12 Important Electricity Terms Every Homeowner Needs to Know When Switching Power Companies in Texas

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Understanding Key Electricity Terms Could Make a Difference How Much You Pay Each Month

Feeling overwhelmed by the process of switching electricity providers in Texas? Don’t worry. Here’s a straightforward explanation of common electricity terms you’ll encounter, so you can switch with confidence.

This guide is aimed at helping you reduce your electricity costs in Texas. We cover everything you need to know about transitioning to a new retail electric provider.

This article explains the key and often complex electricity terms you need to understand when switching providers.

1. Early Termination Fee

An early termination fee is charged if you leave your electricity provider before the end of your contract. In Texas, electricity contracts typically last 12 months, but durations can vary. The fee can be significant, so it’s essential to weigh this cost against any potential savings from switching providers.

2. Cashback Offers

Some providers offer cashback incentives when you sign up for specific plans. Typically, this cashback is credited to your electricity bill rather than being paid directly to your bank account or as a check. They also come with a long-term commitment. When comparing prices, consider whether including cashback offers makes a significant difference to your overall annual cost.

3. Monthly Service Fee

A monthly service fee is a fixed charge on your electricity bill that covers a wide range of things, including customer service, payment processing and the maintenance of the grid that supplies electricity to your home. This fee is constant, regardless of your energy consumption. It helps cover costs related to account servicing, meter readings, and billing. These fees can vary by provider and plan. Some suppliers opt to charge this as a separate line-item fee, whereas others include it in their standard energy charge.

4. Delivery Charges

Delivery charges are the costs associated with transporting electricity from the power plants to your home through the miles and miles of poles and wires. These charges can differ based on your location within Texas, but for residential customers delivery charges are fixed. Some companies like to roll these costs into your energy charge, while others will include them as a separate line-item. When switching providers, it’s important to understand these costs as they can impact your overall bill.

5. Estimated Monthly Cost

Your estimated monthly cost is an estimate of what you can expect to pay for electricity each month. This estimate considers your average consumption, your energy charge, and any other fixed charges or credits that are usage-based. It helps you understand what to expect on your bill and compare different providers effectively.

6. Renewable Energy Percentage

The renewable energy percentage indicates the proportion of electricity sourced from renewable energy in a provider’s supply mix. This percentage is a crucial factor for environmentally conscious consumers. Many providers in Texas offer plans with varying degrees of renewable energy. If you’re curious to learn how much renewable energy content is included in your electric plan, be sure to visit the Electricity Facts Labels (EFL) for more info.

7. Kilowatt-Hour (kWh)

A kilowatt-hour (kWh) is the unit of measurement for electricity usage. It represents the amount of energy consumed by using a 1,000-watt appliance for one hour. Electricity rates are usually quoted in cents per kWh, and understanding your consumption in kWh helps in comparing different plans.

8. New Customer Offers

New customer offers are special rates or incentives available to individuals who have not been a customer of a provider for a specified period, usually 12 months. These offers can include lower rates or additional perks, making them attractive for first-time switchers.

9. Time-of-Use Plans

Time-of-use (TOU) plans charge different rates for electricity depending on the time of day. Typically, electricity is cheaper during off-peak hours and more expensive during peak hours. If you can adjust your usage to off-peak times, a TOU plan can result in significant savings.

10. Variable vs. Fixed Rates

Variable rates change based on the market price of electricity, which can fluctuate due to their short-term nature. Fixed rates, on the other hand, are more long-term and remain constant for the duration of your contract. Fixed rates provide stability and predictability, while variable rates might offer savings when market prices are low but can increase unexpectedly. Understanding the difference between long-term vs short-term electricity plans can help you decide which is the better deal for you.

11. Average Price You Paid for Electricity This Month

When you’re looking at different electricity plans and figuring out how much you can save, it’s important to find where it says “Average Price You Paid for Electricity This Month” on your bill. This number tells you the total cost of your electricity per kilowatt-hour (kWh), including all the extra charges. These extra charges can be things like base fees, customer service fees, and discounts for using less electricity. By looking at this number, you get a clear idea of how much you’re really paying, which helps you compare plans better.

12. Electricity Facts Label (EFL)

An Electricity Facts Label (EFL) is a document that explains all the important details about an electricity plan. It is modeled after a Nutrition Facts Label that you’ll commonly find on any food packaging. It tells you how much you will pay for electricity each month, including the cost breakdown per kilowatt-hour (kWh) and any extra monthly fees. The EFL also shows how long the contract lasts, what happens when the contract ends, and if there are any fees for ending the contract early. It even tells you how much of the electricity comes from renewable sources like wind or solar power. This information serves as the basis for Honest Gorilla helps you to conveniently compare different electricity plans so you can easily choose the best one for you.

Honest Gorilla’s Energy Comparison Tool

Now that you armed with a better understanding of key electricity terms, you can start saving today with Honest Gorilla’s easy-to-use comparison tool. Compare deals from some of Texas’ top-rated electricity providers in just minutes. Just enter your ZIP Code and see how much you could save.

Remember, the savings on your electricity bill don’t have to stop here. Honest Gorilla also offers comparison tools for other utilities and services.

Explore More in Our Switching Series

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