How to Read an Electricity Facts Label (EFL)

Why Is Understanding Your EFL Important?

Your EFL contains information to help control your electricity costs and compare plans with confidence. Understanding your EFL empowers you to:

• Estimate your monthly electricity costs based on your usage.
• Compare plans from different providers to find the best deal.
• Evaluate the renewable energy content in each plan, which is especially useful if you’re environmentally conscious.

How Is an EFL Structured?

EFLs clearly break down information into sections to help you understand your plan’s pricing and terms. Here’s how to read each section: 

• Provider information: This includes the electricity provider’s name, license number and contact details. It’s useful to have if you need to reach out with questions.
• Electricity price: This is one of the most important sections since it breaks down the cost per kilowatt-hour (kWh) at different usage levels — usually 500, 1000 and 2000 kWh per month. It’s helpful for estimating your monthly bill based on your home’s average energy use.
• Contract terms: Here, you’ll find the length of your contract, whether it’s a fixed or variable rate and any fees tied to early termination. Knowing this helps you avoid surprise charges and pick a plan that suits your long-term needs.

Decoding Energy Charges on Your EFL

Let’s break down the main types of charges you might encounter on your EFL, depending on your specific plan.

Base Energy Charge

The base energy charge is the primary cost of the electricity you consume. It’s typically measured in cents per kWh. This charge will vary depending on your usage level and the specific plan you choose. Some plans offer tiered pricing, where the rate changes based on your consumption.

Delivery Charges

Delivery charges, also known as transmission and distribution utility (TDU) charges, reflect the cost of delivering electricity to your home. They help cover maintenance of the utility infrastructure, like poles and wires. Your local utility sets these, so they’ll stay the same no matter which energy provider you have.

Demand Charges

Demand charges are rare for residential customers but may apply to some commercial plans. These charges are based on the highest amount of electricity used during a specific period, usually measured in 15-minute intervals. While they’re not typically found on residential EFLs, you should be aware of them if you’re comparing commercial electricity plans.

Time-of-Use Rates

Some electricity plans feature time-of-use rates, which vary depending on the time of day you use electricity. These plans typically offer lower rates during off-peak hours and higher rates during peak demand periods. Time-of-use plans are often paired with renewable energy sources like solar, which benefits consumers using power in off-peak hours.

Calculating Your Monthly Bill Using an EFL

To estimate your bill, start by figuring out your average monthly usage in kWh. Look at the EFL to find the price per kWh for your usage level, then multiply your usage by that rate. Add in any base fees or extra charges, along with the TDU delivery charges. 

Keep in mind that this only gives you an estimate. Actual bills may fluctuate based on factors like weather or changes in your usage.

Green Energy Options on an EFL

The renewable energy content section of your EFL tells you how much of your electricity comes from renewable sources like wind or solar. If you’re looking to go green, this section is where you’ll find the information you need. 

Many providers offer green energy options, and they show up on the EFL in the following two ways:

• Renewable energy percentages: Texas is a leader in wind and solar energy, and many plans offer up to 100% renewable content.
• Green energy plans: These plans source more electricity from renewables. They might come with higher rates, but they appeal to anyone looking to reduce their carbon footprint.

Comparing EFLs From Different Providers

When comparing EFL rates and plans in Texas’ deregulated market, pay close attention to the rates, contract length and whether the plan is fixed or variable. Consider how each option aligns with your budget and risk tolerance:

• Fixed-rate plans: Offer a consistent price per kWh throughout the contract term, providing stability and predictability in your electricity costs.
• Variable-rate plans: These can fluctuate based on market conditions. 

What to Look Out for in an EFL

Hidden costs, like charges for using less than a certain amount of electricity each month, can catch you by surprise. Be sure to check for any minimum usage requirements or early termination fees before signing up. These details can help you avoid unexpected charges. 

You should also pay attention to the contract length, as shorter contracts offer more flexibility. Longer ones might lock you into lower rates but with less wiggle room. Always check the cancellation policies, as some plans have hefty fees if you end your contract early.

Tips for Choosing the Right Electricity Plan

Selecting the best electricity plan for your needs requires careful consideration of various factors. Here are some tips to help you make an informed decision using your EFL.

Assessing Your Energy Needs

Before comparing plans, review your past electricity bills to understand your typical usage patterns. This will help you focus on the most relevant pricing information in the EFL. Consider factors such as home size, appliance efficiency and seasonal variations in your energy consumption.

Evaluating Provider Reputation

While the EFL provides valuable information about plan details, it’s also important to consider the reputation of the electricity provider. We recommend researching customer reviews, complaint histories and the provider’s track record in customer service. This information, combined with the EFL details, will help you make an informed decision about your electricity plan.

Our Conclusion

Understanding your EFL makes it easier to pick the right electricity plan. By getting familiar with the basics — like energy charges, usage levels and environmental impact — you’ll be able to compare options and find a plan that best fits your lifestyle and values. 

This article was created with the assistance of automation technology, reviewed and fact-checked by two editors specializing in deregulated energy.