Residential electric customers have a problem in Texas when shopping online for electric rates because there are over 40 Retail Electric Providers and many of these companies have several hard to understand plans. The best way to understand these plans is to look at the Electricity Facts Label. The Facts Label is enforced by the government agency ERCOT to accurately provide the electricity contract details in a clear easy to understand fashion. The ERCOT agency also known as the Electric Reliability Council of Texas has made this a requirement so that it will be harder for these Retail Electric Providers to trick customers into an electric rate that is not easily understandable.
Reviewing Texas Residential Electric Plans
After reviewing all 40 Retail Electric Provider’s plans and facts label’s it may still be a hard decision. The reason that it may still be complicated is because several electric rate plans follow the natural gas market or the Market Clearing Price for Energy index. Natural Gas remains a very volatile energy and because of this the electric rate pricing structure usually differs at several different intervals in the futures market. For instance, the facts label for a variable electric rate will show what the electric rate will be if Natural Gas trades between $6 – $7 MMBtu during the month of September. If the Natural Gas price goes bove this then you will be charged a higher electric rate. Natural Gas prices could very easily rise above this futures contract rate and so there are usually suprises during the year when on a variable energy rate plan. The general consensus among energy consumers that have been on a residential variable energy rate is to stay away from them. The volatility is to great and most people like the satisfaction of being guaranteed a rate that will remain the same all year long.
Why are 24 month, and 36 month electric plans more then 12 month plans?
Why are 24 month, and 36 month residential electric rates higher then the 12 month electric rate? Electric rates are different then cell phone contracts. An electric rate starts out as a Natural Gas futures contract. The energy provider buys a large Natural Gas futures contract. They then hedge this energy, split it up, and resell it to consumers throughout Texas. Right now the 24 month and 36 month futures contracts are higher then the 12 month contracts. Because of this difference you will pay less on the 12 month rate plan. They have to hedge this energy in order to protect their investment in the futures market. If they didn’t do this, the market could go against them and potentially expose them to market risks that could be unrecoverable. Because of the risk involved in trading energy they hedge the energy they buy. That is why when your energy contract is up you are required to go back out and sign up for a new rate plan in order to not pay a premium electric rate. The energy company you buy from has to rehedge a new energy price and sell it to you new. The process is how it is not to sam you out of money but because we are dealing with the energy market.
Using An Energy Broker
An energy broker is the best way to find an electric rate. They can locate the cheapest electric provider immediately for you and bid down the electric price through a reverse auction. Many times they can eliminate such fees as the monthly customer service charge most providers charge each month for you being their customer. Saving an extra $10 a month on your energy rate could mean a huge difference on your energy bill. You know many people will pick a different electric company for an electric rate that has a fraction lowerÂ price only to discover later that they are being charged an extra $10 a month in montly customer fees. You want to avoid this charge if at all possible and an energy consultant can help you with this.ï¿½