×

What You Need To Know About The Reliant First Month Free Plan

The Reliant Energy First Month Free Plan sounds like a great deal.  After all, we all love free.  But, as with all Texas electricity plans, in order to know if it is really a good deal for you a little math is required.  (Ok, actually, a lot of math is required).

The Details

Here is what you need to know about Reliant’s First Month Free plan.

  • The free month of electricity applies to both Reliant’s energy charge as well as TDSP (also called TDU) charges. Electricity bills in Texas are comprised of several components; including an energy charge from the provider as well as pass through charges from your TDU (Transportation Distribution Utility).  The TDU is responsible for maintaining poles and wires and delivering electricity to your address.  TDU fees are the same regardless of the electricity provider you choose or the plan you choose.
  • The plan comes with a free google home mini. This is a $49 value according to Reliant.
  • The average rate on this plan is higher than other plans offered by Reliant. That, in itself, is not necessarily a deal breaker.  That’s where the math comes in.

 

The Math

Electricity Providers in Texas quote rates for their plans based on 3 standard usage levels.  They are:

  • 500 kWh – a typical average usage for an apartment in Texas
  • 1000 kWh – a typical average usage for a small house in Texas
  • 2000 kWh – a typical average usage for a large house in Texas

For this example, we will assume an average usage rate of 2,000 kHw per month.  However, in Texas, electricity usage by month can vary greatly.  The table below shows about what your monthly usage would be  for each month if your overall average usage is 2,000 kWh.  This is important because some months of free electricity are more valuable than other months.

kWh usage by month

A little more math gives us the actual bill amount for each month.  Below are the charges for the plan in the Oncor delivery area as of 3/1/2018 which is the most recent version as of this writing.  Oncor is the TDU that covers the Dallas and Fort Worth area as well as some other parts of Texas.

First Month Free EFL

When these charges are applied to the kWh hours for each month you come up with the following monthly bills.

First Month Free Cost Per Month

For this analysis we assume the best case scenario which is August as the free month.  When all is said and done, for the 12 month term of the plan, you end up with an average rate of 11.9¢ per kWh over the life of the plan.  Plus, you get the $49 google Home mini.  As of the time of this writing you can sign up for the Reliant Secure Advantage 12 Plan on vaultelectricity.com for the same 11.9¢ per kWh. (Note: Electricity rates update frequently. For up to the minute rates in your area enter your zip code at the top of this page.)

Champion Champ Saver 12 Plan – A Closer Look

The Champion Energy Champ Saver 12 is a very popular plan on Vaultelectricity.com.  The plan not only has a low rate but it has the simplest, most straight forward pricing structure you are likely to find among Texas electricity plans.  This means, unlike many other plans, the customer is likely to realize an average price per kWh (kilowatt hour) very close to the rates Champion publishes at all usage levels.  This is because the plan has no tiers and no credits or fees that kick in at certain usage levels.  The rate at 500 kWh is about the same as the rates for 1,000 kWh and 2,000 kWh.

The pricing of this plan has only 2 components.

  1. Delivery Charge from the TDU
  2. Champion Energy Charges

The first charge is a Pass Through Delivery Charge that all providers charge (although it is not always explicitly listed out in the Electricity Facts Label).  See “What is a TDU?”  below for a more detailed explanation of what a TDU is.  In the Houston area, the Delivery Charge consists of a flat fee per month of $5.47 and an additional 3.8711¢ per kWh.  In other parts of the state these rates are slightly different.

The second part of the pricing is Champion’s per kWh energy charge.  In the Houston area this charge is 5.8¢ per kWh.  (Note: This pricing is as of the time of this writing.  Enter your zip code above to see all plans and up to the minute prices in your area.) This energy charge is the same regardless of how much electricity you use.  This is what sets this plan apart from many other plans which have different energy charges for different levels of usage.  The result is consistent pricing regardless of your usage levels.

Champion Champ Saver 12 EFL

Important:  This example is from 8/6/2018 and is for the Houston area.  Please enter your zip code at the top of the page for current plans and prices in your area.

 

What Will My Actual Bill Be?

Here are some examples of what your bill would be at different usage levels.  All Texas electricity providers list average rates at 3 different usage levels (500 kWh, 1,000 kWh, and 2,000 kWh).  So, we will use those levels for our analysis.

 

What your actual bill would be (Houston Area).

500 kWh – This would be the typical average usage level for an apartment in the Houston area.

1000 kWh – This would be the typical average usage level for a small house in the Houston area.

