Examining a Few Texas Electricity Ratings Customer Reviews
February 23, 2012
I get tons of customer reviews through Texas Electricity Ratings, and one of the most consistent issues I see are negative reviews based on misconceptions, or in some cases, a lack of understanding of how the deregulated electricity market works. Since a big part of what I do is to try and help educate people on how the market works I’m going to paste some reviews that I didn’t let through the website for various reasons, which I will explain at length below.
These first two reviews go together:
1.) StarTex Power:
I switched my electric service to StarTex Power about June 3, 2011. I selected their Residential Promotional Variable Price Product. My electric bill began to rise significantly after October, 2011 and upon review I saw that the electric rate they were charging me had almost tripled. My initial rate for the selected plan was 4.75 cents per KWH. That plan allows them to change the rate at their sole discretion. The following month my rate almost tripled to 13.68 cents per KWH. My rate has remained above 12 cents per KWH for the rest of the year 2011. I see from the EFL on their website that their Residential Promotional Variable Price Product is now charging 6.84 cents per KWH. However, they are billing me almost twice that amount. They shouldn’t switch me to another much higher plan without notifying me first. But that is their business plan: Trick customers into signing up for a great rate for one month and then triple their rate and hope they won’t notice.
and
As many have noted, this company will sneakily jack up your rates if you’re not paying attention. They’ll lure you in with a low introductory rate, induce you to autopay your bills, then double your rate immediately at the end of your term and hope it takes you a while to notice. Exceptionally sketchy business model. I’ve used several providers and this company is by far the worst.
Ok, my issue with these reviews is that these people are complaining specifically about their variable rates increasing and attributing it to StarTex. But the fact of the matter is, this is just how variable plans work, regardless of providers. Introductory rates are just that, and they expire. Additionally, in the first review, part of the reason the guy’s plan tripled by October was due to the August record breaking heat wave and prices combined with his variable plan. So it isn’t a StarTex thing, it’s a variable plan thing. It’s the main reason I always suggest a fixed rate plan. I’m highlighting these reviews to help people understand how variable plans work and the pitfalls of signing up for them without understanding that customers have to watch their rates diligently.
2.) First Choice Power:
I was new to the DFW area a few years back and didn’t have a good idea on where to move. I choose a semi crappy apartment complex. Several individuals who gave their notice to move out during my stay there warned me that their electric bill had skyrocketed the last couple of months. When I gave my notice, my next bill went to just under $400 (from avg $100 a month). I called First Choice Power and expressed my concerns about the apartment complex. I spoke to several folks there and asked them if someone could come investigate. There was no care from customer service and I was told that I needed to be more responsible/reduce my usage. The day I moved out, I turned everything off in the apartment, including fridge, micro, etc. I went out to the box and sure enough the ticker was still moving. I called FCP and told them that they really needed to investigate. Their new excuse was… I’m sorry but you don’t live there anymore so there’s nothing we can do about it. Thanks for nothing
While the woman has a legitimate gripe about First Choice’s customer service, the issue I have with this review is that the woman’s angst with First Choice Power in regards to her meter and usage is misplaced. First Choice isn’t responsible for any meter issues. And asking First Choice to investigate was also fruitless…again, the woman should have contacted Oncor. And while First Choice should have HELPED her to understand that she needed to contact Oncor (again, questionable customer service), I’m highlighting this because some people still struggle with the difference between the electricity company that bills them (First Choice Power, etc.) and the pole and power company (Oncor, Centerpoint, etc.) that are responsible for meter issues and the like. People confusing the responsibilities of their REP (Retail Electricity Provider) and TDSP (Transmission and Distribution Service Provider) is still one of the biggest misunderstandings in deregulated electricity in Texas, even 10 years later.
3.) Tara Energy:
Watch out! This is a bate and switch kind of a company. They hook you showing a low price per KW and bill you excessively for some fee called T & D charge. I asked them what this was and was told it is what Oncor charges us. I called Oncor and asked if my KW usage has stayed the same can this so called charge go up? They said no! I will be calling the PUC next!
