Energy-thrifty consumers pay more for using less
Despite conservation push, some electric plans penalize for low usage
When Chasity Shaw shops for electricity, she knows she’ll have a hard time finding the deal she wants.
Shaw lives alone in a one-bedroom apartment and uses less power than the typical Texan. As a result, she pays a $9.95 penalty fee to her electric provider — every month.
“It’s quite frustrating because we’re told to conserve energy, but it seems as though these companies are punishing us to do so,” Shaw said.
Her retail electric provider, NRG-Energy affiliate Everything Energy, charges a fee when customers use less than 1,000 kilowatt hours of power. For Shaw, that’s every month — even in the summer.
More than 70 percent of electric plans offered in the Houston area contain terms that may penalize customers who don’t use a certain amount of power, according to a Houston Chronicle analysis of more than 300 plans available in early January.
NRG and other companies with plans that include the fees say they offer a variety of products designed to meet the needs of different kinds of customers. They also point out that fixed fees cover-
ing some of their overhead allow them to reduce the rates they charge per kilowatt hour of consumption.
Some plans charge minimum-use fees to customers whose monthly power consumption falls below a particular threshold — usually 1,000 kilowatt hours. Other plans offer credits to customers who exceed a specified threshold of power use.
“The market probably still has a way to go toward rewarding people for using less,” said Troy Donovan, market development manager at Center-Point Energy Services, which runs a website called True Cost that factors the fees into its analysis of electric plans. It is a division of Center-Point Energy, the transmission company that distributes electricity in the Houston area regardless of what retailer sells customers their power.
Anti-conservation
Consumer advocates say minimum-use penalties discourage energy conservation at a time when environmental groups, all levels of government and even electric companies themselves are encouraging customers to scale back on energy consumption.
“These fees often go unnoticed until you really cut back and you realize you still have a larger bill than you expected,” said Jake Dyer, a policy analyst at the nonprofit Texas Coalition for Affordable Power. “It’s bad news for a lot of folks doing their best to save power and save on their electric bill.”
Even customers penalized for using less energy pay for energy efficiency initiatives: A $3.05 fee on monthly bills in the Houston area covers installation of technically advanced smart meters partly touted as energy-saving measures; the city of Houston last year raised residential energy-efficiency requirements.
Only a few Texas areas, including San Antonio and Austin, still have the regulated monopoly utilities that once were the norm. In most of Texas, retail electric companies offer hundreds of rate plans.
In that competitive market, companies structure their rates and fees so they can attract customers and maintain profits. In addition to minimum-use fees, some charge customers for such services as receiving copies of their bills or speaking to customer service agents.
Supporters of the state’s 15-year-old competitive market contend it ensures better prices.
Most plans have fee
But critics say the wide promotion of conservation makes minimum-use fees counterintuitive, and that the array of rate plans fosters confusion among customers trying to navigate the retail market’s complexities.
“They shouldn’t have to do a math calculation or see the fine print to know what the rate is going to be,” said Carol Biedrzycki, head of the nonprofit consumer group Texas ROSE.
The state does not maintain records showing how many customers pay minimum-use fees.
The Houston Chronicle analyzed 309 plans offered to Houston-area customers as of Jan. 6 by 49 different retail electric providers through the state’s online retail electric clearinghouse, Power to Choose.
At least 218 included minimum-use fees or bill credits for customers who exceed a specified threshold of power consumption. At least 34 of the 49 Houston-area providers offered at least one such plan. Minimum fees averaged $10.67, mostly for using less than 1,000 kilowatt hours.
Not all electric providers participate in Power to Choose, and some don’t tout all their plans on the website. But since the state does not maintain records of every provider’s electricity plans, Power to Choose is the closest thing to a comprehensive list of electricity plans offered in Texas, said Public Utility Commission spokesman Terry Hadley.
While the low-use penalties are disclosed in documentation available to customers, some say they didn’t notice or understand them, or couldn’t find plans without them.
When Katherine Taconi moved to a new house in Spring in 2013, she took her builder’s advice and looked for a plan offered by NRG-owned Reliant Energy.
