Spring and Summer Electricity Bills with Solar Power

From my last post, I indicated that one of my recent electricity bills was really low ($16), but I didn't delve into the bill details.  What I'd like to do in this post is share a bit about those bill details and the elements that comprise a typical electricity rate plan for solar power owners here in Texas.

On that note, I logged into my account online and took a screenshot of the "current electricity details" portion of my March 2012 bill (my rep is Reliant, could this information may be called something similar with TXU or Green Mountain statements).

The first thing to notice is the "29 day billing period". Why is this not simply the first day of the month to the last day of the month?  Most likely because my old analog electricity meter required someone to physically come and read the meter values for billing purposes.  My premise (home) was probably lumped together with other homes in my area into a "billing cycle", while taking into account weekends and holidays, and given the dates of 3/6/2012 to 4/4/2012 so that the meter reader could more conveniently read as many meters as possible.

Of course, with the new smart meters, I'm guessing it's really not necessary to have the billing cycle fall on these predetermined dates since a meter reader person is no longer necessary.  However, it's probably more of a legacy billing system and business process holdover for utilities to do it this way.

In the future, as utilities' IT systems mature, I'd hope that they would allow customers to choose the dates for each month's billing cycle since one of the advantages of smart meters is the granularity of the data (15 minutes, so daily sums are easily possible).

At left are more screenshots, including portions of my April and May electricity bills.

Again, notice the billing days each time.  My April bill shows 4/4/2012 to 5/4/2012, while my May bill shows 5/4/2012 to 6/5/2012.  Interestingly, the date of 5/4/2012 shows up in both statements, so which one is correct?

What is missing here are the times on those dates for which meter readings are included.  My best guess is that "start date" is inclusive of all hours on that day, while the "end date" is exclusive of that day's hours (meaning midnight).  In other words, my April bill would go from 12:00am on 4/4/2012 to 12:00am on 5/4/2012.  What do you think?

At right are a few more screenshots, this time from my Summer electricity bills.

The next line items to notice are the Energy Charge (which I explained briefly here) and the Grid Credit (which is touched on here).

My rate is the same in each bill (meaning it's a fixed rate) and the usage was steadily increasing from March through May (551 kWh to 946 kWh consumed).  This indicates that it was getting warmer and my A/C was in use a bit more each month.  Since we us natural gas in my home for heating, I expect this trend to reverse once the Fall months come around.

Also, notice that the rate for Grid Credit was the same as the Energy Charge ($0.092 per kWh).  This is the great thing about have a rate plan that pays me back for excess solar power placed back onto the grid.

Interestingly, since I know that my solar panel system produces at least 800 kWh in the Spring/Summer months, I can simply subtract the Grid Credit kWh number from the amount of energy I produced in that month to figure out how much of my solar production I consumed that same month.

So it's apparent that I'm saving some money each month with solar power, but what's the difference compared to last year?  Glad that I asked!

At left is one final screenshot, from my August bill, of the "electricity usage summary" section.

The difference between August 2011 and August 2012 was about 1400 kWh, about 50% less.  Since solar power provided about 600 kWh of my total consumption, my bill without solar would have showed about 2000 kWh sans solar power.  Then, where's the 800 kWh difference coming from?

One potential culprit is the Billing Days line item.  However, last year my August billing cycle had fewer days than the same period this year, so that should have led to a smaller difference.

Another factor could have been that we were more diligent in watching our electricity use, such as turning off various electronics when not in use and turning up the thermostats another degree (while using ceiling fans instead).  This would probably have a measurable effect on energy savings, although it would take some effort to determine the exact amount (time to finally plug in my home energy monitor!).

One last factor to consider is the average high temperature in the billing period.  Last year in August, Texas had it's worst heat wave ever, with average highs measured at 104 degrees F.  However, this year has been much tamer, with average highs around 97 degrees F.  I believe this is the primary reason for the 800 kWh difference between August last year and this year.

Anyways, I hope this provided some useful insights into the billing aspects that a solar energy home owner sees these days.  Please feel free to post any questions and I'll try to get back to you sooner than my recent post history would indicate...

Energy Sell-Back (or Buy-Back) Electricity Rate Plans

My fault, it's been a while... my goal when I created this blog was to have at least 1 "useful" post per month.  Although I have a lot of ideas, simply putting "pen to paper" has been much harder than I had expected.

