Tag Archives: deceptive

I Want a Pay-as-You-Go Electricity Plan and it’s Not What You Think.

I’m not broke. I have pretty good credit these days and I can afford to pay once a month for power. I have a social security number, a co-signer if I needed one (thanks, mom!) and access to all kinds of post-paid electricity products. So why the heck do I want to try a “pre-paid” or Pay as You Go plan for my very own home in C-Town, USA?

The story starts with two Payless Power employees coming into the office this morning to chat over coffee about why Pay as You Go is a great addition to our site. We already wanted it. My (albeit simpler) thinking was that there is a whole world out there of folks with no credit and that a no-deposit, cash option, pre-pay, or pay-as-you-go electricity plan would be a good option for those folks… but now I want it for my family, and its not JUST because you get a cool text each day to tell you how much power you use or because you can call customer service for free and talk to a real person. It might actually be great for our planet. (Plus you get a cool text each day and get to talk to a real person for free.)

Phillip Armenta, Director of Sales at Payless Power mentioned explained the process to me. He explained that it isn’t really pre-paid anymore, “Literally, it is paying as you go one day to the next based on household needs and customer awareness.” He went on to explain that his customers get notified of their consumption via text, which means that, “with real time readings, I could make changes immediately that I can see within a day or two.” Therefore, pay-as-You-Go users are engaged and cognizant of their usage and so they use less power over all. It’s like they put a little pink post-it on your phone every morning.

Little pink post-its

 

Phillip says their pay-as-you-go plans offer “real time readings for real time savings.’” Of course!

Many of us want that magic pill right? If I am going to lose weight, I do not want to eat less food or move my body, I wish for a pill to make me not only thin but toned too. If I want to pay less for power, I don’t want to watch consumption (turn the bathroom light off, Terra!), I might prefer to just find a cheaper electricity rate. Sometimes the obvious way seems….hard. But Pay as You Go option makes it all seem pretty simple.

Candidates for Pay as You Go plans may not have access to the lowest electricity rate in town so what do they do? They use less power. THEY USE  LESS POWER!

These savvy customers may find that their bills are equivalent to that fancy post-paid plan holder’s bill AND they are helping the grid by conserving energy. Doesn’t seem like a “second rate” rate after all, does it?

 

 

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“Forget electricity rates. What can you do about these PASS THROUGH CHARGES?!”

The one question I hear every week looks like this: “What can you do about my pass through charges?! They are so HIGH!” Or “My delivery charges are more than my electricity supply!” A quick look at your usage file (ordered from your local utility) can tell you if the pass through charges on your bill match the amounts charged by your utility for the delivery portion of the bill. The chatter about suppliers ‘pulling a fast one’ regarding delivery charges is a result of all the fear in the electricity marketplace and here at Shop My Power, we get it. We try to ease that fear whenever we can by educating our customers, so let’s talk about what it all means.

There are a number of items that can be called “pass through charges” so let’s get clear on that first by understanding a function of your retail electricity supplier. In Texas, your supplier is like a collector for three separate parties. Think of it like your water/trash bill at home. You might pay one bill and the city will divvy it up, right? It’s similar with your commercial power bill. Most folks get one bill for their business electricity from one entity (usually the retail supplier) and on it are three separate sections: Taxes, Delivery and Supply. You pay the bill, then the supplier pays the government their taxes and the utility for the delivery of your power. This is why business owners cannot “shop” their taxes or delivery charges. And YES – quite often businesses pay more for the delivery of their power than they do for the power (or supply,) especially now while electricity prices are so dang low! Unfortunately these two sections (taxes and delivery) are what most folks are talking about when they say “pass through charges”. You cannot shop for better tax or delivery rates as there is no competition for your government or your “poles and wires” company (your local utility). What you can shop is your supply (the amount you pay per kWh – i.e. your RATE.) But rates are not presented to you apples to apples. Oh no, there are pass through charges in rates from suppliers too, and those are the pass-throughs we can manage together.

Think of it like mailing letters. You cannot do anything about the cost of the stamps (delivery) but you can sure go buy cheaper stationary (supply). At Shop My Power we help you weed through the supply rates (which can be about as clear as mud) to find a bill you can fully understand and feel good about.

What’s the difference between the suppliers who supply power and the utilities who deliver it?    In order to wrap your head around what is arguably the first important “get” when shopping for electricity in a competitive market, you need a small history lesson (sorry) here goes. I will make it quick.

 Deregulation; a history lesson: The electricity market before deregulation and retail electricity suppliers existed: (This is General as all states are a little different.)

For many years, electricity was produced and delivered by the same company. This company can be called a Utility. Here are some examples of those utility companies:  ConEd in New York, ComEd in Illinois, ONCOR and Centerpoint in Texas, JCP&L in New Jersey. These utilities historically provided both these services: Supply and Delivery:

  • Supply – Think of power plants generating power. This power itself, the electrons, is the electricity supply.

