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Electricity Rates As Low As A Penny?

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NORTH TEXAS (CBSDFW.COM) - Summer is just around the corner, and with it rising temperatures. And as temperatures rise, so do electric bills.

If you're shopping for a new provider, though, beware plans advertising rates as low as a penny. The 1 cent plans appear prominently on the state-run website.

"If I go there and I see the first 3 to 4 plans all have 1 cent, I probably think to myself, 'Great! Sign me up!' " said G.T. Barden.
He built a spreadsheet to figure out what the best option would be for his Highland Park home. Those penny plans weren't it.

"That 1 cent is only if you use an exact number of kilowatt hours," he said. "If I use 1,000 kilowatt hours in a month, my bill could be $11, but if I use just one less, 999, I'm going to be paying $100."

Even the Public Utility Commission of Texas was surprised to see what its own website is showing.

"It has come to my attention that some (electric companies) may be working the system on Power to Choose," said chair Donna Nelson at a February 11 meeting.

The website most prominently displays what plans charge when a customer uses 1,000 kilowatt hours, so it's likely not a coincidence some companies offer you a discount or credit for using just that much.

The benefit tends to decrease with every extra kilowatt hour used over that and often disappears altogether if you use more than 2000 kilowatt hours.

Check out the graph on this Electricity Match blog to see how that plays out.

The PUC has called for a review of its website as well as the companies advertising suspiciously low rates.
Infinite Energy's COO, Steve Madden, said his company's one cent plans are a response to consumer demand.

"If they didn't like them, we wouldn't offer them," he said.

Madden argued customers who consistently fall within a certain range of kilowatt use can get an "extremely competitive rate".
Consumer advocate, Jake Dyer with the Texas Coalition for Affordable Power ( says that is true.

"But, you have to be extremely vigilant, and I think that's a lot to ask for most folks who just want to flip a switch and have their lights go on," he said.

Electric companies, he believes, are gambling most consumers won't be getting that one cent rate.

"No retail provider can offer electricity at one cent or two cents for any prolonged period of time without going broke," he said.

Dyer still considers the Power To Choose website a valuable resource, but urges customers to read the fine print, often found in the "Fact Sheet" plans are required to provide.

An easier option, though, he said, may be to filter out some of the deceptively low rates.

When you visit Power To Choose, enter your zip code, and hit "view results'. Then, scan the left side of the screen for the "new feature" under "Pricing and Billing" and select "plans without minimum usage fees/credits".

When you refresh your results, the remaining plans will likely have more upfront pricing. Barden, meanwhile, said he keeps his rates low by constantly switching to take advantage of promotional rates. His latest bill was $25 and during the summer he's been charged as little as $70.

That strategy, though, requires him to change plans often, usually every 3 to 6 months.

(©2016 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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