This guy is going to be sorely disappointed when he calls the PUC because he won’t find their response very satisfying. T&D charge stands for Transmission & Distribution charge. It, along with a number of other potential charges, are passed directly to the customer and have nothing to do with whichever electricity company someone might use. It is listed in the Electricity Facts Label (EFL) for every plan of every electricity company on the market. Also in every EFL is a disclosure that those rates can change at any time based on decisions that have nothing to do with an REP. Other TDSP charges that can be passed down to customers are charges for things like Smart Meters, or Hurricane Recovery fees, etc. Again, this person’s anger at Tara as misplaced, as they have as little control in those fees as the person who lodged this complaint. I’m not certain what the person he spoke with at Oncor was talking about at all. In fact, Tara Energy themselves explained the charges pretty clearly on their website:
Transmission & Distribution Utility Charges (“T&D Charges”)
The amount you owe your local utility for transmitting your electricity, and maintaining wires, poles and meters. The amount billed by
Tara Energy, on behalf of the transmission and distribution utility (TDU) shall not exceed the amount of the TDU tariff charge(s).
4.)Stream Energy:
A bit of a note before I delve into the next review, as it’s not so much education as something that I generally roll my eyes at when they come through my website. They would more accurately be classified in a blog post titled “Fun with Customer Reviews.”
After being a satisfied Stream customer for 3 years and so pleased with both their pricing and service, that I joined Ignite, Stream’s marketing group, as an Associate to help share my wonderful experience with others and share the knowledge to friends and family about how easy it was to switch and how much money they could save. I can’t say enough good things about Stream, but their prices are lower and their customer service is better. They were actually Rated #2 in TX by JD Power & Associates!
Ambit and Stream reviews can be difficult because they often come from their Marketing Associates and are thus, by definition, biased. They’re aren’t many instances of people who willingly sign up to be salesman for a product to make money and turn around and bad-mouth said product. So when I see reviews like the one above, I have a hard time taking them at face value because they come from people who have a financial interest in making Stream (or Ambit) look good. Case in point: Stream didn’t rank #2 in TX by JD Power & Associates…they were ranked 7th:.
In 2010 Stream Ranked 8th. In 2009 they were 6th.
Anyway, I hope this article was helpful to some people in regards to learning some new things about how the deregulated Texas electricity market works.
Texas Electricity Ratings Update: New Rankings Released
September 27, 2011
Good afternoon, everyone. I just wanted to post a quick update that I’ve revised the Texas Electricity Ratings ranking of providers this week. The new rankings and numbers are posted, although there wasn’t much change in the actual order of providers.
Bounce Energy remained in the top spot, boosted by their great freshman performance in the JD Power Rankings that were released in August. They raised their average a few tenths of a point with that addition and by continuing to work to their strengths as an REP. So congratulations to Bounce Energy!
Champion Energy held onto the number 2 spot, although Gexa (leapfrogging Direct Energy) closed the gap after Champion was hit with some negative reviews by customers after August heat spikes wreaked havoc on their indexed plans. Direct Energy and StarTex power rounded out the top 5.
It was a tough summer for electricity providers in Texas. Lots of companies suffered losses because of the energy shortages. And because of some bad pricing scenarios with some variable and indexed plans, many providers have pulled their Month To Month plans from the market completely. By the same turn, lots of customers had bad summers as well, just because of bad circumstances and the worst summer in Texas recorded history. That being said, the wheels keep turning. Below is a full list of the provider rankings.
Texas Electricity Ratings rates providers in the marketplace based on a number of different factors, including pricing, PUC complaint statistics, Better Business Bureau evaluations, third party surveys, customer service and many other important categories.
