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How to Read an Electricity Facts Label (EFL) in 60 Seconds

How to Read an Electricity Facts Label (EFL) in 60 Seconds

Before you enroll in an electricity plan you should always read the electricity facts label (EFL). Here's how you can quickly find everything you need to know about your electricity plan.
Written By:
Anna Grisham
4
min read
Last Edited By:
Thad Warren
On:
September 26, 2023

How to Read an Electricity Facts Label (EFL) In 60 Seconds.

Electricity plans are full of gimmicks and tricks that make deciding on a plan difficult. Energy companies do this purposefully to get customers to sign up for plans that make them more money.

The electricity facts label or "EFL" is a summary of the energy plan that gives you an easy way to see the important plan details.

The electricity facts label is required to be available for every residential energy plan by every energy provider. Business energy plans do not have an electricity facts label.

What is an Electricity Facts Label (EFL)?

An electricity facts label is a short-form summary of the terms and conditions of an electricity plan.

Inside you will find the basic information about the plan like the the type of rate (fixed or variable), rate structure at various usage amounts, early termination fees, contract length, and other important information.

It is required by the PUC of Texas for every residential electricity plan. It's a guide provided by electric companies to show you the nitty-gritty of an electricity plan.

Think of it as the nutrition label on your favorite snack, but instead of calories and fat content, it tells you about prices, fees, and other electric goodies.

What's Included on an EFL:

Every electricity facts label is a little different. But if you can identify these key attributes you will know how to read the electricity facts label for any Texas electricity plan.

  • Energy Rate (Price per kWh): The basic unit of electric charge is measured in kilowatt-hours (kWh). This shows you how much you'll pay per kWh.
  • Average Rate: Plans typically have different rates depending on how much energy you use. Shown for 500 kWh, 1,000 kWh, and 2,000 kWh on the EFL.
  • Delivery charges: These charges are set by your utility. Unlike your energy rate, you cannot shop for different delivery charges.
  • Type of Rate: Is it a fixed rate where you pay the same rate all the time? Or a variable rate that changes based on the market? (Think of it as choosing between predictable old Uncle Bob or wild Cousin Eddie.)
  • Early termination fees: Fees associated with canceling your electricity plan before the contract end date.
  • Other Fees: Monthly charges, one-time fees, or even credits that apply to the plan.
  • Renewable Content: This shows you how much of the electricity is from renewable sources. For example solar and wind farms.
  • Contract term: Every Texas electricity facts label will include the contract term. Make sure you know when your plan ends.

What to Look For in An Electricity Facts Label:

The Fine Print: Always! Hidden fees or penalties for using too much (or too little) electricity can be lurking here.

Rate Structure: Your electricity facts label will include the kWh electricity price at various usage levels. Generally, the usage levels are 500 kWh, 1,000 kWh, and 2,000 kWh. Your electricity usage will determine what your average energy charge will be.

Like your federal income tax, you will pay the rate displayed at each usage level listed.

Early Termination Fee: Planning to break up with your electric company? This tells you how much that breakup might cost. It's important to note that if you are moving, and your provider does not service your new address you are exempt from the early termination fee.

Promotions: Sometimes there are short-term deals, like a reduced rate for the first three months. Don't be lured in without checking what happens AFTER the promo.

How to Calculate Your Electricity Bill Using an EFL

An accurate comprehension of how your electricity bill is determined is essential for informed financial planning and energy usage decisions. Here’s a detailed breakdown:

The structure of a standard electric bill, influenced by the details on the EFL, is as follows:

(EnergyRate×kWhconsumed)+FixedTDSPFee+(VariableTDSPFee×kWhconsumed)+MonthlyServiceCharge=TotalElectricityBill

To find your average cost per kWh:

Total Electricity Bill ÷ kWh consumed = Cost Per kWh

It's crucial to have a deep understanding of your bill's calculation. The EFL provides important details such as usage credits, tiered energy rates, specific time-of-use rates, and minimum usage fees. Depending on your consumption habits, these factors can considerably affect the final amount on your bill.

For plans with tiered rates, the calculation is more intricate:

(Rate 1 for 1 − 500 kWh)+( Rate 2 for 501 − 999 kWh)+(Rate 3 for 1000 + kWh)+Fixed TDSP Fee+(Variable TDSP Fee× kWh consumed)+ Monthly Charge − Credit Fo r Consumption Over 1000kWh=Total Electricity Bill

That is a lot of math and a lot of work. So rather than trying to hack together your potential bill, you can use GridHacker to accurately pull your historical usage data and pair it to the best plans available.

Gridhacker will calculate your monthly electricity bill and show you the best plans for your home or business.

