When choosing an electricity plan, the Electricity Facts Label (EFL) sheet might not seem that important at first. After all, most of us don’t automatically read nutrition labels before purchasing food at the grocery store.
However, an EFL is critical to selecting an energy plan that’s correct for your home so you can prevent a big billing surprise.
Let’s take a deeper dive into the components of an EFL so you can understand what each item means and learn how to use the information.
What exactly is an Electricity Facts Label?
It’s pretty simple, really. In Texas, you’re allowed to choose your own electricity provider. There is no government-regulated monopoly as in the days before deregulation, when you paid whatever rate the regulators decided and didn’t have to worry about how to analyze energy plans to select the best one for your home.
In the Lone Star State, you can choose from among scores of providers, ranging from large providers such as Reliant and Gexa, to small companies who may only have a thousand customers and employ a handful of employees. Some providers have straight-forward energy plans that provide predictable billing, while others use gimmicky rates that mislead consumers and cause monster billing surprises.
To help Texans compare plans on an apples-to-apples basis, the state created the state-mandated EFL, which providers must issue for each energy plan.
The EFL provides important disclosures about the energy rates you’ll pay at various usage levels so you can decide which plan best fits the usage pattern of your home, and other information such as the amount you’ll pay if you cancel your plan early, the term length of the plan and whether your rate will be fixed or variable. These items will help you make a more informed choice.
Sample of an EFL
The most important part of the EFL is the section at the top showing the electricity rate. This gives you a simple way to compare your “effective rate” at specific monthly usage amounts.
|Average Monthly Use||500 kWh||1,000 kWh||2,000 kWh|
|Average Price per kWh||8.6 ¢||8.0 ¢||7.8 ¢|
These average prices are examples. Your price for electricity will vary depending vary on your actual usage. The average prices above do not include facility relocation fees or other changes that may be order by a municipality
Just below the “effective rate” information is a breakdown of charges that are included in the rate calculation. These include the energy rate and monthly fees. Often these charges are broken out for the retail energy provider (REP, who sells you the energy) and the Transmission and Delivery Service Provider (TDSP, the regulated entity that maintains the wires and corrects outages). Other information may include tiered rates for different usage amounts in a given month, bill credits for reaching specific usage amounts, and other monthly fees.
|Energy Charge:||3.248¢ per kWh|
|TDU Delivery Charges:||$5.47 per month and 4.2536¢ per kWh|
The remainder of the EFL provides details such as whether the rate is fixed or variable, the term length of the contract, early termination fees, and renewable energy content.
Type or product
Do I have a termination fee or any fees associated with terminating service?
|Yes. An early termination fee of $150 will be charged for cancellation of service prior to the end of the contract. This fee will not apply if you move and provide a forwarding address or oter evidence to verify you have moved.|
|Can my price change during the contract period?If my price can change, how will it change and by how much?||Yes. Your price can change if there are changes in TDU charges; changes to the Electric Reliability Council of Texas or Texas Regional Entity administrative fees charged to loads; or changes resulting from federal, state or local laws or regulatory actions that impose new or modified fees or costs that are outside our control.|
|What other fees may I be charged?||For full list of fees , please see the “Pricing and Fees” section of your Terms of Service|
Is this a pre-pay ind advance product?
|Does Champion purcharse excess distributed renewable generation?||No|
|Statewide average for Renewable Content||18.90%|
How to Read Your EFL
Now that you know what an Electricity Facts Label is, it’s important to know the meaning of the components in the EFL sheet. Keep this list handy so you can refer to it while you search for your Texas electricity provider.
1 Average price per kWh:
- First, understand that kWh means kilowatt per hour.
- At the top of the EFL, you’ll see three usage levels: 500 kWh, 1000 kWh, and 2000 kWh.
- The 500 kWh usage level relates mostly to places the size of an apartment or condo.
- Usage of 1000 kWh refers to a small to mid-size home and 2000 kWh refers to a large home.
- The rate you can expect to pay per kWh in a given month is listed under each usage level.
- Don’t forget that these are just guideline levels. What you actually pay will depend on exactly how much energy you use in a given month.
2 Base Charge:
- Some plans have a base charge. In most cases, the base charge is a set amount per month regardless of how much energy you use.
- Be sure to check the amount in the EFL, because while most base charges are for modest amounts, such as $5.00 or $10.00, some plans charge huge base charges of over $100!
3 Energy Charge:
This is the rate charged by your electricity provider. Your electricity provider sells you your energy and bills you. They’re the company whose logo appears on your bills.
4 TDU Charge:
- TDU stands for Transmission and Distribution Utility.
- This is the company who manages the power lines, checks your meter and corrects outages.
- About a half dozen companies in Texas provide transmission and distribution of electricity in assigned zones.
- Your electricity provider actually has no influence on the charges that a TDU charges you, as they are a regulated entity. Their charges are reflected in your monthly bill sent by the provider.
5 Type of Product:
- This is a big one. Make sure you know if you’re paying a fixed rate during the term of the contract or if it’s variable. If it’s fixed, the provider cannot increase your rate for the term of the contract.
- If it’s variable, the provider can increase the rate, so as you would expect, variable rates are more likely to cause billing surprises.
- However, variable rates are often less than fixed rates for the first few months so the provider can advertise a cheap rate.
6 Contract Term:
- This is the number of months of your contract.
- Typical contract terms are 12, 24, and 36 months, but there are also many partial-year term offerings and some providers offer a 60-month term.
7 Termination Fee:
If you wish to terminate the contract before the term is up, you’ll pay an early termination fee, unless you are cancelling because you are moving away from your home.
8 Pre-pay Plans:
Some plans allow you to pre-pay. These plans are usually targeted to consumers with poor credit and the rates are often very expensive.
9 Renewable Content:
Some plans offer renewable energy incentives. Renewable content tells you the percentage of electricity produced from green or renewable energy sources associated with your plan.