All the options she found included a monthly fee of about $10 for using less than 1,000 kilowatt hours. But since she had no idea how much power she’d use in her new house, she signed up for a Reliant plant.
She wound up paying the fee in 10 of the following 12 months.
“How are you supposed to know that you are a ‘low-user’ until you live in the house for a significant period of time?” Taconi asked.
She since has found a Reliant plan with no minimum-use fees.
“The plans are designed to meet a variety of consumer needs and lifestyles,” Reliant spokeswoman Patricia Hammond said, “and to adequately cover the cost of providing the product that the customer chooses.”
In some cases, minimum-use fees or credits mean customers get higher bills for reducing their consumption.
Houston-based Gexa Energy — which devotes a section of its website to energy conservation tips — offers the “Gexa Choice 6” plan that includes a $60 credit when customers hit 1,000 kilowatt hours a month.
A customer who used 1,200 kilowatt hours — about average monthly use for Texas residences, according to the U.S. Energy Information Administration — would have an electric bill around $78. But if the customer reduced energy consumption by a third to 800 kilowatt hours, the monthly bill would rise about $17 because the customer would lose out on the credit.
Spokeswoman Jo Trizila said the company offers plans to meet the needs of customers at various usage levels.
Penalties often unlisted
The fees are included in a document called an Electricity Facts Label that companies must make available to customers prior to sign-up. But even the names of some plans that charge minimum use fees contain phrases like “green energy” that suggest they’re designed to promote conservation or renewable power.
Houston resident Lauren Lampert, who rents a Heights apartment that’s not even 600 square feet, said she regularly pays the fees, especially during the winter months when her consumption is almost nil. “I don’t really use any electricity — and I get charged a fee, “Lempert said.
Such fees don’t violate rules set by the state’s Public Utility Commission, said Hadley, the spokesman, though he acknowledged they don’t encourage customers to conserve. “It takes some extra calculation to determine if a particular plan is the best value based on their usage and to what extent a fee would apply for them,” Hadley said.
About a third of the Houston-area retail providers the Chronicle examined listed no plans containing penalties or credits based on power use.
TriEagle Energy, based in The Woodlands, charges customers flat monthly fees — in addition to their electricity rate per kilowatt hour — but the fees aren’t tied to power consumption. Consumers are more likely to stay with the company if they don’t get surprises like minimum-use fees on their bills, said Kasey Cline, TriEagle’s director of sales and marketing.
Other retailers, however, say the fees make sense.
Champion Energy Services uses them to cover fixed costs that it otherwise would roll into energy rates, said Brenda Crockett, vice president for market development and regulatory affairs. The company has to pay costs of billing and other services for all customers, she added, regardless of their electricity use.
Other companies echoed that response.
“There’s a cost to cover, whether they’re using 1 kilowatt hour or 1 million kilowatt hours,” said Robbie Wright, a founder of Bounce Energy, which also charges minimum use fees.
That argument rings hollow with Dyer, of the Texas Coalition for Affordable Power. “You don’t pay a minimum-use fee when you step into a grocery store,” Dyer said. “You don’t pay a minimum-use fee when you shop for any other product. Most businesses price their product in such a way that the people who actually buy it will pay for their fixed-cost infrastructure.”
Electric provider 4Change Energy of- fers credits to customers whose usage exceeds 1,000 kilowatt hours. Company president John Geary said the intent is to help offset electricity costs during the most expensive months. No pricing regulations
Texas has a State Energy Conservation Office dedicated to promoting energy conservation. But it has no authority over pricing models, said Lauren Willis, a spokeswoman for the state comptroller’s office, which oversees the unit.
Tonya Baer, who heads the Texas Office of the Public Utility Counsel, tasked with taking the consumer’s position in utility proceedings, urged electric customers to understand their usage history and how a minimum-use fee would affect their bills.
“Yes, it discourages conservation,” she said. “You’re charging people a fee for not using enough electricity.”
“You need to be an informed consumer,” Baer said.