What types of electricity plans are available to customers in competitive areas? Customers in competitive areas can choose from various plans offered by retail electric providers (REPs). These plans can be fixed, variable, indexed, or prepaid. REPs may also offer time-of-use service plans.
What is a fixed rate plan?
A fixed-rate plan is one in which the price per kWh does not change during the contract period except for transmission and distribution fees, ERCOT or Texas Regional Entity administrative fees, or changes due to federal, state, or local laws.
Pros:
Stable pricing for the entire contract period, which makes budgeting easier.
Protection against price increases in the energy market.
Cons:
No benefit from falling market prices.
You may have to wait until the contract ends to enjoy a lower price.
What is a variable rate plan?
A variable rate plan is one in which the rate per kilowatt-hour (kWh) can vary monthly. Customers can benefit from falling market prices but also have an increased risk of higher rates if electricity prices spike due to natural disasters, cold winters, or adverse market conditions.
Pros:
No monthly contract or cancellation fee.
Potential to benefit from falling market prices.
Cons:
Rates can go up or down based on the market and the discretion of the electric company.
Increased risk for higher rates if electricity prices spike due to natural disasters or adverse market conditions.
What is a prepaid service option?
A prepaid service option allows customers to make electric service purchases in advance. Service is provided on a “pay-as-you-go” basis, with usage calculated daily via a smart meter or other specialized device.
Pros:
Allows customers to make electric service purchases in advance.
No deposit or credit check is required.
Cons:
Requires upfront payment for electricity service.
This may result in disconnection if the balance runs out.
What is a time-of-use service?
A time-of-use service plan includes incentives to use power during specific periods, such as nights or weekends. The average price calculations for time-of-use plan service vary from REP to REP and product to product. The most common type of time-of-use plan is free nights or free weekends.
Pros:
Incentives to use power during specific periods, such as nights or weekends.
Potential to save money by shifting usage to discounted times.
Cons:
The actual price will vary depending on usage during free versus non-free hours.
Bill may increase if usage is not shifted to discounted times.
Learn about the different types of electricity plans available to Texas energy customers in competitive areas.
Written by Enri
Updated over a week ago