Anyways, the topic of discussion this time is related to a previous post around my new solar panels.  As I described in that post, I was (and still am) really excited with the new system and the benefits that came with having had it installed.

I also alluded to the efforts to try and find the right electricity rate plan.  Initially, I struggled with how pick the right provider.  Prior to that, I touched on how to choose an electricity rate plan, but that was with the mindset where, like most homeowners, I would only be consuming electricity.

However, I needed to shop for a rate plan while also taking into consideration that I could generate excess electricity and put it back on to the grid.  This made comparing rate plans a bit more challenging.

On that note, a few things I needed to keep in mind while shopping for the right rate plan for a solar powered home:
1) Does the retailer offer a plan that actually purchases "net outflow"? (excess electricity generated that is placed back onto the grid)
2) What's the rate of "buy back"? ($ per kWh rate that the retailer will purchase net outflow)
3) How does this cost compare to non-buy back rate plans?

Example of retailer that doesn't buy back power.

About #1, the easiest way is to look at any of the retailer's rate plans and under the "Disclosure Chart" section (included with all Texas deregulated Energy Facts Labels).  There you will see a line item about whether or not they purchase excess renewable generation or net outflow.

Example of retailer that buys back power.

After determining whether or not a retailer purchases excess renewable generation, the search is then narrowed down to the specific rate plan(s) from the retailer that specifically allows for bill credits resulting from net outflows.

My search led me to just three in Texas that offer a buy-back rate plan:
- Reliant Energy
- TXU Energy
- Green Mountain Energy

With that, the next question, from #2 above, is about each retailer's policy on purchasing excess generation.

Not surprisingly, I discovered that this policy varies by retailer:
- Reliant's policy provides "a credit at the full retail energy charge for the first 500 kWh returned to the grid each month" and above that "5 cents per kWh credit for additional generation above 500 kWh that is returned to the grid"
- TXU's policy "will pay you 7.5¢ / kWh for surplus generation from solar units" (and from what I understood, there was not a kWh cap)
- Green Mountain's policy will pay for "the first 500 kWh per month of surplus power, the credit will be the same per kWh rate that Green Mountain charges for the Renewable Rewards electricity product" and above that "the buy-back rate will be reduced by 50 percent"

I threw those variables into a spreadsheet and, with some seasonal kWh assumptions, I determined that below 10 cents/kWh Reliant's plan was the best, with Green Mountain coming in second.  However, both retailer's rate plans have energy charges that are a bit higher than their own "run-of-the-mill" rate plans (at least 10 to 20% higher).

About TXU Energy, they offer buy-back on any rate plan, which is really nice, with the only requirement that you fill out a surplus generation agreement.  I would consider one of their plans if my net outflows were more than 500 kWh of electricity each month.

In a later post, I'll try to share some of the detailed analysis around the calculations leading to those conclusions.

Lastly, about question #3 above, I started my research with the assumption that buy-back rate plans could be compared with non-buy back plans.  However, after having had a new smart meter installed (required where I live in the Texas ERCOT market) with my solar panel system, I found that comparison is truly an apples-to-oranges scenario.

A little background before I get into "why":

• The old electric meter was analog
• Meaning it had a physical set of dials that showed how much electricity was flowing across the meter (for most people it flowed in one direction since electricity in the house was only being consumed)
• The limitation to this technology was that it had to be physically visited by someone, typically once per month, for purposes like reading (billing) or disconnection
• The new electric meter, or smart meter, is digital
• Meaning it encompasses several technologies, such as wireless communication, that eliminate the need to be visited by someone for measurement or disconnection
• Another advantage is the ability to read the flow of electricity more frequently, like every 15 minutes, which allows further insight into daily household energy use

So, why is the difference between old and new meters important?

If I had an analog meter with my solar panel system, those dials measuring my electricity flow would spin forward when I was using electricity and backward when I had excess generation going back onto the grid.  This would essentially credit me for all of my net outflow.  I actually was in this situation for a few weeks after my solar panels were installed while waiting for the smart meter to be put into place.