Why EFLs are Important:

Much like nutrition labels on food products that help us make informed dietary choices, EFLs empower us to make informed decisions about our energy consumption.

1. Transparency in Pricing:

One of the primary reasons EFLs are crucial is that they offer transparency in electricity pricing. Every electricity plan might have its pricing structure, and without an EFL, consumers could easily find themselves lost in the maze of rates, fees, and credits. For instance, a family in Texas might see a low advertised rate for an electricity plan but might not realize that this rate only applies when they use a specific amount of electricity each month. Without checking the EFL, they might end up with surprisingly high bills when their consumption doesn't match the plan's ideal usage.

2. Breakdown of Costs:

EFLs provide a clear breakdown of the electricity costs, helping users understand what they're paying for. It's common for consumers to see a summarized bill and wonder why their expenses are so high.

For instance, John might not realize that his plan has a base charge per billing cycle, irrespective of how much electricity he uses. By understanding this through the EFL, John can make more informed decisions about his consumption or even switch to a plan that suits his usage patterns better.

3. Environmental Impact:

With increasing awareness about the environment, many people are interested to know the source of their electricity. EFLs provide details on where the energy you are paying for comes from. Inside EFL you will like see something labeled renewable energy percentage or renewable energy content.

This will tell you how much or if all of your plan is sourced from renewable energy sources.

Emily, a passionate environmentalist, could choose an electricity plan that relies more on wind or solar energy, aligning her energy choices with her values.

4. Contract Details:

Electricity plans can come with various terms and conditions. Some might have a long-term contract, while others might be month-to-month. Some might have hefty termination fees, while others might offer more flexibility. By examining the EFL, consumers like Mike from Florida can ensure they're not caught off-guard by unexpected terms or penalties.

5. Reducing Confusion:

In a world with countless electricity providers and even more plans, it's easy to get overwhelmed. EFLs serve as a standardized document that breaks down the complexities of each plan, making it easier to compare different options side-by-side. For instance, Laura from Ohio might find two plans with similar rates but, upon closer examination of their EFLs, realize that one offers a rebate after a certain usage threshold, potentially saving her hundreds of dollars annually.

In conclusion, Electricity Facts Labels are not just another piece of paper but a crucial tool in the modern energy landscape. By understanding and utilizing them, consumers can demystify their electricity bills, align their energy choices with their values, and potentially save a significant amount of money. The next time you're pondering over an electricity plan, make sure to give its EFL the attention it deserves.

FAQs about EFLs:

Can I ignore the EFL and pick the cheapest plan?

A: You could, but remember: cheap isn’t always cheerful. Check the details to make sure you're not in for some nasty surprises.

I barely understand my current relationship, how can I understand kWh and rates?

Baby steps! Just like any relationship, it takes time. Familiarize yourself bit by bit, and soon you'll be an EFL whisperer.

Do all electric companies use EFLs?

Most deregulated energy markets require providers to show you an EFL. It's their way of saying, "Here's what you're getting into."

What's the difference between Energy Rate and Average Price

The energy rate denotes the amount you're billed per kilowatt-hour for electricity. In Texas, some retail electricity providers encompass delivery within this charge, terming it a 'bundled rate.' Meanwhile, others separate the energy cost and delivery fee, naming it an 'unbundled rate.' Further complexities can arise with tiered rates or rates incorporating bill credits.

Conversely, the average price is a comprehensive figure, accounting for electricity, delivery, and additional fees pegged to a predetermined usage level. This metric facilitates a comparison across various electricity plans, be they bundled, unbundled, tiered, or flat fee.

What Does Base Charge Mean?

If you spot a base charge on your monthly electricity bill, it indicates that your chosen plan has this feature. Essentially, two primary monthly charges could appear:

  1. A charge from your Retail Electricity Provider (REP), typically visible if your plan comprises a base charge or minimum usage fee as detailed in the Electricity Facts Label (EFL).
  2. A charge stemming from your delivery company. Every Texas delivery company imposes both a monthly fee and a per kWh charge. These charges might be explicitly detailed, or they could be integrated into a bundled energy rate.

Should you ever stumble upon an unfamiliar charge, it's paramount to immediately touch base with your REP for clarification.

Reading Your Electricity Bill

Upon receipt of your initial electricity bill from a new provider in Texas, it's wise to compare it with the Electricity Facts Label (EFL). This document, which you obtain when opting for an electricity plan (usually emailed to you), shows the energy rate, delivery fee, any extra charges, and the formula for your bill's calculation. If discrepancies arise between your bill and the EFL's provisions, or if the final amount isn't aligned with your expectations, you should contact your retail energy provider.