Points to Consider When Picking an Energy Provider

by admin on January 9, 2009


What are the major points to consider when choosing a Texas electric rate for a home owner?

There are a few things to consider. How long the electric company has been in business is important.  An electric provider that has just started up could be a fly by night company, like we have seen in the past that would offer a very low fixed rate for the first few months and then attempt to raise this fixed rate later on in the contract by using fine print and legal jargon in the energy contract.  The Public Utility Commission of Texas usually fines electric providers who do this but the mess and costs caused to Texas consumers by these dishonest electric companies is never made up. Riverway Power and National Power company are both examples of electric providers in Texas who attempted to raise their fixed electric rates on their customers this last summer.

                What is a normal amount of time for a Texas electric company to have been in business and to have established a track record of accurate billing, good customer service, and good business practices?

Usually a couple of years of being in business are all that is necessary to build up some type of customer feedback about how the electric provider does business.  Texas was only deregulated in 2002 so many of the energy providers are only a few years old to begin with. If after two years they are still listed on the state of Texas’ Power to Choose website you at least know they are a viable company. The state website isn’t enough though as Riverway Power and National Power was both found on this site. It costs to be on the state website and a Texas electric provider has to opt in to be on it, so simply by not being on the state website doesn’t mean the electric company in question is not a good electric provider. There are several consumer sites on the internet that list consumer complaints and comments about bad electric companies. These consumer sites are the best places to find out if the electric provider you are considering is worth becoming your home or business electric service provider.  Some of these sites are Yelp.com, Ripoffreport.com, Electricitybid.com, Better Business Bureau, and the PUCT has documents on electric providers and the fines they have received.

What is the difference in a commercial electric service rate and a residential rate?

There is basically no difference as they both have a TDSP charge and they both have an “energy only” charge.  The small difference that they do have comes in how the TDSP charge is calculated for commercial in comparison to residential. Residential electric rates are quoted as an “all-in” rate that includes TDSP charges and energy only charges. The residential electric provider can quote you an all-in rate because the TDSP charge is fixed for residential homes. A commercial businesses TDSP charges are variable because a main component of the TDSP charge is the demand charge.  About 90% of the TDSP charges are demand charges and businesses all vary in how much electricity they demand at any one time.  A residential homes electricity demand can be averaged out over several thousand customers by the state and then fixed for everyone. In contrast to residential demand a manufacturing facilities demand charge is much more expensive then say a Curves fitness studio franchise. The manufacturing facility may pay several thousand dollars for their demand charges and the Curves may only pay $30 a month.


How would you explain the demand charge so it can be easily understood?

The demand charge of an electric rate is easily explained. When you have several appliances, machines, and lights all on at the same time they are demanding a certain amount of Kilowatts of energy at that time, that is demand. No matter how long those machines are on your demand is set. So if during an entire month a commercial business uses only 1,000 kilowatt hours but for 5 minutes they turn on all of their machines and appliances they may get hit with a very high demand charge which is abbreviated as KW on your electric bill. In this situation the business could have a higher percentage of their electric bill costs associated with demand charges then the total kilowatt hours they used during the month. For a company that just doesn’t use that much electricity it can really pay to manage what machines are turned on at the same time during a monthly electric service billing cycle.

How can a residential home owner or commercial business learn more about their electric service?

You can visit our website at www.texascommercialenergy.com   or on our blog at www.texascommercialenergy.com/blog  and learn more online and contact us for more information. An energy consultant would be glad to assist you in procuring a commercial electric rate by taking your commercial electric usage out to bid in a reverse auction to work down the electric rate among multiple electric providers in Texas. We also have several residential electric rate choices in Texas available on our website.

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