With the new smart meter (specifically the one designed for solar panel owners), it has two channels of measurement.  One for inflows (power taken from the grid and into my home) and the second for outflows (power placed onto the grid that I didn't consume).  So, essentially nothing "spins" backward.  The numbers measuring kWh only go forward.

This is important because retailers will see both numbers (inflow and outflow readings), but it's up to them whether or not they care about the outflow.  For most retailers, they would only bill on the inflow reading and never credit you (nor would they be obligated to) for the outflow reading.

Bottom-line, it really goes back to question #1 and focusing on retailers that offer a buy-back plan.  Comparing them with other retailers who only take into account electricity usage and exclude potential credit for excess generation doesn't make much sense, especially if I'm trying to maximize my investment in solar power.

Given that, I'll share with you a number from one of my recent monthly bills:  $16

Not bad, right??

(yeah yeah, "wait 'til summer" you say...)

We got Solar Power for our home! But, what's the ROI payback?

View of our solar panels from the alley

Yes, that's right.  Solar panels, on our roof, just in time for summer!

I'm really excited about the benefits (primarily to save money), but our setup was only made possible, financially, due to:
1) Federal tax credit of 30% with no cap
2) Local utility rebate of $2 per Watt up to $20,000
3) Solar lease option (such as with SolarCity)

Photovoltaic (PV) systems are so much more affordable than they were not even 5 years ago, due to the federal tax credit (which has been extended through 2016) combined with other available rebates, like my incentive from Oncor.  Additionally, component costs have been dropping quickly the last few years as well, further improving bottom-line cost of a residential PV system (although potentially making rebate/incentive programs unnecessary).

Regarding the third item from the list above, there were two options when deciding how to fund (out of our pockets) the solar equipment and installation:  Buy it or lease it.

Just like buying a car, purchasing the PV system means that we pay the entire upfront cost of equipment and installation, plus all ongoing maintenance and insurance for the life of the system.  However, we get to enjoy use of the system for its operational lifespan (at least 30 years) and include it in the price of the home, if we sell sooner.

On the other hand, leasing a PV system simply requires that we pay for the use of the equipment for a predefined number of years.  Since the lease company owns the equipment, ongoing maintenance and insurance is handled by them as well.  In our setup, our lease is for 15 years, so we will not enjoy its use through its full operational lifespan.  The primary benefit is the lower upfront cost of the system.

View of our solar panels from the street

For example, a recent quote that I received (in 2011) to buy a 6.2 kW system where I live (in the Dallas-area) had a total cost of about $40k, before all incentives were included.  With incentives (both federal and local), the total cost had dropped to about $19k.

Compared to the PV system that we actually leased, at 6.4 kW, our full prepaid cost was about $5k.  The lease company can offer this lower cost because they receive the federal and local rebates, instead of us.  Also, my guess is that they factor in the potential value of the equipment at lease-end.

So, what's the payback to break even (and enjoy free electricity)?

Both systems are estimated to generate around 8,600 kWh per year, which an average of a little more than 700 kWh per month.  Electricity prices fluctuate greatly from year-to-year and the actual savings is a bit more complicated than most PV-pushers (go figure) will tell you, but using a buy-back (I'll explain this in a future post) rate of about $0.075 per kWh, that's a savings of about $50 per month.

Now, taking the upfront costs and the monthly savings together, we get...
Purchase: $19k/$50 per month = 380 months (31 years)
Lease: $5k/$50 per month = 100 months (8 years)

It's now fairly obvious that the lease option was much more attractive than buying the system outright.  We can enjoy free electricity generated from our solar panels in years 8 through 15.

Despite federal and local rebates, which cut the total cost by more than half, purchasing a PV system is still not a financially viable option, which I presume is the case for most homes, assuming your local utility rebate terms are similar.

I'll post more goodies about how we went about shopping for an electricity rate, considering our newly installed solar panels.  You may be surprised to know that most electric retailers don't pay (also known as buy-back or net metering) for excess energy put back onto the grid.  Details coming soon.

Compare Electricity - Index Rate Plans

So I've FINALLY picked a new electricity plan after my last fixed rate contract expired several months ago... After shopping around for a little while, I decided to go with an indexed rate offer from Reliant, called the "Reliant PowerTracker".

Similar to variable rate plans, index rates can vary from month-to-month.  This sounds scary upon first glance, however, index rate plans provide more insight into the price that you'll actually pay each month.