2000 kWh – This would be the typical average usage level for a large house in the Houston area.

The reason the average price per kWh is different for the different usage levels is because of the $5.47 flat fee pass through Delivery Charge.  That fixed amount effects the average rate more at lower usage levels than the higher usage levels.

The chart below shows how the average rate changes based on how much electricity you actually use.  You can see that at 500 kWh the plan starts off at a fairly good rate but gets progressively cheaper – bottoming out at about 9.9¢/kWh at higher usage levels.

champion ave price chart

What is a TDU?

The Delivery charge is the pass through charge from the TDU (Transmission Distribution Utility). This is the company that actually maintains all the power lines and delivers electricity in your area.  It’s different from the Retail Electricity Provider (REP).  The REP is the electric company that sells you the electricity. In this case Champion Energy is the REP.  In the Houston area the TDU is Centerpoint.  In the Dallas/Fort Worth area the TDU is Oncor.

What else do I need to know?

This plan has a cancelation fee of $150 which is pretty standard for a 12 month contract in Texas.

 

What your actual bill would be (Dallas/Fort Worth Area).

500 kWh – This would be the typical average usage level for an apartment in the Dallas/Fort Worth area.

 

1000 kWh – This would be the typical average usage level for a small house in the Dallas/Fort Worth area.

2000 kWh – This would be the typical average usage level for a large house in the Dallas/Fort Worth area.

Lower Corporate Taxes Mean Lower Electricity Rates For Texas

Texas electricityThe Texas PUC is pushing the state’s utilities to pass through some of the benefits of the recently passed corporate tax cuts in the form of lower electricity rates.

Retail electricity is deregulated in Texas. However, the transmission and distribution utilities that deliver electricity around the state are still subject to the state’s oversight.

Oncor, the state’s largest distribution utility which covers Dallas, Fort Worth and much of North Texas, has already agreed to pass all of the millions of dollars of expected tax savings along to consumers.  Oncor agreed to pass the savings along to customers as part of a rate review which is a formal process in which the PUC reviews the appropriateness of rates being charged by the utility.  No exact details have been determined with respect to how the savings will be passed along. The rate review was actually completed before the tax reform bill was passed but there was a commitment in principle to passing along the savings.  It’s not yet know exactly how much Oncor will save from the lower corporate tax rates but with a $245 million tax bill in 2017 future saving are likely to be in the tens of millions of dollars.

Several of the state’s other electrical utilities have also agreed to pass along the savings to consumers.  These include Southwestern Electric Power Co., and El Paso Electric.  Centerpoint, which is responsible for delivery to the Houston area, has yet to specifically commit to lowering electricity rates in response to the tax cuts.

TDU fees in Texas appear as a pass thru item on consumer’s electric bills.  They are the same for any consumer within the delivery area regardless of the Retail Electricity Provider serving the address.  Lowering these pass thru fees will lower the effective electricity rate for millions of Texas rate payers.

Buffett May Be Buying Oncor

Legendary investor Warren Buffett may be close to buying Texas’ largest electricity utility according to reports.   Once part of the giant energy concern that included the retail arm of TXU, Oncor Electric Delivery has been up for sale for some time since the bankruptcy of its parent holding company Energy Future Holdings.

There have been numerous attempts to sell the unit already.  Offers by Hunt Consolidated Inc and NextEra Energy have both hit roadblocks thrown up by Texas regulators.  Buffett’s company Berkshire Hathaway is said to be offering $17.4 billion for the utility.

ONCOR is responsible for the transportation and distribution of electricity for a large portion of the Texas electricity marketplace including the Dallas and Fort Worth areas.  It is one of a handful of regional monopolies allowed to transmit the electricity that retail electricity providers sell to residential and commercial end users.   10 million electricity users in Texas are served by ONCOR.

Oncor Proposes Electricity Rate Increase for Many Texans

Oncor-Electricity-MapOncor Electric Delivery Company has filed a request with the Texas Public Utility Commission to increase electricity rates for those in its delivery area.  This is primarily North Texas which includes Dallas, Fort Worth and surrounding cities.  It also includes parts of Central Texas including Temple and Killeen as well as parts of Western Texas including Midland and Odessa.

According to the company, the proposed rate increases are necessary to offset nearly $8 billion dollars spent by the company on upgrading and operating the electric grid as well as expansion into newly covered areas.

Oncor is one of a handful of regulated Transmission and Distribution Utilities (TDUs) in the state of Texas, each of which holds a regional monopoly on the transmission of electricity which is bought by retail electricity providers such as TXU and Reliant and resold to consumers.

