Dallas Morning News on competitive retail power market fees and rate designs in Texas

At the Dallas Morning News James Osborne reports on the controversy over minimum use fees in the competitive retail power market that includes most Texas households. As discussed here at Knowledge Problem last week, retail suppliers sometimes design contract offers to be especially cheap for consumers using 1000 kWh per month. The state’s powertochoose.org website defaults to presenting offers from low to high by the average cost of power at exactly 1000 kWh per month. Minimum use fees can be used to help boost an offer to the top of the ranking.

Minimum use fees are sometimes controversial — consumers feel penalized for conserving resources — and the Texas state legislature looked into the issue earlier this year. Osborne wrote:

During this year’s legislative session, Rep. Sylvester Turner, D, Houston, introduced a bill banning retailers from charging customers for using too little power. Power companies quickly lined up against the bill, arguing the fees were essential to the financial health of the retail industry, which must navigate wide swings in wholesale power prices. The legislation never made it onto the House floor.

But Osborne noticed, “For some companies, the controversy presents an opportunity.” He explains retailers offer an increasing variety of plans – some with free nights and weekends for example, others designed to accommodate solar panels, and still others that reward conservation over consumption.

A Houston Chronicle analysis in January 2015, link below, concluded over 70 percent of the contract offers for the Houston area included minimum use fees, but then nearly 30 percent of the offers did not. Consumers simply need to understand a bit about their own power consumption and shop accordingly.

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