Be careful about comparing electricity rate plans
I routinely switch providers in search of strategically lowering my rates, and this time around I noticed some of the providers are offering rate plans which are very deceiving.
If you have ever been to the powertochoose web site, you probably know that rates are quoted for 500, 1000, and 2000 kwh usage rates.
As an example, I'll quote different rate plans which appear at first to be similar, but are quite different.
The first is the I LUV U 12 plan from Hino which advertises 10.5, 1.1, and 6.1 cents for the three different usage rates.
The second is the Prime 12-month plan from Infinite with 11.2, 1.2, and 6.2 cents.
The third is the Extra Saver 12 plan from Pennywise with 10.5, 1.2, and 6.5 cents.
At first glance you might think all three of these plans are pretty similar in their pricing, but the reality is you can wind up paying drastically different amounts. The key to navigating the minefield is knowing your normal usage rate for the time period you sign up for. Most of the plans are by 3, 6, or 12 month intervals. Normally the shorter intervals usually have the best rates, but this is not always true, and if your rate plan ends in the middle of the summer when rates typically go up, you could wind up paying significantly more when you renew. So usually the best strategy is to pick a plan that will get you through the summer if you are running the HVAC a lot during the hottest months, or if you have electric heat you might want to strategically plan out your winters as well although rates in the winter typically go down which is a good time to sign up for 12 month plans if that's what you want. In this case, all the examples are in 12 month intervals to make it easy.
All of the plans are probably going to charge you what is called TDSP which is the electrical delivery provider's connection fee. This is based on where you live, and is usually around $5-10. Most rate plans simply pass that cost on to you without markup. In my case it's $5.25 so I'll use that for the example.
Let's say your highest usage rate last year was 2,345 kwh.
For the first plan, reading the fine print, you will pay TDSP($5.25), no minimum usage fee since it's over 500kwh, and 6.1 cents times 2,345 ($143.05), for $148.30 total.
For the second plan you will pay TDSP($5.25), plus 11.203 cents times 2,345 ($262.71), for $267.96.
For the third plan you will pay TDSP($5.25), plus a base charge of $7.95, plus 4.4 cents times 2,345 ($103.18) for $116.38 total.
So as you can see you would wind up paying very different amounts depending on which plan you had.
Now let's say your typical bill in the spring and fall is 1,234 kwh.
You'd pay $18.82, $43.50, or $13.20 respectively.
Now let's say your lowest bill in the winter is 456 kwh.
You'd pay $53.13, $56.34, $33.26 respectively.
It's worth noting that even though all three plans quoted nearly identical rates for 500, 1000, and 2000kwh usage rates the actual charges varied widely with the 3rd plan being significantly cheaper in all real world instances. It's also worth noting that the higher usage rate of 1,234 was cheaper than the lower usage rate of 456kwh under all three plans. This is not a mistake. It's just how the plans sometimes work. So you just have to run different scenarios through the fine print and gamble with what you think you might use to find the best plan.
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