ONCOR doesn’t bill consumers directly.  The flat and usage based fees charged by Oncor for electric delivery are passed through to consumers on their electric bills which come from Retail Electricity Providers in Texas.

If the proposal is approved, a typical residential consumer would see their electricity rate go up about .5 cents per kWh.

See Also: Texas PUC Agrees To Electricity Fee Rate Hike

 

Oncor Proposes Battery Storage for Texas Electricity Grid

Texas energy storagyTexas’s transmission and distribution utility, Oncor, which manages the largest power line network in Texas, has proposed an infrastructure upgrade plan to invest 5.2 billion dollars in a network of large storage batteries that will be connected to the power grid. The plan, which calls for the purchase and installation of up to 5 gigawatts’ worth of energy storage, is proposed by Oncor to be implemented in 2018.

How Can Batteries Enhance the Power Grid?

Power demand in Texas is uneven. Because most Texans power down when they go to sleep at night, demand drops considerably, and power plants can sit idle. During the day, demand increases so greatly that its potential to outstrip capacity–resulting in the occasional power outage–is an ongoing threat. Power generation is uneven, as well, as Texas gets a growing amount of its energy from alternative sources, like solar and wind power. It’s clean and green, but unfortunately these sources can be intermittent. Sometimes the sun shines and the wind blows, and sometimes, not so much.

With their ability to store a surplus of energy and then feed it back into the grid when necessary, utility-scale batteries can solve the problems of both intermittent supply and cyclical demand. Power plants can operate on a more smoothed-out schedule of 24 hours, instead of cranking frantically in the daytime and foundering listlessly at night. Solar arrays and wind farms, such as Duke Power’s Notrees wind farm, with its 36-megawatt battery facility, can store power generated at peak weather to help ease demand on the grid even in non-ideal conditions, such as those hot summer days with nary a breeze to alleviate a jump in air-conditioning use.

One of the main supporting factors behind Oncor’s push to get batteries into the grid is that the cost for the batteries is forecast to be lower by 2018 than previously projected. Electric car manufacturer Tesla, with whom Oncor is in talks, will be producing industrial-sized batteries at its new “Gigafactory” battery production facility in Nebraska, scheduled to open in 2017. A study conducted by The Brattle Group estimates that the lower outlay of costs, along with the ability to bring in revenue by renting storage space on the batteries and a reduction in power prices, would likely result in a savings for power customers of 34 cents per month off the average bill. Consumers would benefit both from a more consistent and reliable source of energy and a small reduction in their utility expenses.

Oncor is responsible for transmitting power to most North Texas including the Dallas and Fort Worth areas.

See Also: New Transmission Lines To Bring West Texas Wind To Dallas And Austin

 

Group Claims Oncor Unnecessarily Charged Fees to Texas Electricity Consumers

According to a report commissioned by a group called Texas Coalition for Affordable Power (TCAP), Oncor has collected around a half billion dollars in fees from Texas electricity ratepayers in the past several years in order to pay federal income taxes.  This money, according to TCAP, was never actually paid to the federal government.  Texas regulations allow utilities such as Oncor to collect fees from customers to pay federal income taxes but don’t actually require the fees to be used for that purpose.

Texas is a “Power to Choose” state which means that consumers in most parts of the state are free to select their Retail Electric Provider.  However, the transmission utilities, including Oncor, are still regulated monopolies.  They are responsible for delivering electricity to consumers regardless of who the retail provider is.  The electric company whose name appears on the bill charges consumers pass-through fees that go back to Oncor to pay for the cost of delivering the power.

Oncor is owned by the same parent company that owns the retail electric provider TXU.  The parent company, Energy Future Holdings (EFH), has been in financial trouble since an ill-fated leveraged buyout in 2007 left the company with an unsustainable amount of debt.  The buyout amounted to a massive bet on the direction of natural gas prices by a group of large investors.  Soon after the buyout the bottom feel out of natural gas prices and never recovered. 

As a result EFH has been losing money since 2008 and consequently has not paid any federal income taxes.  According to the report, the money collected by Oncor ostensibly to pay federal income taxes has simply gone into the pockets of EFH and used to help service their massive debt payments.  The report further contends that since EFH appears to be heading towards bankruptcy or some other form of restructuring, the money collected for taxes will likely never be paid to the federal government.

See Also: A New Fee On The Electric Bill of Dallas / Fort Worth Customers