose this information.
Also known as the Electricity Facts Sheet, the EFL contains information such as electricity price, monthly charges, type of product, contract terms, renewable content, etc.
EFL aims to empower the end-user of electricity, you, with the knowledge of how a certain REP’s electricity plan works.
Importance of EFL
Picture this. You are making efforts on daily basis to consume less energy so that you may save some bucks on your electricity bills. Your efforts seem to pay off when you see a significant drop in the units registered by your meter. However, to your surprise, your friend living nearby received a lower bill even though his consumption was more than yours! This is actually possible when you subtract the option of considering the Electricity Facts Label while opting for an electricity plan.
There are several Retail Energy Providers (REPs) in the Lone Star State. All of them have their unique method of calculating the energy bill. Yes, you read it right! It is not as simple as taking the product of electricity rate (cents per kWh) and the number of consumed kilowatt-hours. Other charges and factors are at play also.
After the deregulation in 2002, REPs had the opportunity to attract customers based on seemingly great offers. Later, users would receive hefty bills as they were unable to compare different electricity plans due to ambiguities.
Thus, to make things fair and square, a standard legal document called the Electricity Facts Label or EFL was introduced. It contains fine details that help make an accurate estimation of utility bills.
How to Read Your EFL
Though the Electricity Facts Label is not interesting, it is definitely worth it to read.
Usually, there are two sections:
- the first one mentions the electricity pricing scheme, while
- the second one discloses the contract period, type of product, termination fee, etc.
Let’s dig in further.
Electricity Price
This section lets you accurately estimate the price of electricity. Some factors control the price.
Average price per kWh
This is where most of the users get confused. This tag mentions what you may expect to pay for a certain number of consumed units. The prices are generally mentioned for the usage of 500 kWh, 1000 kWh, and 2000 kWh respectively.
Energy Charge
The energy charge is the raw price of electricity per kWh that you pay to your retail energy provider (REP). It does not include other charges.
Base Charge
It is the fixed amount charged by the REP. It is independent of the amount of electricity used. As long as you’re a customer, the REP will demand a base charge every month. Different REPs will have different base charges. Some might even not ask for it.
TDU Charge
This fee is imposed by the transmission and distribution utility. The purpose is to cover the cost of delivering the electricity and also correcting the outages.
Summing up: You will find the average price per kWh which is what an average customer pays for a given usage. You may expect to pay less per kWh for high consumption. The electricity price is equal to the energy charge times the number of kilowatt-hours, + Base charge + TDU charge. This excludes taxes and other fees (if any).
Disclosure Chart
The other part of the Electricity Facts Label contains information such as the type of product, contract terms, early termination fee, percentage of renewable energy content, etc.
Type of Product
It specifies whether the energy rate is fixed or variable for the entire duration of the contract. With the fixed rate, you have accurate estimates of your bills. The variable rate is initially lower. However, since it is not fixed, the rate might increase notably within months.
Contract Term
It is the time length for which you are in contract with the electricity provider. The contract may last 1, 2, or even 3 years. Some companies may offer a contract length of less than a year.
Termination Fee
This one is important. If you leave the contract before its ending time, you will incur the Early Termination Fees or ETF for short. It may be in hundreds of dollars or none at all.
The PUCT exempts the user from submitting the termination fee in case they are moving out. The proof is required, however. The retail electricity provider might even waive off the early termination fee if you’re moving within the same utility delivery area.
Renewable Content
This part is unrelated to the price. It is to let you know what percentage of your electric power usage is produced by renewable energy sources such as solar panels, wind turbines, etc. This can be great additional info if you’re conscious of your impact on the environment.
Electricity plans are also available that claim 100% renewable energy content!
Pre-pay Plans
The customers having poor credit are offered pre-pay electricity plans. Watch out though since the rates are usually higher.
Other Fees and Penalties
Retail Electricity Providers might have another surprise for you in the form of penalties and other fees. You probably won’t find these charges mentioned in the Electricity Price section. However, there would be a note directing you where to look. For instance, it might be mentioned that the full list can be found in the “Terms of Service” (TOS) document.
