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How to Understand an Electricity Facts Label

Written by Caitlin Ritchie

Edited by Hannah Hillson

Last updated 08/12/2022


Martin Prescott/E+/Getty images

 

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What is an Electricity Facts Label?

An Electricity Facts Label — often shortened to EFL — is a document provided by an energy provider that breaks down the details of an electricity plan. This is the most important document to review and understand before signing up for an energy plan.

Electricity Facts Labels include important information about:

  • The average price per kilowatt-hour (kWh) based on monthly energy usage
  • Usage credits for electricity
  • Delivery charges from the utility company
  • The length of the plan’s contract
  • Early termination fees
  • Percentage of renewable content in the plan
  • Contact information for the provider

EFLs are important, but they can seem confusing if you’re new to shopping for an energy plan or are unfamiliar with deregulated energy. SaveOnEnergy.com® will walk you through an Electricity Facts Label and provide visual examples to help you make the most informed decision for your energy needs.

Where to find an Electricity Facts Label

Finding a plan’s EFL can be tricky if you don’t know where to look. Here’s how you can find the Electricity Facts Label on the SaveOnEnergy marketplace.

Step 1: Enter your ZIP code above and we’ll show you plans available in your area. This is where you can compare available energy plans and providers in your area. 

Step 2: Once you’ve found an energy plan that you’d like to learn more about, click the “Plan details” below.

Step 3: From there, you’ll find a dropdown menu with details of the plan, including “Plan documents.” The first option under “Plan documents” is “EFL,” which will open the plan’s Electricity Facts Label in a new tab.

The next section of this guide will explain how you can review and understand the information in the EFL. 

How to read an Electricity Facts Label

Below you’ll find a sample Electricity Facts Label from one of 4Change Energy’s plans. The EFL for your plan may look slightly different from this sample, but should include the same information in a similar format. We’ll break down each section of the Electricity Facts Label and explain what the numbers and information mean.

EFL by Save On Energy

1.     Average Monthly Use

This row shows three numbers — 500 kWh, 1,000 kWh, and 2,000 kWh. These are usage tiers, which represent how much electricity your household consumes each month. If you use 500 kWh, you will fall into the first usage tier. 1,000 kWh is the second. 2,000 kWh or more is the third. You can check your previous energy bills to estimate how much electricity you normally consume in a month, or visit the SaveOnEnergy usage calculator to get an estimate. The usage tiers tie into the next section. The Public Utilities Commission (PUC) in Texas mandates providers show their electricity rates in these three usage tiers. 

2.      Average Price per kWh

This row will normally show three prices per kilowatt-hour lining up with the Average Monthly Use tiers. This section shows you the rate for the usage tier that you fall into in Section 1. Occasionally, the usage tiers will charge the same rate per kWh. The average price per kWh factors in the energy charge, other fees, and bill credits to provide this average estimate for each usage tier. We’ll explain this in more detail below.

3.     Base Charge

This is a set amount each month that covers operational costs and should not change during your contract. In this example EFL, the base charge is $0, although that is not always the case with other plans. 

4.      Energy Charge

This section shows you the default rate the provider charges for this plan. We’ll explain why this is different from the Average Price per kWh (Section 2) below.

5.      Monthly Bill Credit

This section displays any bill credits you will receive with this plan. Usage credits for electricity are usually per billing cycle and are most commonly applied if your usage falls into a certain range. That range will also be noted in this section. In this example, there is a $100 bill credit each month if you use at least 1,000 kWh.

6.      TDU Charges

The TDU (sometimes called TDSP) is the utility company in your area. In this EFL, the utility listed is Oncor Electric Delivery. The utility is responsible for delivering electricity from the provider to the consumer and restoring power when there is an outage. Because the utility delivers electricity and maintains power lines, it charges consumers each month for its services. These charges will vary based on location and utility. There are two TDU charges — one is a fixed charge per billing cycle ($3.42 in this example) and the other is a usage charge per kWh that you consume ($3.8907 cents per kWh in this example). 

7.      Type of Product

This section states the type of plan, most likely fixed rate, variable rate, or indexed rate. SaveOnEnergy can help you learn more about the different types of energy plans and the pros and cons of each type. This example EFL is for a fixed-rate plan.

8.      Contract Term

This section outlines how long this plan’s contract will last. The most common contract lengths are 12, 24, and 36 months. In this example, the contract for this plan lasts 12 months.

