Electricity has become an essential part of human life. Unless you have solar panels or wind farms generating electricity for your home, you will most likely pay a monthly electricity bill each month.
This bill is usually unlike any of your other utility bills that you receive on a monthly basis. You might as well consider it a foreign language with the terminology that is displayed on the bill.
With that said, this is the perfect time to understand exactly how your Texas electricity bill works.
Monthly Bill
Here’s a quick breakdown of the components of a standard electricity bill:
Account Number and ESI Number – The two unique numbers that identify your account with the provider.
Contact Information - Your contact information and other basic details will be featured here. You will also find contact details for the provider if you have any questions about your service.
Due Date – Date that the current balance needs to be paid by to avoid late fees
Total Amount – The total amount due including taxes and fees
Account Balance – The previous and current charges of your account
Usage charges – The total amount of electricity used determined by a number of factors:
- A charge for the electricity you used for the previous month
- A charge for the delivery of power from the utility provider
- A charge for transmission and distribution as well as any other fees relating to meter usage
- Any additional charges between the PUC and the supplier
TDSP Fee (Texas) – A special fee due to a one-off meter reading whenever problems arise
Gross Receipts Tax – A tax specifically required by the state of Texas that all consumers have to pay
City Tax – A tax specifically required by your local city in the state of Texas
Monthly Charge – An administrative charge that varies between providers and is usually the same amount each month
Late Payment Charge – Any charges that you failed to pay before your current bill will be shown here
Plan Type
Fixed Plan
A fixed plan is a locked in electricity rate for a certain amount of months. This is beneficial because lower rates are generally offered based on the longevity of the contract. This makes budgeting for the future easier since you know you are locked in for an exact amount of months. 3, 6, 12, and 24 months are usually available for you to choose between.
The downside with choosing a fixed plan is that you are obligated to pay that rate for the entire contract. Yes, this may have been the cheapest rate at the time you started your contract but there is always a chance that rates can drop in the future. Let’s say you wanted to switch providers in the middle of your contract, this is possible however the early termination fee is usually ridiculous and not worth paying.
Variable Plan
A variable plan is a plan with a rate that fluctuates on a monthly basis depending on the provider’s costs. This is perfect for those people that move frequently and do not want to be locked in for a long period of time. This can also be great if you are the type of person that loves to shop around for the cheapest electricity rate promoted each month. There are no termination fees so switching electricity providers is a simple process.
The only downside with choosing a variable plan is that the rate can increase without you knowing it. This would definitely stress me out each month, so the key here would be to stay on top of your rate each month.
Your bill will verify which plan you are currently under.
Meter Readings
There will be two readings here: your previous usage and your current usage. The difference between these two readings is what you are being billed for this cycle. It’s a good idea to review the previous 12 months of usage to see how and when it fluctuates. This will help you determine the perfect time to find a better rate when your contract is up.
Also, it's worth noting that readings are not always taken each month. In many cases, a provider will estimate your reading. This is nothing to worry about, as the provider will "true up" your account once they take an actual reading. Just make sure you aren't getting two estimated readings in a row.
Rate
Now that we have the amount of electricity used, we need to find the amount you are being charged for that electricity. The standard measurement of electricity usage is the kilowatt-hour (or kWh). A kilowatt-hour is equal to 1,000 watts being used over a period of one hour. For reference, a one room apartment will usually draw about 500 kWh per month, while a two bedroom house use around 1,500 kWh.
If you have a fixed rate plan, when you signed up for your service you were quoted a certain price for kWh. You'll find that you are probably paying a little less or a little more than that number, as it figures in flat fees and charges and was based on exactly 2,000 kWh of usage. If you use less than 2,000 kWh per month your bill effective rate will be a little higher that quoted rate, while if you use more than 2,000 kWh per month your effective rate will be a little lower than the quoted rate.
All electricity providers are now required to disclose the price per kWh you paid during that billing period. Each provider lists this in a separate place on the bill, but it will usually be near the bottom or near the fees breakdown and will say “During this billing period, your average rate per kWh was XX cents.” This factors in the energy charge along with any TDU surcharges and monthly fees. Use this as your “rate to compare” when shopping for a new plan.
Charges, Fees and Taxes
Your bill is probably not based purely on your electricity usage, there are probably some additional charges and fees. A good example of this is the transmission and distribution charges. As noted above, these were figured into your rate when you signed up. As usual you will also find any applicable sales or state taxes.
Other Data
Every electricity provider has a different format for their bills and many provide helpful information beyond the basics listed above. For example, some providers provide charts showing your usage relative to the weekly temperature, hints on how to cut usage and how much carbon you kept from being released by using renewable energy.