Whereas variable rate contract language may state, "After the initial rate, your next bill's rate is up to sole discretion of Retail Provider X", an index rate is one in which the price you pay for energy is tied directly to the price of some energy market index, in this case the last settled price of the NYMEX Natural Gas Futures Contract.  This allows you to receive a "heads-up" on the direction in which your final cost of electricity is going.

In order to get to that final cost, we have to add one more pricing component to the ones that I've covered previously:  An Indexed Energy Charge.

This charge is calculated using a predefined Gas Multiplier (as outlined in the rate offer):

Notice that in the screenshot above from the Reliant PowerTracker product, the Gas Multiplier is defined at four different times of the year.  Why is this the case?  I'm not certain, but from what I can tell, the multiplier is basically higher during the hottest months of the year (June-September).

The only other retailer besides Reliant to offer another indexed rate plan is TXU, called the "TXU Energy MarketEdge".  Their Index Energy Charge is calculated in the same manner, but using just two different Gas Factors (or Multipliers), again depending on the time of year:

Taking into account this index energy charge, the calculation is simply a matter of including that with the base charge, kWh energy charges, TDSP charges and monthly kWh usage to get to your final bill.  Here's the Reliant screenshot outlining the calculation:

On a related note, TXU Energy's recent "No Vari-a-Bull" rate marketing is interesting because it appears as though they are trying to distance themselves from variable rate plans in general, even though their "MarketEdge" product, being an indexed plan, is basically variable as well (changes from month-to-month).

However, to their credit (being an indexed plan), since each month's price is clearly explained (as shown in the screenshots above), their most variable product will not suffer the surprise expiration of a typical variable rate's initial promotional teaser price as exists with other retailers.


Anyways, with summer approaching soon, I'm pretty close to switching to a fixed rate again (yes, after just a few months with the indexed plan), but with natural gas prices near 10-year lows, perhaps it's now best to lock in a rate.

Electric Space Heaters - Are They Cost Effective?

As winter ends and spring approaches, I wanted to write a quick note about electric space heaters.  In particular, I want to review the costs behind running a few of the ones that we have in our home.

During last year's Thanksgiving holiday weekend, Lowe's had a deal ($50) for this electric "stove" space heater (complete with fake flickering flame!).  We already had these oil-filled radiator electric space heaters in the kids' bedrooms (bought 2 for about $60 each) and I was just looking for something for the master bedroom.

Our home is heated mainly from a central gas unit (we set our thermostats at 74 degrees), however I use the oil-filled heaters to set a more even and consistent temperature in the bedrooms, but only at night and typically when outside temperatures dipped into the 50's and below.

The Honeywell oil-filled units were especially nice due to the digital temperature controls and LCD display of the current ambient room temperature.

The Duraflame heater basically acts (and sounds) like a hair dryer, just blowing air over a heated coil, albeit more quietly.

The main difference between the two heater types, that I've noticed, is that the air doesn't stay as consistently warm with a "blower" based electric heater, as opposed to an oil-based radiator which seems to retain (and thus radiate) heat throughout the air space more effectively.

Anyways, back to the point of this post... I used the Kill-a-Watt energy measurement device to figure out how much energy these heaters used, on the same night (outside temperatures were in the 50's).

I set the Honeywell oil-filled heater to "level 1" (lowest power setting) at 75 degrees and the Duraflame air heater to about halfway (unfortunately, there is no temperature or power settings, just on/off and a power dial).

Over a 12 hour period, the oil-filled radiator consumed about 0.8 kWh per hour, so over the course of 12 hours at 10 cents/kWh, that added up to about $1 for the night.

The air heater consumed about 0.4 kWh per hour, which added up to about $0.50 for the night, using the same time period and price/kWh.

I probably could have turned up the air heater a bit more (than halfway) to make the room feel as comfortable as the oil-filled radiator did, which would most likely have caused the air heater's electricity consumption to go up.  It's rated at 1350 watts, so if I were to run it the whole night at that top setting, it would cost about $1.62, although running it at the max sounds like overkill.

On that note, I've got 2 oil-filled heaters, and running them over the month of January cost us about $60.  Adding the air-heater (about $15), brings the total for electric space heating in my home to about $75.

