Electric Company Thievery So Appalling That It Inspired Me To Write Again

We spent last Saturday with some friends at their house, the kiddos sports games rained out, the adults couched out watching TV shows and the kids playing. Good times and a well deserved recharge. As we were talking, somehow the conversation turned to costs and saving money and, specifically, electric rates. I asked who their provider was, and when told TXU my immediate reply was, “You are paying too much!” They were a little skeptical at the boldness of the claim, especially with my not know what plan or rate they were subscribed to. Being in rare form, I asked to see their electric bill. At first I was shocked, but the more I reflect on it, the angrier I get. I’ll get to the details below, but in 15 minutes time, I was able to show them how to save $100 each and every month (if their electricity use stays constant). What started to really make me mad was this kind of money can really affect a family’s budget! An extra $100 a month can mean the difference between gymnastics lessons or not, or saving for retirement or college, or so many other things that two overwhelmed parents are struggling to provide…what would you do with an extra $100? All because the company that they choose to provide electricity can get away with charging shamefully high rates for their ‘service’. Ultimately, we lowered their kwh rate from 13.6¢ to 8.3¢, and at their 2,000 kwh per month usage that will result in about $100 savings. And it was easy!

Some background…In Texas, significant portions of the state are competitive zones were residential customers can select their electric provider. In reality, this retail company is merely a billing and marketing company, and if it is run well, with a little bit a of commodity purchasing/forecasting capability. The actual “poles-and-wires” company is a separate entity and still the same for everyone in the area, and all of these are provided power by the power generator companies that sell power to the grid.

So customers are supposed to select a provider in a rational way, right? Based on price, benefits, value, etc., right? The problem is that is not happening. The company that was the only choice before the deregulation came into being continues to maintain such name/brand recognition that its customers are harmed by its predatory pricing. Don’t get me wrong, I am pro-business, competitive advantage, exploit your strengths and minimize your weaknesses to make money, but this level of price differential is so great for literally no benefit that I feel confident in labeling it shameful. It is the SAME electricity. It is the same company that you call if power goes out (Oncor in our case). It is the same electric meter. It is even the same meter reader! The only things that change are the price that you pay and where you send your check. But many YEARS after deregulation has been put into place, something like 65% of all the residential customers still use the pre-deregulation (is that a word?) company. Personally, I have changed electric companies at least 5 times. Each time it was to get a little bit better rate than I was getting at the time. This resulted in a monthly savings of $10-$20 each time. No big deal, but I wasn’t going to turn it down either. This was my first experience with the sheer magnitude of the difference between the old incumbent company and the really competitive companies that are working to earn business in a competitive market.

To offer an analogy, it would be similar to purchasing a new Chevy Suburban. You go to dealer A that just opened a couple years ago (new kids on the block, but not brand new), you negotiate and get a good deal, let’s say for $41,500. Then you go to dealer B, and this dealer has been the only dealer in the area for the last 100 years. You sit down to negotiate a price on EXACTLY the same vehicle and they won’t go less than $68,000! Because no one knows that the Dealer A exists, or where it is located, or perhaps there are (untrue) rumors that if you buy from Dealer A and something breaks that the warranty would be voided. Which dealer would you by the car from? Really?

So, how did we do it? Easy! We got a copy of their last electric bill. It has all the information that you need. What rate you are paying now, service address, ESI ID (the ERCOT identifier number), on the bill that we had it even had the date that the existing contract expires. That is right! They were under a contract with TXU, it had a $100 cancellation fee, but when you are going to save $100 a month the choice is to pay TXU $100 too much for one more month (via the cancellation fee) or for 8 more months (through the end of the contract)? It is a no-brainer to take to cancellation fee and get out of the overpriced monthly screw-job. The funny thing is that when we called the TXU customer service line to inquire about the cancellation fee, we were initially told that is was $200. I was looking up the plan on www.powertochoose.org while the phone call was happening and saw that the plan that they were on showed a $100 cancellation fee. Hmmm. Honest mistake, perhaps, or could be a crafty tactic to dissuade those that are calling in asking about cancellation fees--you decide. When confronted with the web information, the call center rep did confirm that the fee was in fact only $100. Thank you, Goodbye.

Next, we went to Champion Energy’s website to sign up for a switch service. We could have chosen any of the companies at www.powertochoose.org, you simply enter your zip code and then you can sort and filter the offerings by the contract lengths (0-36 months typically), company, or renewable content. The site allows easy comparisons across offerings that the providers have and it is generally easy to navigate. We chose Champion because:

1. It was the company that I was using currently, and honestly, that personal recommendation coupled with the fact that I was showing them how to save so much per month was 90% of what set their mind at ease. Having someone there to walk them through the process and answer the questions, but that is why I am writing this account, because it is not hard or complex or scary--your lights don't go out, you just switch, save, and start sending the check to a new address when the bill comes.

2. It was the first company that I ever renewed my contract with when it expired (they managed to stay competitive a year later)

3. I have had ZERO billing issues with them. Remember above? You are selecting a billing and marketing company, after I have selected you as my provider I no longer need the marketing functions…

4. Champion had sent a “Refer-A-Friend” program link that offered the person (and me) a signup bonus of $25. This helps to offset the $100 cancellation fee sting.

At Champion’s website, we entered their zip code in the box in the Texas section and hit the continue button. On the next page, the correct Poles and Wires company was already selected by default. We typed in the referral code in the Referral ID section (the second section, the first section is for promo codes and Agent IDs) and again in the Confirm Referral ID box. This will allow them to get the $25 bill credit after 60 days! Then click the Get Rates button and the various plans that are available appear. I explained the reasons why I picked the 12 month plan, happy medium between locking in a good rate for a while and feeling locked into a long term plan if the company starts to perform poorly. They selected a 12-month plan and clicked the Enroll Now button.

This brings up the “What’s Your Address” page. Here you have a choice between entering your ESI ID number (if you have a past bill handy) or entering your actual address and performing a lookup. I like the ESI ID route better, as it is one less search that can get messed up and we had a copy of the bill. So we entered the ESI ID, clicked Find Address, and verify that it was the address that we wanted, continued on to the billing information and tada! They were set up.

The bad is that the $100 cancellation fee will have to be paid. But after that, it is all positive! Savings of about $100 each and every month! Money that they can use to better affect their lives and their family. And it does not cause any sacrifice for them. They do not have less features or less benefits, the power doesn't even flicker at the time of transfer (usually at the next meter read)…they will just more money to use (enjoy) somewhere else. Try it! I dare you! If you want to go with Champion as well and want a referral code for a $25 savings, leave me a comment and I will get you setup. If you want to try another company, go for it! If you have other questions, let me know, like I mentioned above, I have tried several of the companies. Good luck and most of all ENJOY the things that you are able to do with the money saved!!!

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