About TXU, Energy, and You

An Editorial by Jack Andrews, Chimneyhill Townhomes resident and webmaster of the Chimneyhill Townhomes community web site.

Many long-time TXU customers have become disillusioned, disappointed, even angry lately over the high rates, stories of rate abuse and bullying threats delivered by the long-time Texas power company. Rumor and hearsay are to be avoided here, but the fact remains that many people don't understand what's going on and what they can do about their own electric service.

In 1999, the passage of Senate Bill 7 deregulated the electricity industry in Texas and created a new multi-billion dollar market. On January 1, 2002, the market officially opened for competition, and Texas consumers could choose which electric provider they buy their electricity from for the first time. The legislators wisely built in a two year period for the State of Texas to prepare the controls needed to avoid the disasterous pitfalls of power deregulation experienced by California.

• Generation, or the production of electricity, is deregulated. Generation plants across the state transmit electricity into the distribution network called “The Grid,” which is managed by the Electric Reliability Council of Texas, known as ERCOT.
• Retail Electric Providers, called REPs, are licensed by the state to sell electricity to Texas consumers from “The Grid.” These companies include TXU Energy, Reliant Energy, CPL, WTU, First Choice and Stream Energy, Ignite’s parent company. There is no difference in the quality or available quantity of electricity.
  
  
  
  
• However, the actual delivery of electricity across poles and wires to your home or business continues to be regulated. Delivery, including maintenance and emergency response, is
  still provided, just like before, by one company in each Service Area called the Local Wires Company.
  If there is a power outage in your neighborhood, the Local Wires Company (TXU Electric Delivery*, Centerpoint, AEP Central, AEP North and Texas New Mexico Power) will restore power regardless of which electric provider you buy your electricity from. So, with deregulation, customers enjoy both a competitive market and dependable service. The diagram further illustrates this relationship.
  
  
  
  *TXU Electric Delivery is NOT owned by TXU Energy, however the name is confusing customers who see the trucks and assume TXU is the provider. E.R.C.O.T. is currently planning a name change for this provider under pressure from other Retail Electric Providers in North Texas.

Since January of 2002, many new Retail Electric Providers have have been attracting customers away from the big power companies, offering lower rates for the same electricity. For us as businesses and residential customers, the only major difference is the company we pay. That's it. Except---

Lower rates now, may not mean lower rates later

The only way to be sure of accurate rate comparisons is to compare the companies' FACTS LABELS. The Facts Label is a legal form required by the State to disclose accurate rate information to the consumer. In most cases, rates vary depending on what the Provider must pay for the power. Some companies' rates fluctuate more than others. Reading the Facts Label will reveal how each manages their rates. For example, one company may display or advertise a very low rate, but the Facts Label reveals that the peak demand rate is much higher on month-to-month billing plans. So, like me, you may not want the cheapest. You want the best value.

The power of an electric rate contract

We as the electric customer must decide if we believe rates will rise or fall in the next 12 months. One and two year contracts will lock in a rate for up to five years depending on the company. However, there are stiff penalties for cancelling a contract -- usually about $250, so if rates drop below your contract rate, the drop would need to be significant to justify the cancellation. You should ask your electric provider about the details of their contract rates before making a commitment.

Another deterrent to switching can be what is called "average billing". The electric provider evens out your monthly bills by increasing the amount you pay in the low months by taking off the amount you would pay in the peak months, so your bills are more even. There are periods during the year when your real balance evens out, so you could switch without having to pay off a balance. You should ask your current electric provider for further information if you're not sure, before you switch. Other electric providers will not have access to your records.

What happens when you switch?

The process starts by filling out a form, usually availabe online, at the web site of the electric provider you choose. Once your information is submitted, your current service and your credit are varified (see note at the bottom of this page). Your application is also submitted to ERCOT for further varification. Your meter must then be read to begin your service. This process can take up to 30 days in some cases. You will receive a final bill from the provider you are leaving and you will receive a notice when billing begins from your new provider. You, by law, will receive a quality control call to be sure you were not switched against your will and that you were treated fairly and courteously by the new provider's sales rep.

Last, you will receive a notice from your current provider stating that a transfer of your service has been filed. It will ask you to call ONLY if you DID NOT authorize a transfer. Otherwise, just ignore the notice.

Compare rates and Facts Labels: www.powertochoose.org

The Public Utility Commission of Texas has provided a web site where you can enter your ZIP code and compare electric providers serving your area. The web address is: www.powertochoose.org

Switching is easy.

If you have a computer, which obviously you do or you probably wouldn't be reading this information, switching is easier. By law, you are required to submit your Social Security number and your ESI ID number, which is printed on your electric bill.  Or you can contact your current electric provider.

Last year, 2006, my daughter and mother of four living in Allen, Texas, called me and told me she had just started as a representative of a new electric provider called STREAM ENERGY and was now working part time for the company's wholly owned marketing arm, Ignite, Inc.

She asked me if I would do her a small favor and be her electric customer. My guard immediately went up as I said lovingly, "UH UH! NO way. I am not switching. I have computers and a business here and I don't want any glitches." She said, "Dad, won't you do it just to help me out?". "No, Honey, I won't. I'll do anything else, but not that!"

Well, she backed off this old curmudgeon dad of hers for a couple of days. Then, she explained to me how simple it was to switch as I have explained above, and that I would save some money on my electric bill. So, I switched for her sake. She also shared a little with me about how STREAM markets there service, how she would be making money off others' electric bills, and something about residual passive present and future income, but I once again I put her off. Until recently.

Thank you for visiting. Please come back soon.