The Public Utility Commission of Texas (PUCT) establishes the rules retail electric providers must follow when communicating with prospective and current customers about their product offerings. These rules standardize the information provided to customers so that they can compare retail electric plans and make an informed decision as to which supplier and plan best suits their needs. The information and disclosure rules only apply to residential and small commercial (<50kW demand) customers and are very detailed.
Texas Electricity Contract
The three documents that comprise a Texas retail electric contract are the Terms of Service (TOS), Electricity Facts Label (EFL), and the Your Rights as a Customer disclosure (YRAC). When shopping for great electricity rates, it is easy to get bleary-eyed reviewing these documents for every provider and rate plan you are considering. There is a temptation to select a plan without much thought to anything other than the price displayed. Most people agree to terms of service for apps and software without even reading them.
Why should selecting an electric rate for your home or small business be any different? First, the dollars involved are far more significant. A Texas home can easily see annual electric bills range from $1000 to $2000 or even higher. Second, while the PUCT has specific rules (e.g., font size, maximum number of words in a paragraph, etc.) for the contract documents, there is room for creativity in how the retail electric plans are presented. In other words, a standardized disclosure format does mean that all electricity products are standardized. A brief overview of each document below will help you know where to look for important information when shopping for low electric rates.
Terms of Service (TOS)
The TOS is important to read because it contains information on what is required of you and your retail electric provider during the term of the agreement. This document resembles the contracts many of us are familiar with when dealing with other service providers in our daily lives. The key information in the TOS includes:
- identification and contact information for the retail electric provider
- pricing and payment information including an itemization of any non-recurring charges like late payment fees,
- description of the deposit policy including what events could trigger a request for a deposit or how the customer may otherwise establish satisfactory credit,
- instructions on how to rescind a request for service within three federal business days of receiving the TOS,
- information on how to terminate the agreement without penalty if you move or how service may be disconnected for non-payment,
- statement of antidiscrimination including how the retail electric provider is not able to change the price because of customer credit information,
- description of when the contract expiration notice will be provided and how the customer will default to a month-to-month contract if no action is taken, and
- listing of any other special provisions associated with the electric service agreement and a statement regarding how the contract can change during the term of the agreement.
All of the information in the TOS is important but pay special attention to the pricing and payment information as well as the any special provisions unique to the plan you are considering.
Electricity Facts Label (EFL)
The EFL takes its cue from the FDA nutrition labels we see on food and drink items. The purpose of the EFL is to format critical information on each retail electric plan in a manner that allows for easy side-by-side comparison. For example, if two energy suppliers are offering fixed price plans with a rate of 10 cents/kWh, are they really the same? Are wires charges passed through as a line item or are they included in the price? Do minimum usage requirements apply and what charges are assessed if you terminate the agreement early? This is where the EFL shines as a tool for comparing electric rates offer.
The pricing disclosure is the heart of the EFL. This is where the plan must be identified as being a fixed rate, variable price or indexed product. The disclosure requirements are different for each of these product types. Retail electric providers are not required to include state and local sales taxes or the reimbursement for the state gross receipts tax in the price. Prices for residential customers must be provided at three electricity usage levels: 500, 1000, and 2000 kWh per month. Small commercial customer prices are shown for 1500, 2500, and 3500 kWh per month. This is important to review as it pertains to your usage level.
Have your last 12 months of usage handy when you shop for electricity rates. You will find plans that are targeted at specific usage levels and need to know which one is best for you. A plan with the lowest price at the 2000 kWh per month level may not be the lowest price plan at the 1000 kWh per month usage level. All things pricing related are disclosed in this section of the EFL and this is where you want to invest the bulk of your time when comparing plans.
The EFL also includes sections that disclose other fees including early termination fees. The EFL includes disclosures on the term of the agreement and the renewable energy content of the product. All three documents (TOS, EFL, YRAC) that form the retail electric contract are important. From an electricity rate comparison standpoint, the EFL will generally highlight differences more than the other documents.
Your Rights as a Customer (YRAC)
Should you read the YRAC? Absolutely. Should you read the YRAC associated with every retail electric plan you considering. Perhaps not. The reason is that your rights are established under the PUCT rules and they do not vary between suppliers or electric rate plans. This document is very prescriptive in the language it uses and the information it provides.
The only customization allowed is the retail electric provider’s name, PUC certificate number, contact information, and customer service hours of operation. The rest of the document is a recitation of basic consumer protections including special programs and protections for low-income customers and those customers relying on electricity to maintain life support systems.
To summarize, the best document to use when comparing retail electric rates is the EFL. Then check out the TOS for additional information and finally, the YRAC. All of the documents are required to be available in both English and Spanish. The information to shop for and find great electric rates is readily available. Be sure to review it so you can be sure you getting the best deal for your home or small business.