By: Dave Lieber |
In the confusing and sometimes deceptive Texas residential electricity market, certain monthly charges called delivery fees are often more frustrating than a brownout.
Some electric companies list them in marketing materials and bills. Others don’t.
Delivery fees can add as much as 30 percent to a bill. But some electricity sales people only sell customers on the kilowatt-hour rate and leave out the delivery fee when closing the deal.
There’s only one place to learn the true kilowatt-hour charge, and The Watchdog will tell you where that is.
Delivery fees cover the cost of moving electricity through power lines, a different cost than how much electricity is used each month. In North Texas, it’s the Oncor charge because Oncor Electric Delivery delivers the juice on behalf of dozens of retail companies that compete for business.
Delivery fees are a standard charge for everyone. Electric companies pass them through to customers.
Confusion abounds because of how the fees are presented. Companies can do it one of two ways. Companies can bundle the kwh rates and delivery fees into one lump sum, or they can split them out as line items.
How do you shop companies when some list their prices with fees and others don’t? Sticker shock hits later when monthly bills come in at a higher rate than what consumers were led to believe.
Another reason for confusion: The same fee has different names. Aside from Oncor charge, other names used are Transmission and Distribution Utilities recurring fees, TDU fees and TDU delivery charges.
Customer Justin Brower of Dallas said that when fees and taxes were added, his bill was 60 percent higher than he expected.
“It is extremely misleading to not show the customer which plans have the charges bundled vs. the ones which are unbundled,” he said.
One reason these monthly fees have moved front and center is because some of the larger retailers decided to break them out as a separate line item. It makes sense since the fees are outside the control of the electric companies that send the bills.
TXU Energy tells customers on its bills: “TDU delivery charges are regulated fees from your TDU for the delivery of electricity. Previously they were included in your energy rate, but are now itemized separately.”
The fees are set by state regulators. They’ve more than doubled since deregulation began in Texas a dozen years ago. Part of that increase covers smart meter conversions.
TXU provides an excellent breakout of the monthly fees at txu.com/tducharges. They include a 78-cent customer charge, a $2.19 smart meter charge and a $2.28 meter charge for a fixed monthly charge of $5.25. Seven other charges are based on the amount of kilowatt-hours used. All this adds a little more than 3 cents per kwh to a contract’s listed rate.
Champion Energy Services sends emails to current customers accurately advertising a renewal rate for its annual plan at 7.6 cents per kwh. Beneath in smaller print, it states, “Energy price does not include delivery fees. Average price per kwh is 11 cents.” That shows both the base cost and the transmission-added cost clearly.
“The problem,” says R.A. Dyer of Texas Coalition for Affordable Power, “is that a lot of retail electric providers are able to compete using confusion rather than price.”
A door-to-door electricity salesman will probably talk about a low kwh rate and not mention the delivery fees along with other taxes that increase a bill. That keeps an advertised kwh rate low, but it’s an incomplete statement of cost.
I promised to show the one place to learn the true price of an electricity contract. But it comes with a hedge.
By law, an electric company must list its full pricing with fees on the Electricity Facts Label for each offered plan. An EFL can be found on a company’s website and also on the state-run PowerToChoose.org.
Here’s my hedge, or really two of them. First, EFLs are confusing. An average kwh rate is shown and that includes the fees. But different companies present their numbers different ways. Some do it with text, others with numbers and text. There’s not enough standardization.
Randy Evans of Dallas told me he was certain he could shop smart by plugging company numbers from EFLs into a spreadsheet.
“Well, I was wrong,” he says. “Trying to make sure you were gleaning the correct information from these ‘Facts Labels’ was a chore indeed. Not all the numbers are necessarily there.”
That’s my second hedge. Some companies aren’t including the required information. A few ignore the requirement to put numbers in the EFL and instead give a website in the EFL offering further information.
Bottom line: Complete costs must be shown on an EFL. Check an EFL closely before agreeing to an electricity contract. Learn the “all in” rate with everything added up — kwh rate plus delivery charge.
Sounds like it should be easy to find out. But too often it’s not.