Texas Electricity: Market Rates
September 12, 2011
It’s been a long time since I posted a blog update with the list of different electricity rates throughout the 5 different regions of Texas. To be perfectly honest, making that post became too cumbersome, and I was trying to find some easier ways to do that regularly with some technological solutions. Well, that hasn’t happened, although I’m still working on a long term solution. In the meantime, however, I wanted to give everyone an idea of the electric prices in a more general sense around the market this week, now that the summer energy crisis seems to be behind our state. This should give people an idea moving forward about what the fair rates are in the market for their region of deregulated Texas electricity.
Lets start with Oncor. Oncor is the biggest and most populated deregulated region of Texas. Their electric rates are also typically the cheapest. Right now, the cheap variable rates with promotional pricing are listed between 5 and 6 cents per kWh. After the promotional rate expires, it’s impossible what to tell what the rates would be, but I’d expect anything between 9 and 11 cents per kWh. A fair price for any long term fixed rate electricity plan, anywhere from 6 months to a year or two, should be between 8 and 9.5 cents per kWh. For green energy fixed rate plans, expect between 9.5 and 11 cents per kWh.
Next is Centerpoint. Right now, Centerpoint is pretty close to the rates in Oncor. Actually, they’re almost identical in terms of their ranges for what is a competitive market rate. I’d except them to match pretty closely to the rates in Oncor, with maybe just a few tenths of a cent more expensive across the board.
AEP Central’s range of electric rates is pretty much identical to Centerpoint’s. Typically, AEP Central is the most expensive region in Texas. And while they have less options for promotional variable rates, in general a customer can still get a decently priced fixed rate electricity plan in the 8 to 11 cent range, pending on the term of the contract.
AEP North is a bit more pricey, but again, not much. The promotional rates for variable electricity plans start close to the 7 cent per kWh rate. And the fixed rate electricity plans start at about the 9 cent per kWh range and end at about the 11 or 11.5 cent kWh point. Green electricity plans start at about a half cent per kWh higher and range accordingly.
Finally, is TNMP (Texas New Mexico Power). This region is a bit cheaper than both of the AEP regions mentioned above, and settles in right around the same rates as Centerpoint.
Again, this post isn’t as detailed per region with specific electricity plans and electricity providers, like it has in the past, but it should give consumers an idea of the market prices if they’re looking for new plans now that the summer heat seems to be subsiding.
Indexed Plans Explained
September 1, 2011
Indexed Plans have always been a quiet, and rarely understood part of the Texas electricity market. They’ve been present on the market for a couple years now, but for the most part have been sitting in the background behind Fixed Rate Electricity Plans and Variable Rate Electricity Plans.
Recently, however, that has changed. For starters, TXU Energy has started spending millions upon millions of dollars in television commercials advertising the “safety and reliability” of indexed plans. It’s been an effective, if somewhat misleading, marketing campaign. Which brings me to the second item that has brought Indexed Plans to the attention of people recently…the Texas heat wave. There’s been many articles written and barrels of attention brought to bear on Indexed Plans in recent weeks. But we’ll get to that in a minute.
What is an Indexed Plan?
An Indexed plan is very simply a plan that is tied directly, through a mathematical formula, to, well, anything really. In theory, you could tie the pricing of an Indexed Plan to the cost of oil, the cost of the Dow Jones Index, or even the cost of pork bellies. However, in practice, Indexed Plans are tied to the cost of natural gas market prices. Now, it’s important to note that the cost of natural gas prices set the market prices for ALL electricity plans, be they Fixed Rate, Variable, or Indexed. The difference is that the free-market acts as a control of the electricity prices for variable and fixed-rate plans. And what that means is that Retail Electricity Providers (REPs) have to keep their prices somewhat close and competitive to their competition, otherwise they’ll never get any customers. For Indexed Plans, however, the prices aren’t controlled by the free-market. Instead the cost of the plans is tired directly to the cost of natural gas by a mathematical formula. Here is the formula for one of TXU’s Indexed plans from their Electricity Facts Label:
Price per kWh = (Monthly NYMEX Natural Gas Price multiplied by applicable Seasonal Natural Gas Factor)
+ Energy Charge + Storm Recovery Charge + Storm Recovery Tax Credit + ((Base Charge + EECRF
Charge + CenterPoint Advanced Meter Charge)/Monthly billed kWh Usage)
Now, I’m not going to go through the formula like I have in other write-ups, because to be perfectly honest, it doesn’t really matter for our purposes here. All you really need to know is that Indexed Plans are Month to Month Plans, just like variable electricity plans, but the rate is determined by the cost of natural gas and the formula above. It’s very cut and dry and easy to track if you’re so inclined.