Central gas heating cost us about $110, which is not too bad in a typical Dallas-area January, but considering how mild it has been this season, I wonder if this could have been better.  Note that this cost is also for all-day heating, not just at night.

What I would love to do (contingent upon the wife's blessing) is to turn off the central gas each night for a month and use only space heaters in the bedrooms.  Then, in another month use only central gas each night and compare the two costs.

Making comparison a bit more difficult, however, is finding the right months that will have very similar weather and follow the same daytime energy usage (TV, lights, laundry, etc.) patterns in both months, so not to skew the results.

Now that it's already March, I'll simply shelve this for some time and revisit this experiment in the late fall this year... try and remind me if you're interested.

Going Green

Not sure if "going green" is just a fad, but for the last few years it seems to have really gained some momentum.  Things like recycling (prevalent in just about any neighborhood now, at least here in North Texas) and promotional campaigns aimed at reducing water use are fairly commonplace nowadays.

In addition to those two areas in the green movement (waste and water), another major component for going green is related to energy.

Several ways of going green around energy (and my opinion):
1) Transportation -
  a) Buy an electric car (however, if plugging in using grid power, you're sourcing it from primarily fossil fuel-based energy, like coal and natural gas)
  b) Buy a hybrid car (uses less grid power than pure electric, but still uses gasoline, derived from oil)
  c) Buy a car that simply uses less oil by getting better mileage (can even save a ton of money doing this, like going from a 15 mpg SUV to a 35 mpg hatch-back could amount to over $1000/year saved)
  d) And obvious maintenance things, like...
    - Keeping tires inflated (I just use 32 psi for all of my cars, easy to remember too)
    - Changing my air filters once every year (I just use a milestone date, like Thanksgiving or Christmas)
    - Using the correct fuel type (double-check for your car, premium gas in a vehicle only needs regular doesn't save any gas and certainly doesn't save dollars)
2)  Home appliances and gadgets -
  a) Upgrade old equipment to more efficient devices like (all good)...
    - An Energy Star rated refrigerator or television
    - The highest SEER rated A/C unit
    - Using a laptop instead of a desktop computer
    - Replacing incandescent lighting with compact fluorescent
  b) Unplug devices when not in use (lights, computers, charging devices)
    - Optionally, there are several power strips on the market today that can cut-off power to devices when it detects that they are not on, thereby reducing wasted "phantom" power (standby modes, charging adapters)
3)  Electricity -
  a) Shop around for the best electric rate (can really save a bunch doing this, if you haven't switched electricity providers in a while... I review this at least once a year)
  b) Renewable power (can be cost prohibitive, unless combined federal and local rebates make up much of the up front investment... and if it's a lease, I'll explain more on this later)
  c) Related to #2a, simply use less (bundle up in the winter, use ceiling fans in the summer, turn off the lights)

Whatever methods chosen to "go green", it's definitely a great thing to do and can save a bunch of money at the same time.

Sears Assurelink - Wireless Garage Opener

It has been a really tough last 6 months for my garage door system.  In the summer, one of the torsion springs broke (there are 2 on my garage door since it's extra wide and fairly heavy).  The sound of it was like a really loud "pop", as if someone shot a gun inside the garage... quite alarming since we were just entering the house and we had no warning.

Anyways, without both torsion springs, opening the garage using either the motor or manually using the override, was impossible.  So we made a quick call to the garage door repairman... a new torsion spring, an afternoon and $300 later, the garage door was opening and closing again without issue.

Fast forward a few months, to this past fall, and the garage started to make this loud "banging" noise while opening until one day it just stopped opening.  The motor sounded like it was struggling to move, but the garage door refused to open.  The torsion springs looked fine.  Another call to the repairman... a quick diagnosis, a new manual override lever and $180 later, our garage was opening and closing again just fine.

Then, a few months later around October, the garage door motor started to produce a white smoke each time after opening.  There was a slight burning smell to it and I knew it that it was probably on it's last legs.

The garage motor was a Genie screw-drive model from when the house was built, so it may have been about 15 years old.

However, since we'd just dropped almost $500 on garage door repairs over a few short months, I couldn't bear the thought of shelling out more dough to fix the aging unit.  Perfect opportunity for a DIY purchase and install of a new one!

