TXU Energy and Direct Energy Free Electricity Plans

TXU Energy and Direct Energy Free Electricity Plans

For most of the history of residential electric service in Texas, it did not matter when customers used electricity.  TXU Energy and Direct Energy have introduced free electricity plans.  Most energy providers simply took the difference between the beginning and ending reading and multiplied it by the electricity rate.  With the deployment of smart meters in Texas, retail electric providers have access to unprecedented information on how consumers use electricity.

Unfortunately, electricity rate plans that capitalize on smart meter data have been slow to develop.  Consumers, for the most part, have been even slower to embrace the concept of time-of-use electricity plans.  There are two basic categories of retail electric pricing plans utilizing smart meter data.  In the first category are plans that reward customers for curtailing electricity usage during power grid alerts when power reserves are in short supply.  These rates plans fall into the category of “you scratch my back, and I’ll scratch yours.” Customers receive no incentive to make any lasting changes to the electricity usage habits.

The second category includes plans based on the idea of customers fundamentally altering how and when they use electricity.  The plans offer free electricity during specific times such as nights or Saturdays.  While most consumers are numb to the marketing promise of the word “free,” a closer look at these types of plans is worthwhile.

TXU Energy Free Nights

TXU Energy markets Free Nights product with a 24-month term.  A fixed rate applies to all electricity used by the customer.  A credit then applies for all electricity used between the hours of 9 pm and 6 am.  The credit also factors in the per kWh charges from the utility (TDU) delivery tariff.  In other words, this plan is a 100% discount of all energy and TDU per kWh charges used during the 9-hour nighttime period.  TXU Energy assumes that a residential customer uses 32.4% of their electricity during the night.  This value derives from a statistical sampling of residential electricity customers.  Individual customer usage behavior varies so the 32.4% value may or may not be valid for a given residence.

At the time this of this article, TXU Energy calibrated its Free Nights 24 product to have the same effective rate as its Monthly Saver 24 product at the 2,000 kWh per month usage level.  This means that an electricity customer using 2,000 kWh per month with 32.4% night usage would be indifferent as to which plan they selected.  The appeal of the Free Nights 24 product, however, is if the retail electric customer can shift more usage to night hours.  Initiating discretionary electricity uses like dishwashing and laundry 9 pm would improve the effective rate.  Beyond these end uses, and perhaps an electric car, it is difficult to envision additional opportunities to shift electricity usage to the night.  For that reason, this plan may not be right for everyone.  However, it would be nice to cool the house down more than usual on those hot summer nights.

Direct Energy Free Saturdays

Direct Energy markets a product called Free Power Saturdays for either a 12 or 24-month term.  This product is similar to the TXU Energy Free Nights product except that all-day Saturday is the free period.  Direct Energy assumes that a residential customer uses 13% of their electricity on Saturdays over the course of a 12-month period.  If a customer currently uses more than 13% of their electricity on Saturdays or can change their usage pattern to increase this number, they will have a lower effective electricity rate than shown by Direct Energy.  Usage-shifting ideas suggested by Direct Energy include laundry (especially if using an electric water heater), dishwashing, baking, and home cleaning and repairs.  While many families cannot postpone these activities until Saturday, those who can shift at least some of these activities to the free day will benefit.

It will undoubtedly take a generation or so to unlearn old habits regarding electricity usage.  Hopefully retail electric providers will continue to identify and develop additional products that encourage not only conservation but shifting usage to off-peak periods.