TXU’s latest electricity rate plan (marketing gimmick) is designed to grab consumer’s attention. But for most people, it’s not likely to be a money saver.
The attention grabbing headline is “TXU offers free nighttime electricity”. But the fine print will reveal that they are doing this by increasing daytime rates to 50% higher than rates offered by many of their competitors.
The day time rates for the TXU nights free plan is 12¢ per kwh for the 12-month contract. At the time of this writing, other electric providers are offering 12-month fixed rate plans for as little as 8¢ per kwh.
Nighttime in this plan is defined as 10PM to 6AM – a time slot where most people are sleeping and not using much electricity to begin with. In order to even make the plan a break even proposition, most people would have to change their habits considerably. You could in theory program your dryer to come on at night or run your dishwasher at midnight. People with plug-in electronic cars would almost certainly benefit from the plan. But there aren’t too many of those in Texas.
Although the plan is gimmicky and not really practical for most consumers, it does attempt to address a major challenge that all electrical grids deal with. Capacity within a grid must be sufficient to cover peak demand periods. In Texas, peak demand is typically during the heat of the day when air-conditioners in homes and businesses are at maximum usage. Other times, particularly at night, most of that power generation capacity sits unused. This is why wholesale electricity prices plummet at night. Anything that spreads electricity usage out more reduces strain on the grid.
Ahead of its Time
One can imagine a future where smart appliances are fully integrated with a smart grid, everyone is driving electric cars which are charged during off-peak hours, and A/C units have built in high-efficiency batteries that allow them to store power during off-peak hours and use it during higher demand periods. The grid and appliances will one day communicate in real-time and my coffee maker would cooperate with your clothes dryer to make more efficient use of electricity grid resources and save us both money. But such a future as a long way off and until then the TXU Free Nights plan is a bad deal for most consumers.
If you are among the rare households that use a large portion of electricity when everyone else is sleeping, or you are committed to changing your habits, then the plan might be right for you. Otherwise you’re probably better off shopping for a better overall rate with another provider.
Texas is fortunate in that there are numerous electricity providers competing for your business. Instead of paying the incredibly high TXU rates, take a look at rates currently being offered by electric companies such as Bounce, TriEagle and Champion. Not only do these companies offer substantially lower rates, they have better customer service, fewer complaints with the Public Utility Commission and a stronger financial footing than TXU.