These “hidden” fees depend upon your provider. We would suggest you know exactly what “other fees” include since these charges can add up fast.
Important Terms on EFL
Though there is not a strict format that every supplier follows, some essential terms are part of every contract. We have gathered a list for you.
Energy Charge: This is the rate per kWh that you will pay to the REP.
Base Charge: Most REPs demand a fixed base charge that needs to be paid independent of electricity usage.
TDU/TDSP Delivery Charge: It includes the rate per unit of usage as well as the fixed monthly fee. This fee is regulated by the PUCT and goes to Texas Transmission and Distribution Utility (TDU). Note that these delivery charges are separate from the energy and the base charges.
Disclosure Chart: This portion contains other important information about your plan including contract length, type of product (fixed or variable rate), renewable content, etc.
Electricity Price Table
An Electricity Facts Label mentions the average electricity price in form of a table. Usually, the price per unit is given for three different amounts of energy usage i.e., 500 kWh, 1000 kWh, and 2000 kWh. Note that this price table is only to give you estimates. The final actual cost can vary depending on many factors.
A typical electricity price table is presented below.
| Average Monthly Use | 500 kWh | 1000 kWh | 2000 kWh |
|---|---|---|---|
| Average Price per kWh | 16.1 ȼ | 15.7 ȼ | 15.5 ȼ |
How to Calculate your Monthly Energy Bill?
We have an idea! Let’s go through the step-by-step maths to calculate your monthly energy bill based on a particular electricity plan.
Say you have an electricity plan in your hand. You go through the charges mentioned below the ‘Electricity Price Table’. The energy charge is 7.5 ȼ per kWh, the base charge is $4.95, the TDU/TDSP delivery charge is $5.25 per month plus 3.31 ȼ per kWh.
You look at your old utility bills and find out that you consume an average of 1000 kWh per month. Now, your monthly energy bill can be calculated as:
Your Bill =(1000 kWh consumed ×(0.075+0.0331)$ per kWh)+$4.95+$5.25
=$108.1+$4.95+$5.25
=$118.3
Note that this calculation excludes taxes of any kind. Penalty charges may change the total price.
FAQs
Get ready for the list of some of the frequently asked questions, answered by us.
How much electricity does an AC use?
The power consumption is written on the ‘Data tag’ on the surface of your AC. Among the two main classes of an AC, the Inverter ACs consume significantly less power. A typical 1-ton non-inverter ac consumes 1500 W while the inverter version consumes only 900 W. With an increase in cooling capacity i.e., the ‘number of tons’, the power consumption goes up.
This is not the complete story, however. The kilowatts (mentioned on the data tag) and kilowatt-hours (that affect your monthly electric bill) are not the same. The kilowatt-hours are dependent upon many factors including how many hours the AC has been working, the outside temperature, the set temperature, etc.
Why is my electricity bill so high?
There are several possible reasons. You might have consumed more units as compared to your average energy usage. The electricity rate set by your provider might be costly. It is also possible that you have a variable rate as part of your Texas electricity plan, as variable rates can bring surprises! If you have a solar panel system, it might be producing less energy due to more number of cloudy days in the past month.
What uses the most electricity in your home?
For regions with warmer (or colder) temperatures, the air-conditioner & heating wins first place. In the second place, we have appliances such as washing machines, oven, vacuum cleaner, blower, clothes iron, water pump, etc.
Is 50 KW a lot?
50 kW is more than 2 to 3 times the amount of power that an average house will consume if all of the appliances, lights, devices are simultaneously turned on! 50 kW is the power consumed by almost 30 air-conditioners (2 tons) if operated simultaneously. So, yeah that’s a lot!
Conclusion
Choosing an electric plan that works best for you is not an easy job. With more than 70 REPs in Texas, presenting their offers, it becomes troublesome, pretty quickly, to evaluate the pros and cons of every offer. To mitigate the problem and allow users to make an apples-to-apples comparison, the Public Utility Commission of Texas (PUCT) has come up with the Electricity Facts Label scheme. Still, a diligent eye is required to look through the fine details that we have elaborated on in this article.
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