Lobbyists for deceptive energy companies and inept bureaucrats have made this way more complicated than it needs to be. Wizard Energy is committed to helping our commercial clints navigate these charges in the bids, contracts, and billing of retail electricity providers to make sure our clients get the best possible electric rate and save tons of money.
The “real” or “actual” electric rate you pay is the amount you pay each month divided by the amount of kWh (kilowatt hours) of electricity you used.
CHARGES / USAGE = RATE ( $ / kWh = ELECTRIC RATE )
What Makes Up The Charges on Your Electric Bill in Texas?
1) TDU Delivery Charges (Regulated State Fees)
2) Rate Charged by Retail Electricity Provider
3) Fees Added by Retail Electricity Provider
Let’s go through each of those…
1) TDU Delivery Charges
This is what you pay the state to deliver electricity to your business (i.e. service and maintenance of the poles and wires) and the meters that measure it. TDU delivery charges are regulated by the Public Utility Commission of Texas (PUCT). They are impacted significantly by your Peak Demand.
In Texas “demand charges” are based on the highest usage recorded over a 15-minute period for the previous year. Peak demand is measured so power generators know how much electricity is needed to service everyone on the grid.
If your peak demand is less than 10kW, you pay a base fee plus a rate per kWh:
If your peak demand is greater than 10kW, you pay a base fee plus a rate per kWh AND a Demand Charge:
2) Retail Electricity Provider (REP) Rate
REPs will offer customers a rate based on the amount of electricity they and their Load Factor, which is a measure of how predictable your electricity usage is on average.
If you use power consistently (few or low spikes when you need a large amount of electricity), then the potential for your business to adversely affect the grid is low. In this case, you would be considered a “low demand, high load” customer and tend to pay a lower rate.
Alternatively, if your business has inconsistent, big spikes in demand for a lot of electricity, then your business can potentially have a negative impact on the grid. In this case, you would be considered a “high demand, low load” customer and tend to pay a higher rate.
Calculate Load Factor
(Total Electricity Used (KWh) in Billing Cycle)
(Peak Demand X Hours in Billing Cycle)
As an example, let’s say your business used 14,000 kWh during the month and your previously established Peak Demand is 25 kW.
(14,000) / (25 X 720) = .77 or 77%
This would be considered a high load factor.
Consequently, you are likely to get a better rate offer from an Retail Electricity Provider, like $.03/kWh instead of $.06/kWh. Remember that this rate is in addition to the state-regulated TDU charges for delivering the electricity to your house. Unfortunately, the electricity rate quoted by your REP is not always the sole fee charged to customers. Let’s look at those…
3) Retail Electricity Provider (REP) Fees
There should be only 2 fees in your contract/bill: Electricity Rate ($/kWh) & State Taxes/Fees
Again, unfortunately REPs bury other fees like monthly base fees, minimum usage fees, customer service fees (even for phone calls), etc. These all add up to significantly increase your actual electric rate.
It doesn’t end there. The worst culprits are not hidden fees but deceptive plans that quote potential customers a rate based on a “Market Rate”. These Market Rates are variable rates based on market conditions that are out of your control like weather events, seasonality, global events, or just odd spikes in demand. These risky plans are called:
MCPE Plans (Market Clearing Price of Energy) / Indexed Plans / Market Rate Plans
Instead of your electric bill being a simple sum of (1) TDU Fees + (2) REP Rate + (3) REP Fees + (4) Taxes, you get charged (1) TDU Fees + (2) Market Rate (3) REP Rate + (4) REP Fees + (5) Taxes.
Let’s Calculate Real Electric Rate
CHARGES / USAGE = RATE ( $ / kWh = ELECTRIC RATE )
Let’s go back to our example where your business uses 14,000 kWh/month with a Peak Demand of 25 kW. And let’s say your energy company baited you and quoted an “Indexed Plan” with a rate of $.03/kWh.
Here’s the reality of what you are going to be charged:
(1) TDU Fees: $10.41 + (14000 X $.00314) + (25 X $7.749513) = $248.11
(2) Market Rate: $.12 X 14000 = $1680.00
(3) REP Rate: $.03 X 14000 = $420.00
(4) REP Fees: $50.00/month (assumes no other sneaky fees)
(5) Taxes: $2398.11 X .0625 = $149.88
REAL RATE: $2547.99 / 14000 = $.18/kWh
THAT WOULD BE INFURIATING… The Energy company can quote $.03/kWh and you end up getting charged $.18/kWh… 6X more than you might have been expecting or budgeting for.
Wizard Energy would never steer clients to indexed or variable rates
Plus we know how to review multiple bids, decipher the terms and weed out the sneaky fees or deceptive add-ons.
GET THE BEST ELECTRIC RATE
We FORCE electricity companies to compete! Electricity providers will offer a lower price to us because they know they are competing for the business. This drives your price down. Plus we confront all those sneaky practices of hidden fees or deceptive terms.