Indexed Plans: Perception vs. Practice
So lets talk a bit about how Indexed electricity plans are often portrayed to customers by different REPs, as well as some realistic examples of things that aren’t talked about as often. A common refrain you may hear about Indexed Plans is that they’re more stable and that they’re “safer” than regular variable plans. The justification for this is that a variable rate plan’s rate can go up and down “solely at the provider’s discretion.” And that’s absolutely true, although the way that statement is wielded, by design, often makes it sound like an REP that might raise their electric rates are doing it solely for purposes of profiting at the expense of consumers. Again, it paints a nice story. However, being a slightly more cynical person, I would point that the profits on Indexed for their proponents are consistent and built right into the monthly mathematical formula on the Electricity Facts Label. The fact of the matter is, Indexed plans are very safe for REPs in terms of making a profit, while at the same time allowing their proponents to take a step back and blame any of their electricity rate changes entirely on the cost of natural gas and avoid any responsibility. Meanwhile, variable rate plans, which are also based on the natural gas market (because ALL electricity plans are based on the natural gas market in some regards, because all REPs still have to BUY the electricity for their customers), rely upon the market forces to keep their rates competitive. So instead of a formula, their pricing is based on:
So upon closer examination, the two plans aren’t really that dissimilar after all. But there are some definite differences, and recently those differences have reared their ugly head in a way that really brings to question just how much of a “safer” option Indexed Plans are in practice.
How has the Heat Wave affected Indexed Plans and Consumers?
The heat wave has made things ugly for pretty much everyone in Texas, not just the people suffering from the heat or their high electricity bills. It’s also been hell on the Texas Electricity Grid and the individual Retail Electricity Providers. Recently Indexed Plans have been thrust into the limelight, and not for good reasons. Recently, ABC News ran a story about a Champion Energy customer who opened his bill to a shock. Champion Energy deals almost exclusively in Fixed Rate electricity plans and when customers fail to renew their contracts at the end of term but fail to cancel service, they are rolled over onto an Indexed Plan, which is tied to the rates of the natural gas market. Which is all well and good, except that due to this heat wave and the struggles of the electricity grid to meet the needs of Texans, the cost of natural gas has shot to SIXTY TIMES the normal price. It’s not price gouging, it’s not profiteering, it’s just an unfortunate fact that the cost of natural gas has risen exponentially during this heat wave when the grid faces shutdown. And for customers with Indexed Plans, where the costs are automatically tied into the natural gas market through simple math, the fact of the matter is that those colossal cost increases are passed on directly to the customer. Which is why Robin Jansen was shocked to find an electricity bill covering 4 days of service that was almost as much as their entire last month’s bill. Which is a perfect illustration of one of the rarely discussed dangers of an Indexed Plan. And this is hardly just one instance that was reported, I’ve personally received dozens of similar complaints from customers over at Texas Electricity Ratings.
Closing Thoughts
I actually find the interplay between Indexed Plans and Variable plans to be pretty interesting. In some ways, it’s kind of a microcosm of the differences between regulated and deregulated electricity markets. Indexed Plans represent the regulated market, where things are more cut and dry, things are more simple, and easy to understand. Variable plans represent the deregulated electricity markets, where the free market forces are the power that shapes the cost of electricity and forces providers to find ways to stay competitive with their peers.