Searching the internet for recommendations, I found that there were basically 3 types of garage door openers:  chain-drive, screw-drive and belt-drive.

From what I understood, the chain-drive is the loudest, but cheapest, whereas the belt-drive was the quietest, but most expensive.

Searching the internet further, I came across a new garage door opener from Sears, with a new feature called "Assurelink".  The main benefit of Assurelink is the ability to remotely monitor and control the status of the garage door, using a web browser or mobile (iPhone or Android) device. I thought, "How novel is that??"

Reading the history of the garage door, I learned that it hasn't changed much in the almost 90 years of existence. There have really only been 3 major milestones.

For about 30 years starting in the 1920's, you could open and close the garage door electronically, with a switch. Beginning in the 1940's, with the advent the remote control, you were able to control that switch wirelessly from a short physical distance.  Now, nearly 70 years later, the ubiquitous garage door can be connected and viewed anywhere in the world... amazing.

So, I purchased one of the new Sears Craftsman garage door openers that feature Assurelink and installed it.  I chose the chain-drive over the belt-drive because it was about $50 less expensive. It's also missing a battery backup, but with a working manual override, that shouldn't be necessary.

I'll post about my experience installing and using this new garage door opener soon, but so far it's been fantastic.

Compare Electricity - Fixed Rate Plans

Opposite variable rate electricity plans are offers known as fixed rate plans. The advantage of a fixed rate plan is that the price, in terms of the base energy charge, is set and doesn't change for the length of the contract term, which can vary between as few as 3 months all the up to as many as 60 months.

So, anyone who signed a contract that carried them through the 2011 heat wave had no worries with regards to their electricity rate (the only remaining concern being rolling blackouts, which we can't control).

The primary attractiveness of the fixed rate electricity plan is the comfort in knowing what your rate is going to be each month and that you can control your final bill simply by keeping tabs on your energy usage (easier said than done).

Fixed rates can vary widely, but, in general, the longer the contract term the higher the rate. That may be due to electricity rates' tendency to follow the price of natural gas. Since that price is unpredictable and riskier the further one looks out into the future, a retailer would need to charge a premium rate for that volatility.

I tend to search specifically for rate offers of 6 and 12 months in length as that's where I've noticed consistently good prices from most reps.

Negatively, however, where variable rate plans are flexible in terms of switching electricity providers, the converse is true for fixed rate plans.  Switching your rep before the contract term has expired can lead to costly cancellation fees.

Typically, cancellation fees are higher with longer contract terms. As of this writing, those fees ranged from about $50 (3 month term) to as much as $450 (5 year term) and can be found in the "Disclosure Chart" section of the Energy Facts Label.

The reason for higher cancellation fees on longer contract terms? I think this is related to each rep's requirement to accurately forecast the energy needed to supply all of their respective customers. I imagine that any unexpected event which throws a wrench into those forecast models (like customers cancelling) are fairly costly from the rep's point-of-view.

Anyways, one example of cancellation fee verbiage, from Direct Energy, which I found really straightforward:

Not many questions there... you cancel before your 12 months are up, you pay $200.

Another example, this time from TXU Energy:

Same clarity in terms... notice that the fee is higher due to the longer, 24 month, contract term.

However, what if you were in the last few months, or month, of the contract and needed to cancel?  The flat cancellation fees would seem a bit harsh.  In that case, there are some offers that will pro-rate the fee for cancelling service, such as this example from Dynowatt:

After just 4 months, you could cancel this 12 month contract for $200, the same cost as the aforementioned Direct Energy example, which charges that much in any month that you cancel.

One last example, this time from Amigo Energy:

This is interesting since they allow you a reason to cancel without a fee:  For moving out.

Bottom-line, fixed rate plans are great if you want to "set-it-and-forget" and not have to chase the lowest variable rate each month.  Just remember to renew on another fixed rate plan, either with the same rep or by switching to a new one, as soon as the contract expires.  The default for all of the fixed rate plans that I've seen place the customer onto a variable rate month-to-month plan which can turn out to be an unpleasant surprise.

Compare Electricity - Variable Rate Plans

A nice feature of the "Power to Choose" website is the option to look only at "variable" or "fixed" rate plans, as opposed to all plans together.

Why is this important?

