Until now, Dallas residents haven't had to think about how to get electricity. It always came from TXU, a stodgy monopoly that was regulated by the state. All that changed on January 1, when new state laws took effect and opened up the retail energy market to other companies. Those companies are now competing with TXU for customers in Dallas.
The theory behind deregulation is simple. The new companies, known as retail electric providers, or REPs, will now compete against each other to sell you electricity, much the same way grocers compete to sell you pickles. The competition, we are told, will mean lower prices, more variety and better customer service. For the environmentally conscious, deregulation also means a new chance to be "green" by choosing less polluting sources of power.
So, now you have a choice. You can ignore the entire matter and continue getting your electric bills from TXU, or you can go shopping for cheaper energy.
The electricity market may be unfamiliar terrain to most, but the Texas Public Utilities Commission is assuring us that the process of finding a new REP is akin to "shopping" and should be "easy." It says so right there on the agency's Web site, www.puc.state.tx.us, which has been updated to include a guide for those brave enough to make the journey.
To begin, I click on a box on the PUC's homepage: "TEXAS ELECTRIC CHOICE. The power is yours. Use it." Two clicks later, I enter my ZIP code and retrieve a list of nine companies serving Dallas, including TXU. Next, I print their "worksheet," which consists of 11 questions to ask the company representatives.
For starters, What is their price "per kilowatt-hour?" Is that price "fixed," and is a contract required? The price per kilowatt-hour seems understandable--the lower the better. If Tom Thumb, for example, sells potatoes for 38 cents a pound, but Albertson's sells the same potatoes for 30 cents a pound, go to Albertson's.
The first company to call on the list is The New Power Co., and it's a spawn of Enron, one of several energy giants that successfully lobbied Texas legislators for deregulation.
New Power--like many of the other REPs--is essentially a middleman. It buys power from coal and nuclear plants, among other sources, which is sold on the open market, where prices fluctuate. As part of deregulation, TXU, which still controls everybody's meters, is for now required to charge no more than 8.25 cents per kilowatt-hour. That's called the "price to beat." Several years from now, TXU will be free to charge whatever rates it wants under the new law. In the meantime, the price-to-beat clause gives the new companies time to undercut TXU and lure customers.
On the other end of the line, Josh is, like, you know, pretty straightforward. Their rates are 7.1 cents per kilowatt-hour, plus a monthly service charge of $6.99, and the prices don't fluctuate with the market. I assume this means I have to sign a contract, which guarantees that price for a certain amount of time and, in return, requires payment of a cancellation fee if I leave New Power before the contract expires. Josh has news for me.
"We do ask that you stay with us for a year, but I mean there's no cancellation fees," he says. No catch? Josh also says there are no other fees whatsoever, including a "switching" fee. Are there any incentives, particularly environmental ones, that make New Power the best choice? Josh says the company tries to use wind-generated power "as much as we can."
And how much is that?
"We have several different companies we purchase our electricity from, such as Duke Energy, El Paso, and there's some other ones. I can't think of their names, but we buy from, you know, so many companies that, you know, it's not necessarily all the companies use green energy."
"Some of 'em might use nuclear, coal. Stuff like that."
Can you say what percentage of your electricity is green?
"No, ma'am. I can't," he says. "The majority is green energy."
Their real advantage, he says, is their lower price per kilowatt-hour. All I needed to do was ask Ms. Walker at Reliant how much that company charges per kilowatt-hour before I saw that kilowatts are not potatoes.
"It depends on where you're located. Where are you located?"
"Dallas," I say. As I wait for her reply, I hear her flipping through pages of what I presume to be a pitch sheet.
"OK, per kilowatt-hour you have a choice of two different rates. Um, 7.3 cents," she says, stopping to consult her paperwork. "I mean, yeah, 7.3 cents per kilowatt-hour or 8.3 cents. Let me explain the difference."
"It would be 7.3 cents per kilowatt for what's called the reliable rate. And that's just for just regular utility service. The other one, the reason it's a bit higher is 'cause it's the renewable rate, and what that means is that it is for the environmentally conscious customers; it's basically saying that any electricity you use per kilowatt we'll put that back into the electric grate system through the wind plants, which means it, you know, has no emissions in terms of toxic or any kind of, you know, environmental issues."