It’s fair to note that when Indexed Plans get risky is particularly during times of natural disaster, so it’s not as if they’re this volatile on a regular basis. By the same note, prices on Variable plans have risen during this drought, but the market forces worked to keep prices at acceptable levels, and the losses were incurred by the electricity providers more than the consumers themselves in an effort not to lose customers. Personally, I find the dynamic pretty fascinating, although I’m probably in the minority on that one. Most people just want a reasonable electricity bill without any unexpected surprises. Either way, I hope that this post explains how Indexed Plans work to customers, so they know what they can expect, as well as what to be cautious about if you’re a considering an Indexed plan.
The JD Power & Associates group has released their most recent survey of the deregulated electricity providers operating in Texas. In their own words:
The study, now in its fourth year, measures customer satisfaction with retail electric utility providers in Texas by examining four key factors (listed in order of importance): price; billing and payment; communications; and customer service.
You can view the full results here, but I’d like to run down some of my thoughts about the winners and other participants below.
First, congratulations to Champion Energy, who has now won the award for a 2nd straight year. Their presence and reputation in the market continues to be excellent, and this survey supports that. Their score was a 745/1000. Landing in the 2nd spot was Spark Energy, which is their highest showing yet in this survey, with a score of 740/1000. Rounding out the top 3 was StarTex Power, a mainstay in this yearly poll, with a score of 739/100. As an interesting factoid, all 3 of these retail electricity providers are headquartered in Houston, Texas. And I’m personally proud to say that all of the top 3 REPs are also partners with Texas Electricity Ratings.
Other Texas Electricity Ratings partners fared well on the survey. Amigo Energy, Direct Energy, and Dynowatt all scored 4 out of 5 in overall customer satisfaction, as did Green Mountain Energy and Gexa Energy. Bounce Energy also scored a 4 out of 5 in overall satisfaction, which is extremely impressive considering this is their first year on the survey.
The incumbent electricity providers, TXU and Reliant, did not fare well at all on the survey. TXU Energy was rated last of all providers surveyed, with 2 out of 5 for overall customer satisfaction. Reliant Energy scored 3 out of 5.
I would encourage everyone to read the full press release, and it’s certainly worth reading, but I’m pasting almost the entire thing in this post anyway. Some more interesting facts from the PR below, with my thoughts:
Overall satisfaction among residential customers of electric retailers in Texas has increased to 659 on a 1,000-point scale in 2011—up by 25 points from 2010 and 30 points from 2009. While satisfaction has improved in 2011 in all four factors examined in the study, satisfaction with price improves most notably to an average of 644, increasing by 34 points from 2010. During the past several years, customer-reported bill amounts have declined steadily from a median of $167 in 2009 to $156 in 2010 and $150 in 2011. These price decreases are primarily due to declining natural gas prices.
Well, this seems to contradict Recharge Texas’s hilariously off-base statements about Texans being dissatisfied with deregulated electricity, which I already broke down: here.
Satisfaction with the billing and payment factor has also improved considerably, up 31 points from 2010. Contributing to this increase is a shift in payment methods, with a higher proportion of customers choosing to pay their utility bill electronically rather than by mail. Approximately 46 percent of customers indicate paying their bill either through a financial institution or utility website, while 23 percent of customers mail their payments. Satisfaction among customers who use online and electronic payment methods (recurring bank or credit card debits) is considerably higher than among customers using traditional methods (mail, phone or in-person payment).
I personally think this is a huge deal. It illustrates perfectly the kind of innovation that has been forced onto the market by competition. Not only for online bill pay, but mobile applications and any other kind of innovation that has taken place in the past 9 years. Competition forces companies to stay at or ahead of the curve, if possible. Some regulated electricity providers in other states don’t even have online bill pay yet.
