How to choose a retail electric provider in Texas
If you are going solar in Texas, you will need to choose your retail electric provider (utility company). It’s an important decision because the retail electricity provider you choose will affect whether and how much you are compensated for energy supplied to the grid by your solar system. Thankfully the Public Utility Commission in Texas provides a website, called powertochoose.org that can help you find the right retail electric provider to suit your needs.
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How to use the Power to Choose website
It is recommended that you have past electric bills and a calculator handy when you use the website. The first step will be to enter your zip code. “Then, you will need to make one of the following selections:
- View results – Get a list of all retail electric providers in your zip code
- Narrow your search results – Answer a few questions to narrow the list of providers
Narrow your search
If you select “narrow your search” you will be presented with the following list of questions:
On average, how much electricity do you use in a month?
You’ll need to choose from a drop-down list what your average electrical usage is. Your electrical usage will be shown as the number of kilowatt-hours of electricity you use in a month. A good way to calculate this is to add up all of the electric usage shown in your utility bills for the past 12 months and divide by 12. This will give you your average electric usage over the course of a year.
What plan are you interested in?
It allows you to pay the same electric rate per kilowatt-hour for as long as your contract with your retail electric provider lasts. These plans usually range from 3 months to 36 months. For example, if you choose a fixed-rate plan of $0.10 and you use 1,000 kilowatt-hours of electricity in a month, it will cost you $100 plus any fees added by your retail electric provider.
The advantage of a fixed-rate plan
Fixed-Rate plans can shield you from market-rate fluctuations that occur due to Texas’ deregulated energy market. This can be advantageous during the summer when market rates can rise significantly due to high demand.
The disadvantage of a fixed-rate plan
If a retail electric provider is unable to sustain operations at the rates they charge, they may leave that energy market. This may result in users of that market being switched to a provider of last resort, resulting in much higher utility costs.
Variable (Changing rate) plan
With a variable-rate plan, the price you pay for electricity may fluctuate from month-to-month due to fluctuations in market price. Under this plan, users are likely to pay higher prices in the summer when demand is high, and lower prices in months when demand is low.
The advantage of a variable rate plan
Variable-rate plans are flexible. There is no fixed-term contract with variable rate plans. You can stick with it or opt-out if you find a plan with a better rate. If you were in a fixed-rate plan and wanted to opt-out before the contract was up, a penalty may be imposed.
The disadvantage of a variable rate plan
A constantly changing rate can make it hard to plan your budget. In addition, a sudden spike in energy prices may lead to unexpectedly high electric bills.
Indexed (Market rate) plan
On an indexed rate plan, the rate you pay for electricity is indexed to the price your utility pays for some underlying variable, such as the price of natural gas. These plans can behave like variable-rate plans, where the price paid for power fluctuates; or they can behave like fixed-rate plans, where the rate paid doesn’t change. It is important to note that the type of behavior the plan exhibits may change without warning! The power company must disclose what the rate of your plan is indexed to when you sign your contract.
The advantage of an indexed rate plan
You get the freedom to decide whether you want your indexed rate plan to behave like a fixed-rate plan or a variable rate plan.
The disadvantage of an indexed rate plan
The price of the variable your rate is based on may increase or decrease. To benefit from this plan you need to stay active and involved in understanding the price of the variable your plan is based on and how it affects your electric bill. This is the most confusing of all three plans due to the fact that it can act like a fixed rate or a variable rate plan depending on the underlying variable the plan is based on.
Pricing and Billing
You have two options. You can view all plans or you can view plans without minimum usage fees/credits and tiered rates. Minimum usage fees are fees that are charged regardless of how much power you consume. Tiered rates are rates that rise as you use more power.
Some utilities have prepaid plans (you pay for power ahead of time) which may be a good alternative for consumers with credit problems. You can choose to see all plans, only prepaid plans, or all plans except prepaid plans.
Time of Use (ToU) plans
Time of Use plans charge rates that vary by the time of day or day of the week that you are using electricity. ToU plans are a smart option if you can minimize your power usage during peak rate hours. The times that utilities in Texas charge peak rates vary by the utility, so it’s a smart idea to see if a utility in your area offers a ToU plan that works well for the times that you use the most and least amount of power.
The advantages of Time of Use Plans
If you can minimize your power usage during peak-rate hours, a ToU plan can save you money. One way to take advantage of ToU plans is to install a smart home power management system. This type of system can automatically manage your home’s power usage to minimize power use during peak rate hours.
The disadvantage of Time of Use plans
If you use a lot of power during peak-rate hours, you’re likely to get a high electric bill. Plans with peak rate hours in the evening will be disadvantageous if they charge peak rates during the times when you need to use power.
This question allows you to choose to view companies based on the percentage of complaints that the Texas PUC has received about them. You can choose from 5-stars (least complaints) to one-star (most complaints).
This option allows you to designate what percentage of your home’s power comes from renewable resources. Power from renewable sources generally costs more than fossil fuel burning plants.
You can use this option to choose to view plan information from a specific retail electric provider.
Last step: Click Refresh Results
After clicking “Refresh Results”, you’ll be shown a list of retail electric providers that match your search criteria.
How to make a smart choice from the list of retail electric providers
Once you’ve narrowed down the companies on your list to the ones you are considering doing business with, make sure you click on the “Fact Sheet” link provided for each of those companies. Spend time carefully reading the information provided to make sure that the retail electric provider’s plan best suits your needs.
Important facts when going solar in Texas
The power that your solar system generates is called Distributed Renewable Generation power, or DRG power. You must sell your DRG power to the same company you buy your power from. Often, companies that buy DRG power require you to be on a specific rate plan. But some companies allow you to choose your rate plan and DRG power compensation plans independently. It definitely pays to take the time to look at all of the retail electric providers shown in your area to see which ones offer the best choice in rate plans and DRG power compensation plans.
If you live in an area that is served by a municipal utility or electrical cooperative, you should contact that company to find out what their DRG power compensation plan is. If you live in an area that is served by only one retail electric provider that is not a municipal utility or electrical cooperative, Texas PUC rules require that they purchase GRG power at their “avoided cost”. The avoided cost is the price the utility would have paid for the equivalent amount of conventionally-generated power.
Low-cost loans, rebates, and advice on renewable energy technologies
The last thing to do when choosing a retail electric provider is to see if that company offers any rebates or low-cost loans for renewable energy technology. The company may even offer advice to help you get the most from renewable energy technology. It definitely pays to ask!
The benefit of going solar with Freedom Forever in Texas
Freedom Forever is one of America’s largest and fastest-growing solar power installers with industry-leading experience and expertise. Best of all, when you go solar with Freedom Forever you are covered by our 25-year production guarantee.
We guarantee that your solar power system will meet its promised production amount for 25 years. If your system ever breaks or underproduces due to something that was our fault, we’ll compensate you for the lost production of power resulting from the system being down or under-producing. Furthermore, we’ll monitor your system and if a shortfall in power production is detected, we’ll notify you and then schedule a time to come out and fix it. Very few solar installers offer a 25-year production guarantee! Others often don’t guarantee your system will produce power at all!