  • Delivery- Look outside at the poles and wires delivering your power and the people reading your meters. This is a delivery system. The utility still oversees delivery exclusively.

What is electricity deregulation? Before deregulation, there was no choice as to whom we could buy our power from, hence power supply and delivery were both regulated. About 14 years ago, the laws began to change in certain states. These changes in law allowed business owners to choose who they bought power from. Today, almost half of our United States is deregulated for the supply portion of either natural gas or electricity. In two words, deregulation means: ELECTRIC CHOICE. Delivery is still regulated. When deregulation laws were passed, that did allow for customers in deregulated territories to purchase their power (supply) from anyone they liked (Retail electric Service Providers or REPS), however the delivery of that power is often still managed, maintained, and billed to you by your utility company, depending on your state.

The Birth of Retail Electricity Providers (REPs) and ELECTRIC CHOICE:

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Retail Electricity Providers (REPs):  When deregulation laws passed, utilities were forced to sell their generation (power plants). These plants were bought by retail companies that planned to sell the supply (electrons) from those power plants to customers in that territory. It is their prices for power that Shop My Power will present to you. Why pay more for the same electricity?

These new supply companies have many names; in the south they are called REPs (Retail Electricity Providers), in the north they are called ESCOs, and in the Midwest they are simply called suppliers. Some examples of suppliers: Direct Energy, Constellation New Energy, Just Energy, and Liberty Power. There are hundreds of these REPs in every deregulated state. How will customers know which one to choose?

Energy Consulting: With so many REPs to choose from (none of them presenting pricing, contract language or fees the same way,) it became very confusing for business owners to shop rates for their supply, compare apples to apples offers, and read contract language. A professional community emerged to simplify the process for business owners. We call this community the ABC community: Aggregators, Brokers, and Consultants. The ABC community helps business owners by finding them the best deal for their electric and natural gas supply. In the more mature markets like Texas, over 60% of commercial businesses recognize the value of utilizing an electricity professional to shop for their power. Shop My Power is ready to simplify your procurement today.

 

Electricity Rates are Deceptive as Caesar Salad.

 

Generally consumers want a rate that will produce the lowest bill. So off they go, calling electricity companies and comparing rates. They haggle down a nice tasty fixed rate, and lock it in. But what many business owners and home owners alike do not know is that the rates they sign up for can be deceptive. Those low-looking rates at a seemingly rock bottom price may look appetizing, but it might be full of hidden gotchas, making for a fatter bill.

Think of salad. When the healthy bug bites us, we may want to eat well for a spell. So we look at the menu. There are burgers, ribs, and Caesar salad. “Oh good,” we exclaim, “A good choice for my caloric budget. Yes, I think I will have the salad.” Nope. That tricky salad with all the croutons, cheese, and dressing has more calories than the Burger. That’s right you could have eaten a burger and consumed less calories! Ugh. That is about as depressing as getting an unexpectedly high electricity bill at the end of a summer month.

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And so it is with power rates (electricity or natural gas). This idea holds true whether you are shopping rates for your home or for your business. Let’s get to it then. Where are some of the calories hiding in your rates?

  • Meter Fees – Also called Customer Charge and Meter charges, these nasty little fees are hiding in both residential and commercial accounts and can be as high as $10-15 per meter per month! Some meter fees are justified, but most are not and can really add up. For a small business, a $10.00 meter fee each month is equivalent to half a penny per kWh on your rate (the difference between 5 cents and 5.5 cents per kWh!) and you worked so hard to whittle that price down! Gulp. A commercial business with 4 meters at ten bucks a pop, will over-pay by $480 per year on meter fees alone. Ouch.
  • Unnecessary cost components are passing through from the utility to you! That’s right. You may be paying a cool five cents per kWh, but what other line items are tagged on to your bill in separate line items? Oh dear, another bite out of your wallet.
  • Contract language – There are many reasons to watch your language. One of which is contract termination language. Some commercial contracts will automatically renew at a much higher rate unless you notify them (in writing…through snail mail….60 days prior to your contract end date) that you want your contract to terminate. If you do unknowingly roll into this renewal, you could be slapped with a hefty early termination fee if you try to switch.

It looks like that while you were negotiating that super low rate, that supplier could have been raising your meter fee, adding croutons to your contract, and even removing expensive cost components from your “fully fixed” price to cover the distance. Why is this allowed, you may ask? Because suppliers’ prices, in large part, are not regulated; suppliers can present pricing however they want to. (Read more about the difference between utilities and suppliers.) There is really no such thing as “apples to apples pricing” right out of the gate, but a good broker can get to the meat pretty quick.

Obviously the market has become complicated enough to warrant some folks to become experts (like us!) and those experts can be your budgetary dietician if you will.  (Want to know how to choose an electricity broker?) Shop My Power knows where the gotchas are, who the good suppliers are, and other wonderful things like where is the best place for a (really though) light lunch in the metro. Click or visit us in Allen today. Continue reading Electricity Rates are Deceptive as Caesar Salad.