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When selecting an electricity provider, you may be overwhelmed with the choices available to you. Ads abound proclaiming: “Free nights and weekends!” “No credit check!” “No contract!” Why is that? Since the electricity market in Texas was deregulated in 2002, Texas residents have had the freedom to choose among multiple companies that emerged to distribute electricity. Initially, electricity plans were a monopoly of one company, making plans expensive and distribution inadequate. Now, there are more than 70 retail electric providers in Texas.
With hundreds of retail electricity companies operating in Texas, the cost of electricity has reduced significantly, as retail electricity providers are competing fiercely for the Texas market. The competition is not just about the price per kilowatt hours (kWh), but also involves discounts, promotions, and offers geared to attract as many consumers as possible. If you’re setting up electricity in a new home or switching providers in your current home, plenty of options exist.
Before selecting your provider, however, it’s important to understand their costing procedure, discounts, and promotions. It is common to have some consumers pay more for using 999 kilowatt-hours, than those who have used 1,000 of the same. Rate tiers, bill credits, fees, and other hidden costs can present a challenge to many consumers when trying to calculate their consumption, and determine their payment. Some online calculators can guide you in simplifying these calculations. Other than that, a select number of retail electricity companies offer free weekends electricity while others allow their clients to get free electricity over the weekend under particular terms and conditions.
Before discussing the myths of free nights and weekends electricity plans, it is important to understand why companies offer these kinds of plans. By offering free nights and weekends, electricity providers incentivize consumers to use electricity during off-peak hours. By encouraging off-peak electricity use, it helps power companies avoid outages and equalize energy usage across all times of day. By normalizing usage and demand, it keeps prices and services stable. The concept of free nights and weekends isn’t a bad one.
Whether you have a free electricity plan or not, doing chores like laundry or dishes in the evening can help conserve energy – especially during the summer months.
WHEN FREE ELECTRICITY REALLY ISN’T FREE
However, the ways that these plans are advertised to the public don’t always paint the full picture of the cost implications associated with these kinds of plans. That’s why Payless Power set out to debunk some of the popular myths associated with free electricity plans. Be sure to consider the information below when considering free nights and weekends plans.
MYTH #1: FREE MEANS FREE ELECTRICITY
Sure, free nights and weekends electricity plans list your price per kilowatt hour as free within certain timeframes. However, in order to make a true cost comparison, compare the cost per kilowatt hour outside of the free timeframes. Often, the cost per kilowatt hour is much higher during the hours that you still have to pay for electricity than plans that charge you during all hours of the day. For example, some comparisons have shown that price per kilowatt hour charges for free nights and weekends plans can be as high as 17.7 cents, whereas the average price per kilowatt hour for other types of plans were between 8.4 and 14.40 cents. So, even though you don’t pay for electricity on nights and weekends, you pay more for the electricity you use the rest of the week.
The advertised kWh rate is also based on what percentage of electricity is expected to be free. For example, one leading plan estimates 34.90% of night and weekend usage, but your actual percentage may be lower, while you’re paying more per kWh during daytime hours.
How to read free nights/free weekends EFL
Examining the free nights and weekends Electricity Facts Label (EFL), you’ll discover higher base charges and a higher energy charge. On a leading provider with a free nights plan, the advertised average rates are 14.5 to 15.1 cents per kWh, but the daytime energy charge is nearly 21 cents per kWh. By comparison, Payless Power’s traditional prepaid plans range from 11.8 cents to 16.7 cents. Offsetting the free nights and weekends cost with higher daytime rates could result in higher bills for the customer.
MYTH #2: FREE NIGHTS AND WEEKENDS PLANS MAKE SENSE FOR EVERYONE
Marketing materials for free nights and weekends plans have stated that between 30% and 40% of electricity is used on nights and weekends. This statistic leads people to believe that by switching to free nights and weekends, they can save 30% to 40% on their total electric bill. However, as we learned with myth #1, these savings don’t translate because you are often paying more for the electricity you use during weekdays. Additionally, if 30-40% of electricity is used on nights and weekends, that means 60-70% is used during weekdays. If you and your family spend a lot of time out of your home on weekends or go to bed before 10:00 p.m., it is likely that you won’t see true cost savings from switching plans.
MYTH #3: THESE PLANS AUTOMATICALLY EQUAL COST SAVINGS
As we discussed in myths #1 and #2, true cost savings with free nights and weekends plans are not as high as some providers lead you to believe. In some cases, the higher price per kilowatt hour actually leads to a higher bill than traditional or pay-as-you-go electricity plans. Additionally, these plans often have long contract periods and charge high cancellation fees (of $150 and upwards) that can ultimately trap consumers into paying a higher price for longer periods of time. Additionally, if you don’t have a good idea of what your electricity usage is and when it happens, it can be difficult to make adjustments that take advantage of free nights and weekends.
SO, IS IT WORTH IT?
All in all, free electricity plans can save you money in the right situation, but almost never save you as much as you think. In some cases, consumers have spent between $700 and $1,000 more per year on electricity after being locked into a long-term, high-energy-price contract. Before getting locked into a contract, be sure to read the fine print of the plan you are signing up for so you completely understand the cost implications.
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