Simply because there was (or still is) a lot of consumer confusion with regards to the differences between the two types of rate plans.

My understanding of the variable rate plan is that the price can change from month-to-month, and in some cases without a cap to the actual rate of increase. Since Texas electricity rates are particularly sensitive to the price of natural gas (the biggest source of generation here), the direction of variable rates depends upon that price each month.

The primary draw to variable rates are lower prices than fixed rates (secondarily is the flexibility to switch reps at any time without incurring a cancellation fee).

Consequently, the price variability can come back to haunt, as seen last year when Texas temperatures reached record highs (70 days over 100 degrees here in Dallas!). I imagine that a lot of folks on variable rate plans saw significant rate increases over the course of the summer.

Here are some examples of variable rate plan language from various reps...

Like this one from Direct Energy:

The 30% limit on monthly rate increases sounds okay initially, but a $0.10/kWh rate would go to $0.13/kWh, which is pretty high, and could go higher still the next month.

How about this one from Gexa:

A bit better on the 25% monthly rate increase, so a $0.10/kWh rate would go to $0.125/kWh, however, it could still go higher in subsequent months.

Think that all variable rate plans have this sort of protection in place?

Check out these examples from Mega, Pennywise and Reliant:

A bit scary to say the least as rate increases are not capped and up to the "sole discretion" of the retail electric provider.

That last bit of language does make some sense as the electricity that we're paying for has to be procured by the rep in the first place. The rep has to know a few things like how much power their customer base may use that month and what the weather will be like in order to contract generation for the right amount of energy. Get any of that wrong and my guess is that some (or much?) of the cost burden gets passed on to variable rate customers, on top of the actual rise in the cost of energy that month.

Bottom-line, variable rates can provide lower rates, but they are a risky bet and I (stretching it here) think they can only make sense during milder seasons, like the fall or spring.

A better bet would be a fixed rate plan, which I'll cover in the next post.

Shopping Electricity Rate Plans - Energy Facts Label and Fees

While shopping for a new electricity plan, I wanted to point out a few "gotchas" that I've run across lately, especially when going for the lowest rates. When comparing rates, it's important to approach the experience with a "too-good-to-be-true" mentality and make sure to read the Energy Facts Label (or "EFL") thoroughly.

I recently covered the "Electricity Price" section of the EFL document, which is used primarily to estimate your electricity rate, but I'd also like to give a quick overview of one other important section called the "Disclosure Chart". In the Disclosure Chart, there is a row item that explains other fees that may be charged, specifically those that are not included in the Electricity Price section.

For example, in the first screenshot provided, it shows a "Service Processing Fee: up to $5.95". What does this mean exactly?

According to the Disclosure Chart, further explanation can be found in the "pricing" section of a document (part of the rate list that we saw in the first post) called the "Terms of Service".

There, we see (in the second screenshot) that the $5.95 fee is charged for, essentially, any call to customer service. This is due to the verbiage stipulating that anything which can done through online self-service (i.e. bill payment, paper vs paperless billing, etc.) or web chat (same deal) cannot be done through a phone call, unless one would rather pay the $5.95 fee each time.

Other fees are expected, like "returned payment"-type of stuff, so as long as we are aware of these "other" fees, shopping for an electricity rate plan, especially here in Texas, is fairly easy to do, quick and worthwhile. Saving money by comparing rates is a definite must.

Getting Smarter

I like the idea of home automation; more so recently in my attempts to save money and improve energy consumption.  Enabling this concept are products referred to as "smart" appliances. My understanding is that the term "smart" is used rather loosely, really to mean wireless "interconnected" and most likely Internet-enabled.

For example, at CES 2012, Whirlpool committed to introducing appliances over the next year and a half that would be "smart"-enabled.  They also mentioned that "Seventy-eight percent (of consumers) are interested in monitoring their household's energy use."

Now, the level of monitoring that consumers had in mind is my question.  Is the monitoring more automated so that devices can learn consumer behavior patterns and adjust accordingly, or rather something more hands-on that allows consumers to control devices from anywhere (via smart phone). Personally, it would be great to see a bit of both.

In any case, simply the ability to do any of this now appears within reach for the average residence (not sure how to define "average" except that I'm lumping myself into that group). I'm really excited to see what the next year brings in terms of smarter devices.

