The Ultimate Guide to Understanding Electricity Costs in Texas
With rising energy rates in Texas, it’s essential to understand what makes up your electricity bill. This guide will help you break down charges on your electricity bill so that you can better compare energy plans and save money on your next bill!
Choosing the right electricity plan is one of the most critical decisions. Finding the best method can be difficult, so knowing what to look for is good!
Basic Costs
In the past, most Texas residents bought their electricity from a local utility company. But today, Texas is one of a few states with a deregulated energy market where residents can choose their electricity provider. Competition is good for consumers because it drives down rates and gives shoppers more control.
Considering the rising temperatures, electricity costs in Texas have seen fluctuations, leading many residents to explore energy-saving measures to manage their expenses.
Electricity prices are set by energy companies (also called retail electric providers or REPs) based on the wholesale cost of power from power generators. They then tack on delivery costs from utility companies that maintain the power lines and other fees to create your monthly bill.
You’ll find the rate per kilowatt-hour on your provider’s EFL or Electricity Facts Label. A kilowatt-hour is the amount of electricity your appliances or devices use in an hour. Knowing your rate per kWh is essential so you can calculate your bills accurately. A couple of pennies per kWh may seem small, but that can increase over time. That’s why it’s essential to track your usage and shop for the best plan and rate available.
Utility Charges
Customers in Texas and other states with deregulated energy markets choose their power provider based on their budget and lifestyle needs. While comparing electricity plans, it’s essential to be familiar with the different fees associated with each project.
One of the most common charges on your electric bill is the TDU charge (also called a transmission and distribution fee). This fixed fee goes to the utility company for maintaining the poles and wires to deliver electricity to your home or business.
This charge is not controllable, but by being aware of it, you can help keep your bill as low as possible. For example, you can reduce your consumption by limiting usage during peak times or purchasing more energy-efficient appliances.
Your bill may also include a charge based on your meter’s reading. These metering charges are usually small and not charged on every kilowatt-hour used. However, they can add up over time and impact your bill. The best way to understand these charges is to grab a copy of your recent electricity bill.
Fees for Service
Getting familiar with the components of your electric bill can help you understand why prices change. It also saves you money by showing you where to look for savings.
Texas is unique because it’s a deregulated market, meaning residents can choose the energy provider for their home or business. However, the utility company is responsible for physically delivering electricity to homes and businesses via wires and poles.
This is what makes examining your electricity bill so important. Every statement should clearly show a breakdown of your area utility’s energy charge service charges. You can find these fees on your plan’s “Electricity Facts Label.”
Several offer plans that don’t include a base fee in their kWh rates. Although this sounds ideal, checking your plan details is essential to ensure you pay only what is necessary. Switching to a plan with lower charges and competitive energy rates is worth it if you are. This will help you avoid surprises when your monthly bill arrives.
Fees for Meter Readings
A common complaint among Texas electricity shoppers is that it takes more work to decipher their bills. Although each electricity bill will differ depending on where you live in the state and who your electric company is, four sections should appear on every electricity bill.
First, you should establish a baseline for energy usage by tracking your weekly meter readings. This will help you determine if there are any out-of-the-ordinary energy costs or unusual patterns that need to be addressed.
In Texas, REPs bill customers for electricity use (energy charge) and utility costs to deliver the power to your home or business via wires and poles (utility charges). To ensure you’re being billed accurately, it’s essential to check your bill regularly for plan, usage, and changes.
Understanding your electricity bill will help you save money. By shopping around for better rates and implementing energy-saving strategies, you can reduce your electricity expenses and contribute to a more sustainable future.
Other Charges
With the power to choose their energy providers, Texas residents can save hundreds of dollars a year by taking control of their electricity bills. But it’s important to understand your bill before making a switch, especially regarding the different types of plans available in the state.
The main section of your Texas electricity bill outlines how much you used during the previous month. This metric is determined by subtracting last month’s meter reading from this month’s, which is why keeping your account up to date is crucial.
Your electricity provider’s charges will also be listed, including the Energy Charge per kilowatt-hour and special rates like a fixed or indexed price plan. These charges are what your utility company uses to maintain its transmission lines and electricity delivery from the grid to your home. They may also include a service charge for average billing, which takes a year of usage divided by 12, and a distribution cost for companies.
