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How 2 in '22: How to shop for electricity rates and choose your electric company in Texas

There are very specific things you should know before deciding to switch electricity providers

TEXAS, USA — Rewind to one year ago, and many Texans were still in the dark. 

Despite clear weatherization weaknesses identified from a similar widespread blackout 10 winters prior, the Texas electric grid was woefully unprepared for the February 2021 winter storm. 

So, once again, state decision makers cut the power to millions of Texans to protect the grid from a total collapse that would’ve taken weeks to repair. 

Even if you kept your electricity through it all, you may have been one of many Texans who received enormous electric bills the month after, because it took so much power to keep homes warm in that deep freeze.

That may have been the first time in a long time that many people noticed the rate they paid for electricity. That’s one of those things we tend to forget about after establishing service -- until an unusually large bill focuses our attention.

Many Texans can choose electric rates and providers

Even after that huge power event, some still don’t know that the majority of Texas consumers (those who don’t receive service from an electric cooperative or a city-owned utility) can shop around for electricity rates and have the power to choose their electric provider.

In fact, that's the name of the state-run comparison site; powertochoose.org -- where utilities offer plans by ZIP code. It’s had past issues, including complaints that some rate offerings were deceptively low, and that wasn't immediately apparent unless you read the fine print. 

Another complaint: That plans displayed the price if you used 500, 1,000, or 2,000 kilowatts in a month. 

But they didn’t tell you that if you deviated just a little from those standard benchmarks and, for instance, used 501 or 998 or 2,100 kilowatts, the rates spiked considerably.

Things to know when shopping for an electricity plan

Even after those complaints, the site still uses those thresholds of 500, 1,000, and 2,000 kWh for rate comparisons. 

If you are comparing plans on the state site, in the ‘plan details’ column, pay attention to the term. How long is the service contract? Whether you sign up for three months or 36 months, set a reminder close to the end of that time period, to shop again. Otherwise, you may be automatically kicked to a much higher rate when the term ends. 

Particularly with longer terms, check the cancellation fee just in case you become dissatisfied with the service or with the cost of your plan. The cancellation fee information is in the ‘pricing details’ column. This metric varies by plan. 

There are plenty of them that offer free cancellation. But the fee can sometimes be a hefty flat fee, or it might even be a charge for each month remaining in your contract. 

Once you find a plan you like, look in the ‘pricing details’ column for the ‘fact sheet’. Open that link and read it carefully. In the box labeled ‘electricity price’, you can see if there are additional base charges, subscription charges, or minimum usage fees. Also listed there are more standard add-ons. 

Further down in this fact sheet you will also see the cancellation fee that is charged if you terminate the service contract before then end of the term. 

If you like a plan, but want to verify the details before signing up, it may be a good idea to look up the same plan on the electric provider’s website just to make sure the terms match up. Or you can call the provider and ask what that plan would charge based on your actual usage. 

Finally, just to make sure that choosing a new plan will benefit you, compare the plan details to your current electric plan.

Electricity broker sites

Finally, Texas allows electricity brokerages. This is in no way an endorsement of the brokers below or any brokers, but since some Texans sign up for electricity this way, it is a part of this story. 

On broker sites, like this one and this one, you may see similar offerings you can find on the state site. The brokers may also have listings for less expensive rates than the ones listed on the state site. 

ComparePower boasts, “We often get plans that aren't always available on other sites.” 

Another difference you may see on these sites, they allow you to get a more exact idea of your rate than the standard 500, 1,000, and 2,000 kilowatt benchmarks. You can enter your actual usage when shopping and get an estimated monthly charge based on those numbers. 

You can also still confirm details with individual providers. 

Both the brokerage sites mentioned above insist the plan details they offer come from the electric providers, and that the sites do not add a ‘markup’. 

ElectricityPlans says, “With some companies, we’ve even negotiated rates that are lower than what’s shown on their own web sites." 

Just understand that brokerages do differ from the state-run website in that they don’t have to show you every plan that is on the state site. Often times, the brokers are paid a referral fee by the electric provider if you sign up with them through the broker site. And they may not show you plans from providers that don’t pay them referral fees. 

ComparePower explains, “There is a reason why. There is a significant cost to integrate our technology with our providers, and to maintain the technology stays up to date for real time pricing and enrollment capabilities. Also, providers cannot just pay to get on ComparePower. We turn down suppliers frequently who are willing to pay significant fees just to be listed. We have a very extensive vetting process that ensures we only list top providers that Texans recognize, and have demonstrated their ability to bill timely and accurately, have good customer service, and can deliver the power on time.”

As with any financial decision, if you are shopping for an electric plan, it pays to do your homework, ask questions, and read the fine print before signing up, no matter which site you use.

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