Federal Energy Tax Credits in 2012

I recently went into the attic and noticed a few areas of low insulation, so I was hoping to purchase some additional insulation and qualify for the 10% federal tax credit for energy efficiency upgrades. Albeit late, I was disappointed to read that certain federal tax credits expired at the end of 2011, attic insulation being one of them.

Additionally, my 75 gallon natural gas water heater is about 15 years old and I'd just started thinking about replacing it with a new Energy Star rated unit, such as a tankless version. Unfortunately, the tax credit ($300!) expired a few days ago as well... Hopefully my old water heater can last through one more winter.

Anyways, it seems that the only energy efficient tax credits available for 2012 are related to renewable generation (solar, wind) or other more exotic products, like the residential fuel cell.  Perhaps I'll look into the latter and post about it.

On a related note (to renewables) I'll also write about my recent experience with solar power and smart meters.

Shopping Electricity Rate Plans - Power To Choose, Price and Energy Charge

This has been a bit harder than I expected, as far as starting a blog.  The difficulty might be with what to really begin writing about. So, I'll just start with what I'm currently working on, which is shopping for a new electricity provider since my current contract ends this month.

I don't regularly think about renewing since I usually sign up for 12 month contracts, but I got burned this past summer ("ha ha" funny given the record temps in Texas) when my last contract expired and I was placed on a month-to-month rate (I went up from 10 to 13 cents/kWh, in the middle of the summer! -yes, poorly timed). My mistake was chasing the absolute lowest rate by signing up for a 6 month contract in December that would expire in June, of course, fully expecting that I would remember to renew on another 6 month contract (ha!).

Lesson learned.  Rates are generally better in the late fall and winter months, so best not to leave anything to chance and simply ensure that my contracts would always expire in those seasons going forward.

With that in mind, I started by going to www.powertochoose.org (a site provided by the Public Utilities Commission of Texas), entering my zip code and preferred contract term (12 months) and then reviewing the resulting rate offers.  That list of rates shows the retail electricity provider (also know as "rep"), term, cancellation charge and special notes.

In case you haven't shopped for rates before, the information you'll need to review is contained in what is called an "Electricity Facts Label" document. Each rate offer will have one.

Clicking the document link will take you to a standard outline with what's behind that rep's offer.

From there, everything I really need to know is in the first section, conveniently labelled "Electricity Price".

The monthly electricity price contains a few key areas that makes comparing rates between reps fairly simple.  One is the "Base Charge", which is really an amount that allows the rep to guarantee that they earn at least that much from the customer.

However, it doesn't mean much unless combined with what is called the "Energy Charge". Unlike the base charge, the energy charge is dependent upon the amount of electricity that is consumed each month.

Lastly, the "Transmission and Distribution Surcharges" (also known as "TDSP", which is Oncor in my example) may be broken down into two parts:  A flat rate amount and a rate, similar to the energy charge, that is based on my usage each month.

For me, since I try to conserve power as much as possible, I go for offers that have the lowest energy charge in addition to a zero base charge.  If my usage was relatively and consistently high, I'd probably go with a $5 or $10 base charge if it was with a much lower energy charge.

On a side note, notice that average prices in the offer are listed from 500 up to 2000 kWh.  You'll need to know your average historical monthly usage pattern in order to give relevance to those numbers. No worries otherwise as you can take your January and August bills (since those are probably worst-case) and, using those consumption amounts, bounce them against the average rates from the offer.

Outside of the base and energy charges, there are a few "gotchas" that are not clearly explained, but I'll cover those in another post.

In the meantime, I'll keep shopping and reveal my rate choice soon.

Milestone

This is my first blog, site and post. Ever. Now saved within the depths of Google's server farm caching mechanism for the rest of internet time.

Ok, with that out of the way, my name is Jim Lertdilok and this will be my place on the web to accomplish a few things:
1) Write about a few of the things that I like
  a) Energy industry stuff (my career niche, specifically power and utilities)
  b) Making things in and around my home more efficient, with the goal that it will save me something (money, time)
2) Practice writing (my wife's suggestion)
3) Learn to spell check (and to check the spell check... for example, has anyone ever had issues with the iPhone's auto correct?)

Other than that, I appreciate any and all input that you can provide.

Cheers and have fun reading!