After working at various energy companies over the last 17 years, I know a lot about their inner workings. I can help you sniff out the cheapest energy plans and tell when to steer clear away from the gimmicky options. Armed with this knowledge, there are certain things I’d be on the lookout and never sign up for when choosing an energy plan and provider.
I wouldn’t forego the energy provider’s digital app or customer dashboard
We’re living in the digital age, so most energy providers have either an app or an online portal that serves up all of the essential details of the terms of your contract, usage and service. You can also pay your bill online. Even if you lose a bill or didn’t receive one, chances are you can log in and see what you’ve paid and how much you owe. Some providers even send text or email reminders to help keep you informed.
Watch out for ‘Free Nights and Weekends’ plans
Unless you don’t mind adjusting your lifestyle so that you can take advantage of free nights or free weekends, it’s typically not worth the hassle. If you just so happen to not time things perfectly, that’s when you could really end up in some financial trouble as the rates can be egregious.
Good example is folks who transitioned to work-from-home during the Coronavirus pandemic and had previously signed up for a ‘Free Nights and Weekends’ plan. Those free nights did not matter as much, because they were spending most of their time and increased usage during the daytime while they were working. Guess what happened to their bills. They went sky high!
One thing that is true in life is that companies are in business to make money. If something is free, then read the fine print because somehow somewhere they are going to make their money.
The real incentive for energy companies is for you to use more electricity, not save energy
REPs make their money by selling electricity. Simply put: if you use more, they make more. And to get you to do that, they either incentivize you to use more energy by offering big price breaks at higher thresholds, or they penalize you by charging a “minimum usage fee” or “base charge” if you don’t use up to a certain amount. Either way, the REP is going to make their money. But their real incentive is to sell more electricity.
Honest Gorilla’s algorithm is able to sift through each and every plan so that you can easily and quickly compare which one fits your budget. Even with all of the various fees added based on your usage, you’ll be able to size each one up and choose the cheapest or best one for you.
So, then why do some REPs provide energy saving tips? Unless the company’s business model is to save you money, then the promotion of saving energy is to either create goodwill among its user base and provide some education, or help the grid shed some load when the grid needs it the most (ie during a winter ice storm or a summer heating event).
I’d never use a website that just refers me to the REP’s website
There are many websites disguised as a shopping marketplace, when in reality all they do is provide a minimum level of service and then refer you to the REP’s website. A tell-tale sign to know that you’re on one of these websites is when they direct you to the REP’s website after you’ve made your plan selection.
Often times the issue is when you’re linked over to the REP’s website, you’re presented with more options to choose from. This is when it gets confusing. It essentially puts you right back where you started because they presented you with additional plans to choose from.
Plans offered on Power to Choose are not offered anywhere else
The Public Utilities Commission of Texas (PUCT) has released its own version of a marketplace. It is called the ‘Power to Choose’ and was designed to make the energy shopping experience easier so that customers have access to all of the retail electric providers (REPs) and their plans all in one place.
The issue is that REPs are not required to post their rates on Power to Choose. If an REP doesn’t want to post their rates, then they don’t have to. That is why you may see one or some of your favorite brands not listed.
And most often, you will see plans and rates offered on Power to Choose that you would not see anywhere else. The reason for this is because the REP’s acquisition costs are minimal at best and this is where they can offer super cheap prices.
Buyer beware! REP’s compete solely based on price when it comes to Power to Choose. For a REP to show up high in the search rankings they have to get very creative with their pricing schemas. This is where you will definitely want to read the Electricity Facts Label (EFL) before you sign up so that you can see exactly what their charging you for and how much.
To save yourself time running an excel spreadsheet with 300+ rows of data comparing each and every plan, you can use a trusty service like Honest Gorilla to do all of the math and number crunching for you. Our algorithms are programmed to calculate each EFL offered on our website. All you have to do is enter your usage data and voila! Our recommendation engine will present to you all of your options in order of cheapest to most expensive. It will even graph it out for you.
I wouldn’t shop for energy without entering my own usage history
Many energy shopping websites, including REP websites as well, display prices according to a monthly average usage of 500 kWh, 1000kWh or 2000 kWh. However, they tend to display only the 2000kWh tier since that is typically the cheapest. It follows the ‘more is cheaper’ philosophy. Shopping this way may or may not be reflective of how much electricity you or your household uses each month.
The PUCT created these tiers for ease of use, basically trying to classify customers in apartments, small homes or large homes. But we all know that you can’t place a square peg into a round hole. Same way that no two neighbors in an apartment building have the same lifestyle, household or budget.
If you are looking to switch energy providers and you see prices being advertised based on those average monthly tiers, I would be careful. You could be signing up for a lifestyle or household that may not be yours. In other words, you could be lured into signing up for the cheapest plan (ie 2000 kWh which is great for a family living in a 3000 sqft single family home), when it’s just you living in a one bedroom 750 sqft condo or apartment.
To the extent possible, try and obtain your 12 month usage history. You can access that info by either logging in to your customer dashboard or create a profile at Smart Meter Texas and get it from there. Once you have that usage history, you can plug it in and let the system do the math for you. That way you will have a good picture of what your energy bills will look like if everything stays the same.
I’d never use the services of a network marketing agent, but with one exception
Network marketing agents get a bad rap for constantly asking friends and family to do them a favor and be their customer. Not only can this be annoying but most people either shy away or get de-friended. That’s unfortunate because it’s always a tricky subject trying to mix friendships and business, despite our best of intentions.
On the other hand, network marketing is a force to reckon with. You’re essentially deploying an army of walking, talking billboards to solicit prospects and bring you customers in exchange for a commission. And depending where you land in the organizational structure (we’re going to refrain from calling it a pyramid for purposes of this article), that could mean a life of luxury, exotic trips and incredible recognition among your peer group.
However, all of that comes at a steep cost. And guess who foots the bill for the Mercedes car allowance, the all-inclusive trip to Hawaii, or the $20K bonus they just unlocked? All of those costs get baked into the cost per kWh you get charged. You’re helping fund your friend’s lifestyle with your electric bill.
The company’s intent is to never be the cheapest provider. They want to end up somewhere in the middle of the pack, so you’ll never come out with the best price.
Unless you have a blood relative in the business and don’t want to hurt their feelings, I suggest you keep your options open and consider shopping your services around and see who is really offering you the best deal.
BONUS: Find a plan that allows your contract to start or end during off-peak months in Texas
When it comes to weather in Texas, we are most known for our scorching hot summers. Most of our electricity usage comes from attempting to cool down our homes and businesses as opposed to keeping them warm. Because of that spike in demand, you can expect to see electricity prices being offered to gradually increase between the months of April to October.
Most REPs typically offer standard contract terms like 12, 24 or 36 months. Occasionally, you may see an odd term being offered, but usually they are annualized to keep things simple.
Depending on your living situation and if you have long-term vs short-term plans, you could entertain the prospect of letting your contract expire so that you can take advantage of off-peak pricing offers (ie during November to March). That way, when it comes time to renew, you’d effectively be signing up (theoretically) when prices are a little cheaper.
Please do your homework and only use this strategy if it makes financial sense to your family or household budget. The energy markets are very volatile, and if your budget does not support this or you cannot afford the risk, be sure to renew your contract at least 14 days before your contract’s expiration date.