There are hundreds of electricity plans in Texas, and understanding the terms and calculating the numbers on the electricity bills based on actual electricity usage is a challenging task.
Electricity Facts Label (EFL):Every household in Texas receives a detailed Electricity Facts Label (EFL) along with their first electricity bill. According to the regulations set by the Public Utility Commission of Texas (PUC), all the relevant information regarding electricity charges must be explained in this document, and the basic format of different EFLs is generally the same. For example, the EFL includes several basic pieces of information:
Base Charge: The minimum service fee, which is the cost regardless of electricity usage.Energy Charge: The basic electricity cost. The charging method for electricity can vary, with common options including tiered rates, variable rates, and fixed rates (including tiered rates).TDU Delivery Charges: Transmission and distribution utility charges. In Texas, there are over 120 electricity companies, but only 5 major transmission and distribution companies: Oncor, CenterPoint, AEP Central, AEP North, and TNMP. TDU prices are similar among these companies and may fluctuate annually. The calculation method is shown in the diagram, where the fixed monthly charges are added to the usage-based charges to determine the monthly TDU fee.
Bill Credit: Discounts applied to the electricity bill. These promotions and deductions have different conditions for eligibility, such as first-month credits, usage-based credits, or credits based on the payment method.Average Monthly Use/Average Price per kWh: This table and corresponding numbers are found in the first section of every EFL. It provides an estimate of monthly electricity consumption and price per kilowatt-hour (kWh). Many consumers mistakenly compare different electricity plans or calculate actual electricity costs based on these numbers. While the intention behind creating this table by retail electricity providers was to simplify plan comparisons for consumers with different usage levels, it has often led consumers to make inaccurate calculations.
Calculation of 500/1000/2000kWh Electricity Bills:Based on the data in the diagram, let’s calculate the average price per kWh for 500/1000/2000kWh and determine the difference from the actual electricity charges on your bill.
First, let’s calculate the average electricity cost for 500kWh:
Base Charge: $9.95/monthEnergy Charge: $0.113 * 500 = $56.5/monthTDU Delivery Charges: Choosing CenterPoint Energy as the transmission and distribution company, $4.39 + $0.046397 * 500 = $27.5885/monthBill Credit: $0, as the usage is below 1,200 kWhAverage Price per kWh: ($9.95 + $56.5 + $27.5885 – $0) / 500 = $0.188 (18.8 cents)
This matches perfectly with the prices in the table above. Let’s continue with the calculation for 2000 kWh to understand any variations in the electricity charges:
Base Charge: $9.95/monthEnergy Charge: $0.113 * 1200 + $5.7 * 800 = $181.2/monthTDU Delivery Charges: Choosing CenterPoint Energy as the transmission and distribution company, $4.39 + $0.046397 * 2000 = $97.184/monthBill Credit: $30, as the usage is above 1,200 kWhAverage Price per kWh: ($9.95 + $181.2 + $97.184 – $30) / 2000 = $0.129 (12.9 cents)
As you can see, when calculating the actual electricity charges, we divide the 2000 kWh into 1200 kWh and 800 kWh based on the tiered rates, similar to how income tax calculations work.
Simulating Electricity Bill Calculations:After successfully calculating the average electricity costs for 500/2000 kWh based on the EFL, it is important to note that household electricity usage cannot be precisely controlled within these specific amounts. If your actual usage deviates from 500/1000/2000 kWh, what will be the actual electricity charges on your bill?
According to the graph, due to the existence of the minimum service fee, if your monthly usage is below 500 kWh, the cost per kilowatt-hour will exceed 30 cents. Additionally, due to the structure of tiered rates, the lowest electricity price can be enjoyed with precise usage of 2000 kWh. Once your actual usage falls below or exceeds 2000 kWh, your cost per kilowatt-hour will increase from 12.9 cents to 14, 15 cents, or even higher. If you find your electricity bill to be significantly higher than the price indicated on the EFL or if your actual electricity expenses exceed your initial expectations when selecting a plan, this is the reason.
Therefore, understanding the electricity tariff explanations is the first step, and interpreting the electricity bill is another time-consuming task. To predict electricity expenses more accurately and compare thousands of electricity plans more efficiently, there is more content available for you to explore.