And some final snippets:
It pays to shop around before deciding on an electric retailer. Customers who consider more than one electric retailer are substantially more satisfied than those who only consider one retailer. It may be tempting to choose a retailer based solely on low prices, but this could result in being less satisfied. Customers who choose their retailer based on good customer service are notably more satisfied than those who make their decisions based on low price, reputation, past experience with a retailer or recommendations from family or friends. Select your payment plan carefully. Customers who opt for a fixed rate plan—which guarantees a set rate during the entire length of the contract—are much more satisfied than customers who choose a variable price plan. If you’re dissatisfied with your current electric retailer, consider switching. Among customers who rated their previous provider as “unacceptable” (one point on a 10-point scale) and switched to a new provider, satisfaction soars to an average of 747—nearly 90 points higher than the industry average.
Market Rates: Abilene Electricity & AEP North 5/26
May 26, 2011
Good afternoon, everyone. Our shopping guide entry today for Texas Electricity focuses on the North Texas region, which is serviced by the AEP North TDSP. This includes the prices for Abilene electricity and San Angelo electricity. Compared to Houston and Dallas, the electricity rates in this region are much more expensive for month to month electricity plans, but their long term fixed rate plans are actually reasonable and affordable. And while I’m almost always a proponent of locking in low electricity rates, it makes even more sense in areas like North Texas where volatile month to month rates are already priced at a high premium. The list below also includes both month to month electricity plans along with long term fixed electricity plans. It’s a good place for Texans to start their shopping process.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Abilene electricity; Alpine electricity; San Angelo electricity; Vernon electricity.
Good morning, everyone. This mornings entry into our weekly series of Texas electricity shopping guide entries is for South Texas, which is the AEP Central service area. AEP Central’s service area includes Corpus Christi electricity and Brownsville electricity. This is the most expensive area of Texas for electricity rates, so it’s important to understand where the market starts when shopping for new electricity plans. The list below is of the most commonly ordered types of electricity plans with the cheapest electric rates. It should help anyone shopping for new electricity providers save money and keep their summer electricity bill low.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Brownsville electricity, Corpus Christi electricity, Harlingen electricity, Laredo electricity, McAllen electricity, San Benito electricity, Victoria electricity.
Market Rates: Houston Electricity & Centerpoint 5/24
May 24, 2011
Good morning, everyone. Here is today’s shopping guide entry for Texas electricity, covering the Centerpoint TDSP. This includes electricity in Houston and the surrounding areas. The rates for Houston electricity are a little bit more expensive than Dallas electricity, but they’re still much cheaper than the rest of the state of Texas. To help shoppers get a head start on finding new electricity plans, below is a list of the most regularly ordered types of electricity plans in Texas, both short term month to month electricity plans, long term fixed rate electricity plans, and environmentally friendly green energy plans. The list below should be a good place for Houstonians to start shopping and save money.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
cities covered in this shopping guide: Houston electricity; Baytown electricity; Kingwood electricity; Sugar Land electricity; Humble electricity; Galveston electricity; Pasadena electricity.
Market Rates: West Texas & Lewisville 5/20
May 20, 2011
Good afternoon, everyone. Today marks our last shopping guide entry this for Texas electricity. Today’s service area is the Texas-New Mexico power footprint, which covers electricity in Lewisville and many other service pockets all over Texas. The electricity rates in this region are between the rates for Houston and Dallas, so while not the most expensive in Texas, it’s still important to understand the price floor and find a good deal to help you save money. Below are the most commonly ordered types of electricity plans with the cheapest electricity prices for the service area. It is a good place to start shopping.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Lewisville electricity.
Market Rates: North Texas & Abilene Electricity 5/19
May 19, 2011
Good afternoon, folks. Here is today’s Texas electricity shopping guide, this one reviewing the electric rates for North Texas (AEP North). This coverage area includes electricity in Abilene and electricity in San Angelo. It’s important to keep in mind that electricity prices for this region are expensive, so switching electricity providers is a good way to keep your bills low and save money. This shopping guide is a great place for consumers to start that process.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Abilene electricity; Alpine electricity; San Angelo electricity; Vernon electricity.
Texas Electricity Ratings: The Blog 