Kilowatt-hours weren't much easier elsewhere. First Choice Power claims it provides an 18 percent discount under TXU--no matter which one of the four different rate categories chosen. At Utility Choice and Cirro, the rates varied based on usage. For example, Cirro charges 7.265 cents per kilowatt-hour for the first 1,000 kilowatts and 6.31 cents for every kilowatt thereafter.
As the day approaches evening, I begin to understand why the worksheet includes a question about signing a contract. The only way you can get a fixed monthly rate is if you sign a contract that locks in that rate for the term of the contract. Otherwise, your monthly rate is "variable," meaning it'll jump around like a bucking bull, as the woman from ACN Energy explained.
"[The rate] is based on the wholesale market conditions, so every month we will have a different price," she says. "You just have to compare, you know, the rates. We do not guarantee a specific savings."
In other words, for me to know if the rate they're charging is competitive, I'm going to have to tune into CNBC and start tracking energy futures. The other option is to hire a lawyer, who'll be needed to translate the contracts that the companies offering fixed rates require. These contracts, which can be downloaded from each of the companies' Web sites, consist of dozens of pages of fine-print legalese.
The worksheet is also designed to prevent customers from being socked with hidden fees by having them ask about several fees by name, including a "switching" fee, a "cancellation" fee and a "membership" fee. It wasn't until I called the third company, First Choice Power, that I realized the switching fee is another name for a deposit. Not only that, I learned that this company will decide whether to charge me a deposit by looking up my credit rating.
The PUC contends that the REPs are not allowed to discriminate based on consumers' income, but the agency has evidently made a big exception when it comes to deposits.
"We have to run your credit for that," the First Choice representative tells me. Get a good enough score on your credit report, and no deposit is required.
As I make my way down the calling list, I discover that all the companies except one require credit checks now or perhaps in the future. If your credit is really bad, some companies will reject you altogether.
I call back the first two companies on the list, determined to ask them specifically if they require a deposit and, if so, how much it is. This is when the "easy shopping" experience began to resemble the interactions I'm used to having with utility companies: Straight answers weren't forthcoming.
The New Power representative couldn't answer the question, except to confirm that they run a credit check.
"They just run a credit check to check," he says, "but it's not really referred [to as] that. They're just making sure that you don't, you know, owe a lot of money. That's basically it."
Initially, he insisted that they don't charge a switching fee, but when asked if they charge a deposit he puts me on hold. After a short wait, he returns to the line and says, "I'm not pretty sure if they charge a deposit."
At Reliant, the "customer service" representative had to transfer me to the credit department. The woman there confirmed they would run a credit check.
"If it [is an] excellent credit score, then the deposit can be waived," she says. "If not, then those are charged a deposit."
Although the customer service lady said their deposit "runs around $200," the credit lady said she couldn't say exactly what the deposit would be until after I set up an account with them. I beg the woman to tell me the range of the deposits. She tells me $200.
"Is that the most?"
"That's the least," she says.
She then started laughing when I asked her what the most was.
"The most? It depends on if they have a service with someone else and never make a payment, then it's going to go up to seven or a thousand dollars."
Seven hundred or a thousand dollars?
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After a day on the telephone, I dust off a calculator and sit down with a copy of my February TXU bill, which shows I used a total of 1,539 kilowatt-hours. I use this number to calculate what the other companies would charge based on the rates I was quoted on the telephone, along with their monthly customer service fees. I tacked on the $1.23 in city taxes I paid on my February TXU bill.
In the spirit of full disclosure, I confess that I failed introductory algebra in college. Twice. Nonetheless, my final tallies were no surprise. The most expensive company was Green Mountain, which admits it's more expensive because it uses only wind-generated power. With them, my bill would have been $133.92 for the month.
And the cheapest company? The winner is TXU, which by my calculations should have charged me $111.31. Of course, that does not explain why they charged me $124.07. But the truth is, I don't want to know. In fact, I'm sorry I even asked.