TXU marked an important milestone not long ago. In a press release, the state’s largest electric retailer announced that nearly 100,000 Texans had signed up for one of the company’s free electricity deals.
You heard that right: free electricity.
Under a variety of plans offered by TXU, customers don’t pay a cent for electricity they consume either at night or during weekends. TXU boasts that customers can get up to a quarter of their electricity for free without making even modest changes to their behavior.
But here’s the rub: even with major behavioral changes, these deals probably don’t make sense for consumers. Not only will you probably not save money, chances are you’ll end up paying considerably more.
A quick bit of comparison shopping shows us why.
The state-run powertochoose.com website lists numerous fixed-rate deals with power prices below 9 cents per kilowatt hour. But under its Free Weekends deal, TXU has set the kWh price of power during non-weekend hours at an astronomical 19 cents. That means for five days out of every week, a customer under this plan would pay prices more than double what others pay.
But what about average electricity costs — that is, what if you average the price of power consumed during both weekend and non-weekend hours? Here again, the math doesn’t make sense. According to TXU, the average price of power under the Free Weekends deal is 13.9 cents per kWh. That’s still 50 percent more than other deals commonly available in Texas.
From this we can deduce that the Free Weekend deal might make sense for a weekend home, but even then you’ll end up paying an astronomically high price to keep the fridge cold and to run the AC while you’re away during the week.
The same pattern holds true for TXU’s Free Nights plans. Under these deals, a customer pays nothing for electricity consumed between 10 p.m. and 6 a.m., but then pays a whopping 18.1 cents every other hour of the day. Again, the overall average price of the plan is 13.9 cents, which is more than 50 percent higher than other commonly available deals.
And neither do the Free Nights deals make sense for night owls or folks working night shifts. Remember, if you’re at home sleeping during the day, chances are you’ll be running the air conditioner. You may even be running it harder to stay comfortable. That means it’ll cost you 18.1 cents per kWh to sleep.
And if all that isn’t enough to give you pause, also consider this angle. Some folks believe they can save money with these plans by conserving power during non-nighttime or non-weekend hours. But with power conservation you’d save money with any plan — even the ones selling much cheaper 9-cent power.
The moral of this story: think twice before signing up with gimmick electric deals.
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.