Firms sift out power prices

Cottage industry picks providers to ease confusion

When Texas deregulated electricity markets 16 years ago, the Public Utility Commission created the website Power to Choose to help consumers through the power buying experience. But what was promoted as an easy, free way for Texans to pick electricity providers has turned into a such a complex and confounding experience that it is spawning a cottage industry to help consumers navigate the scores of companies and hundreds of plans available.

At least five companies in Texas are providing both free and paid services aimed at helping consumers in Houston and other deregulated markets decipher confusing electricity offers such as free nights and weekends, multitiered pricing plans, and credits for high electricity use.

The companies have built computer algorithms that try to ferret out the best deals based on factors such as past electricity consumption, home size and the number of people living there. In some cases, it’s just a matter of plug-

ging in your monthly electricity into a website calculator. Others provide more comprehensive services, charging a monthly fee to advise customers which plan will save them the most money and then monitor the market so if prices fall, consumers can switch.

This kind of hand-holding is akin to car buying services, which save customers the time, energy and aggravation researching models, doing comparison shopping and negotiating prices. But unlike cars, there’s no difference in the electricity provided by different retailers, making the emergence of these power buying services a sure sign of the complexity of the system.

“The third party guys demonstrate the consumer is getting ripped off by the Power to Choose artificial configuration that the Public Utility Commission has rammed down the throat of Texas consumers,” said Ed Hirs, energy economist at the University of Houston.

The Public Utility Commission recently recognized the shortcomings of Power to Choose, with chairman DeAnn Walker criticizing retail electric providers for misleading pricing plans. Those plans offer rockbottom rates at 1,000 kilowatt hours, but if consumers use just one kilowatt hour more, the price per kilowatt hour can jump as much as 10 times.

Andrew Barlow, spokesman for the Public Utility Commission, said the buying services are a welcome addition to the competitive market, rejecting the idea their emergence represents flaws in the workings of power deregulation.

“We think it’s great these companies are in the game of helping consumers,” said Barlow, who likening electricity buying services to subscription services such as Consumer Reports, which helps consumers find the best deals on a wide range of products. He added that power buying services compete against each other, adding to the vibrancy of the market.

‘Who has the time?’

Some analysts, however, have suggested that it’s time for the commission to revamp Power to Choose by making it more like shopping for Medicare coverage. Seniors, for example, can put in the names of the drugs they take, and the health care website will tell shoppers which Medicare plan covers those drugs at the lowest cost.

As it now stands in Texas, private companies have stepped in to do the calculations to help people buy electricity.

Jesson Bradshaw, a power industry veteran, saw an opportunity when his friends and family asked him which company they should sign up with for electricity. He sent them to Power to Choose, but he quickly heard complaints.

“I saw how confusing it was,” said Bradshaw, who worked as a power trader and owned the retail power company Amigo Energy until he sold it to Just Energy in 2011.

Four years ago, he and a partner launched the buying service Energy Ogre. The company charges customers $10 each month to find the lowest price plan and monitor rates to see if it makes sense to switch mid-contract. It doesn’t take commissions from power providers.

Bradshaw said his business is not exactly popular among the retail providers, many of which bet that customers won’t shop for better rates when contracts expire.

“They don’t like us informing the customer,” he said. “If there is a better rate, we move them. We don’t care which provider.”

Mark Axford of Sugar Land signed up with Energy Ogre about three years ago. Axford said the company switches electricity providers at least once a year and makes sure Axford and his wife do not get hit with penalties. The monthly fee is well worth it, he said.

If you want to save, you have to shop, said Axford. “But who has the time to keep shopping for electricity?”

The trade association for retail electricity providers in Texas said it recognizes that the buying services may help customers sort through offers. But it’s important to note, said Julia Rathgeber, president of the Association of Electric Companies of Texas, that these companies are not subject to oversight by the Public Utility Commission. It’s still up to consumers to decide whether plans are right for them, she said.

Real Simple Energy launched its calculator earlier this year. It’s free, but customers who want the company to monitor the dates their power contracts expire — so they don’t get hit with higher prices —and the accuracy of their bills, it’s $9 a month. The company’s calculator makes recommendations after asking questions about square footage, the number of residents, the number of thermostats and, if available, a year’s worth of electricity usage.

“This is what Power to Choose should be,” said founder Trent Crow.

Look at the tiny print

Adding to the confusion for buyers are the dozens of brokers that receive commissions from retail electricity providers for signing up customers and operate websites that are more perplexing than Power to Choose. Many display only the energy portion of the price in big bold type, excluding the charges from distribution utilities such as CenterPoint Energy. The total price is found only in tiny print. And consumers don’t necessarily get a good deal.

On ElectricChoice.com, a site owned by Eisenbach Inc. of Tyler, the price per kilowatt hour for Discount Power Super Saver 12 was a half-cent per kilowatt hour more than the price for the same plan on Power to Choose. Another plan, Discount Power Green Saver 12, also was halfcent more per kilowatt hour, according to the energy facts label. That’s $5 a month more for households using 1,000 kilowatt hours.

Sandy Eisenbach, founder and managing director of ElectricChoice, said those were pricing errors. The super savings plan was subsequently fixed to match the rates on Power to Choose and the green saver plan disappeared from the list.

But customers aren’t necessarily looking for the lowest price, Eisenbach said. They want good customer service, confidence their provider won’t go out of business and fair rates.

Fred Anders founded Texas Power Guide in Houston in 2016, offering a website that calculates the best plan for customers based on past electricity use. He asks customers for a $10 fee, which is paid on the honor system.

Anders said his business was made possible by the complexity of the rates and rules that go with buying electricity in Texas. He described the market with a term popularized by the comic strip Dilbert, which satirized the modern workplace.

“I like to call it a confuseopoly,” Anders said.