Bill credit electricity plans offer a discount on your bill through a monthly credit that applies when your usage meets a certain energy consumption threshold. This discount is called a “bill credit” or “usage credit.” Electricity providers created bill credit plans that advertise ultra-low rates as a marketing tactic in the increasingly competitive deregulated energy market.
Despite the attractive bill credit amounts and cheap advertised electricity rates, you may not always earn the bill credit, which can make your energy bills unpredictable. As such, bill credit plans aren’t a good fit for all Texans. We generally recommend more straightforward, fixed-rate plans for predictable monthly costs, regardless of how your monthly usage changes.
Popular companies that offer bill credit plans include Gexa Energy, Reliant Energy and TXU Energy. However, based on our research, the best company for bill credit plans is TriEagle Energy. It offers smaller credits, which may yield more predictable costs. Additionally, many top light companies in Texas offer no-gimmick plans and competitive rates without the risk of unpredictable monthly energy bills caused by bill credits.
How Bill Credit Plans Work
Bill credit plans promise a bill or usage credit, which is essentially a reward amount that unlocks at a certain usage threshold. Your provider will then deduct this amount from your final bill. The effect of securing the bill credit is a lower average electric rate in that month.
However, bill credit plans won’t necessarily result in low prices, as their base energy charge is slightly higher to account for the bill credit. Additionally, it may not always be possible to fulfill the consumption threshold requirement.
Credit Calculation Methods
Typically, bill credit plans work by applying a discount to your account when your monthly energy consumption reaches a certain usage level. The amount of the bill credit and the required kilowatt-hour (kWh) threshold will vary from plan to plan and provider to provider.
Bill credit plans most commonly provide a discount when your usage meets or exceeds a minimum usage level. However, some plans provide a discount when your usage stays below a certain level. In other cases, your usage must stay within a set range, typically between 1,000 kWh and 1,999 kWh. If your usage falls below the minimum or exceeds the maximum usage level in a given billing period, you won’t enjoy the bill credit that month. Failing to secure the bill credit can result in your bill being far higher than expected.
As an example, the Gexa Eco Saver 12 promises a $100 bill credit when your home consumes more than 1,000 kWh of electricity in a billing cycle. If your original bill is $200, the provider will then charge you only $100 for that billing cycle. However, if your usage doesn’t meet the bill credit requirement, you’ll have to pay the full $200.
Benefits and Drawbacks
Bill credit plans have one key benefit — they often promise a lower electricity rate if you succeed in fulfilling the required usage conditions. For example, if a plan offers a $100 bill credit at 1,000 kWh usage, and your usage regularly meets the bill credit requirements, you may be able to secure a very low effective energy rate.
However, because energy usage varies based on a variety of factors, you may not be able to consume 1,000 kWh or more every month. If your usage doesn’t meet the bill credit requirements, you won’t earn the discount, and your energy rate can effectively double. This can make your energy bills very unpredictable.
For example, in my Houston home, we use around 1,300 kWh during the summer months, so I would regularly earn the $100 bill credit in June, July and August. However, my usage typically dips to around 700 kWh per month in fall, spring and winter. In those months, I wouldn’t earn the credit, and I’d be paying a far higher price during most months of the year.
Do Bill Credit Plans Lead To Higher Bills?
Yes, bill credit plans can lead to higher bills than a more straightforward, no-gimmick fixed-rate plan. While bill credit plans typically advertise seductive low rates, their confusing, usage-based discount may be nearly impossible for all Texans to secure consistently. If you’re unable to fulfill the provider’s energy consumption requirements, instead of enjoying a very low energy rate, you’ll pay a very high cost per kilowatt-hour. And because seasonal changes in Texas weather lead to vastly different energy needs, meeting the bill credit requirement every month is highly unlikely.
Comparing Bill Credit Plans with Standard Plans
Bill credit plans often have a lower advertised rate than other plan types. However, if you review the electricity facts label for a given bill credit plan, you’ll find that most bill credit plans’ basic “energy charge” is higher than the rate per kilowatt-hour for a comparable fixed-rate plan. When you don’t meet the bill credit requirements, you’ll be stuck paying that very high rate per kilowatt-hour.
This is why standard plans without a bill credit result in more predictable energy bills, while bill credit plans are more likely to produce unexpectedly high bills.
Alternatives To Bill Credit Plans
Below are some plan types that you can consider as an alternative to bill credit plans.
- Straightforward, fixed-rate plans: Fixed-rate plans without deceptive rate structures offer a constant rate for a fixed contract term and less risk of billing surprises.
- Prepaid plans: Prepaid plans offer bill predictability, as you pay for the energy before using it and can monitor it in real time. However, no-deposit plans tend to charge higher rates per kilowatt-hour.
- Green Energy Plans: Many fixed-rate plans also offer energy drawn from 100% renewable energy sources, helping you lower your carbon footprint. However, you should note that some green energy plans also use bill credits.
Who Should Choose Bill Credit Plans?
Bill credit plans are a good choice only if you can fulfill the energy usage requirements in most or all months of the year. In other words, you should choose a bill credit plan if your energy consumption does not vary much with seasonal or other changes.
If you live in a location with few seasonal changes, your energy usage may fluctuate less with the changing seasons, making bill credit plans a suitable option.
Usage Patterns and Savings
For example, if you consistently use 1,100 kWh per month, a bill credit plan with a discount at 1,000 kWh may help you save money. Or if you live in a larger house that consistently consumes approximately 2,200 kWh every month, a bill credit plan that offers a discount at 2,000 kWh would suit your needs.
On the other hand, if your usage in summer is around 1,200 kWh per month but dips to even 900 kWh in winter, a bill credit plan may cause unpredictable monthly energy bills.
Frequently Asked Questions About Bill Credit Plans
How do bill credits appear on my electricity bill?
If you are eligible for a bill credit in a particular month, the bill credit amount will appear in the “account summary” section of your electricity bill. The amount will be deducted from your original bill amount.
Can I combine bill credits with other electricity plan discounts?
No, you cannot typically combine bill credits with other electric plan discounts. However, different providers have different discount policies, and we recommend checking with your provider about combining bill credits and other discounts.
What happens if I don’t meet the minimum usage requirement?
If you are enrolled in a bill credit plan and don’t fulfill the minimum usage requirement, you will not be eligible for the bill credit in that month. Also, if you have a standard plan with a minimum usage requirement and you don’t fulfill it, you may be subject to a penalty known as the minimum usage fee. This fee depends on the provider and the plan you’ve selected.
Are bill credit plans available in all areas?
Bill credit plans are available in all deregulated areas of Texas. However, they are not an option in the regulated energy areas of Texas or other states. In some cases, they may or may not be available in the deregulated states.