9.      Do I have a termination fee?

This portion of the EFL notes whether the provider will charge an early termination fee if you cancel your contract before it ends. Most providers will waive this charge if you are canceling your service because you are moving to a new home. This is an important section to note when searching for an energy plan. Some EFLs mention a flat cancellation fee, normally between $100-$250. This example plan, however, charges $20 for every month left on your contract.

10.    Can my price change during my contract period? If my price can change, how will it change and by how much?

This section will usually begin with a simple “Yes”. Even if you sign up for a fixed-rate plan, your total rate could change throughout your contract because of fluctuations in utility fees, regulatory charges, or local government taxes.

11.     What other fees may I be charged?

This is where you may find information about other monthly fees, deposits, or payments that you could be charged. The provider may direct you to the Terms of Service document. We recommend always reading the Terms of Service before signing up for a plan to make sure you are aware of the full list of fees and charges that you could encounter with a plan.

12.     Does the REP purchase excess distributed renewable generation?

Some consumers have power-generating equipment like home solar panels or wind turbines. This section notes whether the provider will purchase extra electricity that the consumer generates and does not use, similar to a net metering program. If the provider does purchase excess renewable energy, you could receive credits for the electricity your system produces and sends to the power grid. If the provider does not participate, you cannot receive those credits from the provider. This is an especially important section for consumers who own a solar panel system.

13.     Renewable Content

Here you will find the exact percentage of renewable energy in the plan. If this is a green energy plan, it will say 100%. Every energy plan in Texas is required to have at least 6% of renewable energy sources in the mix. This example notes that the renewable content will either be 6% or 100%, depending on whether you choose a renewable energy option for this plan.

14.     Statewide average for renewable content

This section notes the average percentage of renewable energy included in electricity plans. In Texas, for example, the statewide average is 25%.

15.     Contact Information

The EFL will end with contact information so you can get in touch with the provider. Remember — the provider you choose is not responsible for restoring power when there is an outage. If you experience an electrical outage, contact your utility company instead.

How to calculate the average energy price per kWh

Providers often put their plans into a tiered-rate structure, which designates different energy rates for three tiers of usage. For example, a plan may charge one rate for the first 500 kWh you use in a month, but a different rate for every kWh more that you consume.

These three tiers are normally shown on the EFL as 500 kWh, 1,000 kWh, and 2,000 kWh. On the SaveOnEnergy marketplace, we show the rate for 1,000 kWh of usage. At the top of an EFL, you’ll find the average price per kWh for each tier. This average price includes the base charge, utility charges, and other fees that go into the total cost of electricity. It also factors in bill credits for plans that offer them.

In the example EFL that we show above, the three usage tiers look like this:

500 kWh1,000 kWh2,000 kWh
25.3 ¢14.9 ¢19.8 ¢

 

The actual rate for the plan is noted on the EFL in the Energy Charge section. In our example EFL, the energy charge is listed as 20.715 ¢ per kWh. Some math is required to get from the Energy Charge rate to the Average Price per kWh rates. Use this formula to understand how providers calculate the average price per kWh.

Energy Charge + Per-kWh Utility Fee + [(Per-month Utility Charge + Base Charge)/Usage]

Let’s use the sample EFL above as an example. This is the information we will need from the EFL. 

  • Energy charge: 20.715 ¢ per kWh ($0.20715)
  • Per-kWh Utility Fee: 3.8907 cents per kWh ($0.0389)
  • Per-month Utility Charge: $3.42
  • Base Charge: $0
  • For this example, we’ll assume you use 1,000 kWh of energy in a month.

$0.20715 + $0.0389 + [($3.42 + $0) / 1,000]
$0.20715 + $0.0389 + $.00342 = 24.9 cents per kWh
$0.249 X 1,000 = A bill of $249

This plan offers a $100 bill credit when you use 1,000 kWh or more. This is also factored into the table at the top of the EFL. The credit brings the estimated average monthly bill down to $149. 

$149 / 1,000 kWh = An average electric rate of around 14.9 cents per kWh, which is what is shown for the 1,000 kWh usage tier at the top of the EFL.

Why the Electricity Facts Label matters

When shopping for an energy plan, the Electricity Facts Label is the most important tool for understanding a plan’s energy rate, fees, terms and conditions, and more. Knowing your average electricity usage in a month is another crucial piece of information to have on hand because it will help you choose a plan that works for your usage tier. Refer to your energy bill to find your average monthly usage.

If you have questions about a plan’s Electricity Facts Label or would like to discuss your energy plan options with someone, call the number on this page to speak with our energy experts.

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