You know that advertised rate you saw—“Just 8.9 cents per kWh!”? That’s not what you’ll actually pay.
The real price is buried in a document that most people never read: the Electricity Facts Label, or EFL. It’s like a nutrition label for electricity plans, except instead of revealing hidden sugars, it reveals hidden fees, tiered rates, and usage credits designed to inflate your bills.
The Texas Public Utility Commission requires every electricity provider to publish an EFL for every plan they offer. It’s the only standardized disclosure document in the Texas electricity market. Learn to read it, and you’ll never get tricked by marketing again.
What Is the Electricity Facts Label?
The EFL is a standardized two-page document mandated by Texas PUC Substantive Rule §25.475. It must include:
- Average prices at three usage levels: 500, 1,000, and 2,000 kWh per month
- All fees and charges: Base charges, minimum usage fees, TDU delivery charges
- Contract details: Length, early termination fees, renewal terms
- Renewable energy percentage: How much of the plan comes from green sources
- Provider contact information: Phone number, website, PUCT certification number
Every REP must provide the EFL before you enroll. If they don’t, that’s a red flag.
The Three Usage Tiers (And Why They Matter)
Here’s the first thing you’ll see on an EFL:
Average price per kWh:
- 500 kWh: 14.2 cents
- 1,000 kWh: 11.5 cents
- 2,000 kWh: 10.3 cents
These aren’t price ranges—they’re the average rates you’ll pay at each exact usage level, including all fees and delivery charges.
Why Three Numbers?
The three tiers represent typical residential usage:
- 500 kWh: Small apartments and condos
- 1,000 kWh: Average single-family homes
- 2,000 kWh: Larger homes with high AC usage
The Public Utility Commission of Texas mandated these levels to make plan comparison easier. But here’s the trick: providers design rates to look good at one tier while gouging customers at others.
Example: How Tiered Rates Manipulate You
Let’s say you use 600 kWh per month. A plan shows:
- 500 kWh: 18.0 cents
- 1,000 kWh: 9.5 cents
- 2,000 kWh: 9.0 cents
That 9.5-cent rate looks great, right? Wrong. You’re not using 1,000 kWh—you’re using 600 kWh. Your actual rate is somewhere between the 500 kWh and 1,000 kWh tiers, likely around 14-15 cents per kWh after factoring in the base charge and delivery fees.
The rule: Only trust the tier closest to your actual usage. If you typically use 800 kWh per month, the 1,000 kWh rate is your best reference point—but it still won’t be perfect.
How to Calculate Your Real Rate
The advertised rate is almost always lower than what you’ll actually pay. Here’s the formula providers use to calculate those EFL averages:
Real Rate = [(kWh × Energy Charge) + Base Fee + TDU Fees] ÷ kWh
Let’s break down a real-world example.
Example Plan Breakdown
Advertised rate: 10.0 cents per kWh Energy charge: 7.5 cents per kWh (the actual electricity) Base charge: $9.95 per month (flat fee just for having service) TDU delivery charges: ~4.0 cents per kWh (power line maintenance)
If you use 1,000 kWh:
- Energy: 1,000 kWh × $0.075 = $75.00
- Base charge: $9.95
- TDU delivery: 1,000 kWh × $0.04 = $40.00
- Total bill: $124.95
- Real rate: $124.95 ÷ 1,000 kWh = 12.5 cents per kWh
That’s 25% higher than the advertised rate. And this is a straightforward plan—wait until we get to bill credits and minimum usage fees.
Section-by-Section EFL Breakdown
1. Average Price per Kilowatt-Hour
This is at the top of every EFL. It shows the average price you’ll pay at 500, 1,000, and 2,000 kWh after all fees are included.
What to watch for:
- Wide gaps between tiers (sign of tiered pricing that penalizes certain usage levels)
- The 500 kWh rate being significantly higher (you’ll pay a lot if you use less than expected)
2. Electricity Price
This section shows the base energy charge before delivery fees. Some plans have a flat per-kWh rate. Others have tiered pricing or time-of-use rates (cheaper at night, more expensive during peak hours).
Red flag: Plans with “bill credits” bundled into this section. Example: “15 cents per kWh minus a $75 bill credit at 1,000 kWh usage.” That credit only applies if you hit the exact threshold—miss it by 10 kWh and you lose the entire discount.
3. Base Charge
A flat monthly fee that doesn’t change based on usage. Common amounts: $4.95 to $14.95 per month.
Why it matters: If you’re a low-usage customer, base charges crush your effective rate. A $9.95 base charge adds 2 cents per kWh to a 500 kWh bill, but only 0.5 cents per kWh to a 2,000 kWh bill.
Some providers like Rhythm Energy don’t charge base fees, making them better for apartment dwellers and light users.
4. TDU Delivery Charges
These are the fees charged by your local Transmission and Distribution Utility (Oncor, CenterPoint, AEP Texas, or TNMP) for maintaining the power lines. They’re the same regardless of which REP you choose. Learn more in our guide on understanding TDU charges.
Typical TDU charges:
- Base charge: $3-5 per month
- Metering fee: $3-4 per month
- Per-kWh delivery charge: 3-5 cents per kWh
TDU charges are non-negotiable and add up to about 30-40% of your total bill. They’re unavoidable, but understanding them helps you compare the REP’s actual energy charge.
5. Minimum Usage or Bill Credit Details
This is where providers hide the tricks.
Minimum usage fees: If you don’t use at least X kWh per month, you get charged extra. Common threshold: 1,000 kWh. If you use 900 kWh, you might pay a $25 penalty, pushing your effective rate through the roof. See our best providers for low usage if you typically use less than 1,000 kWh.
Bill credits: “Use 1,000 kWh and get $50 off your bill!” Sounds great. But the base energy rate is inflated to compensate. If you use 980 kWh or 1,020 kWh, you lose the entire credit and pay the inflated rate with no discount.
DATA: Plans with bill credits can cause your actual bill to be 25-40% higher than the advertised EFL rate if you don’t hit the exact usage threshold.
6. Contract Term and Cancellation Fee
Most plans lock you in for 6, 12, or 24 months. Cancel early and you’ll pay an early termination fee (ETF)—usually $150 to $300.
What to check:
- ETF amount (some providers charge $10 per remaining month, others charge a flat $200)
- Auto-renewal terms (many switch you to expensive month-to-month rates when your contract expires)
- Move-out clauses (some providers waive the ETF if you move)
If your contract is ending soon, check out our guide on when to switch electricity providers to avoid getting rolled into a bad rate.
7. Renewable Energy Content
Texas requires providers to disclose the percentage of renewable energy in each plan. The state average is around 30% (mostly wind).
If a plan is 100% renewable, it’ll say so here. Some providers like Gexa Energy specialize in green plans, while others offer renewable options at a slight premium.
Why Advertised Rates Are Misleading
Here’s the truth: the advertised rate you see in marketing is often 20-30% lower than your actual rate.
How Providers Game the System
1. Optimized for 2,000 kWh
Most ads show the 2,000 kWh rate because it’s the lowest. But the average Texas household uses 1,000-1,200 kWh per month. You’re not getting the rate they’re advertising.
2. Base Charges Hidden in Fine Print
A $9.95 base charge isn’t sexy, so it’s buried in the EFL. But it adds a full cent per kWh to a 1,000 kWh bill—enough to turn a “9-cent plan” into a 10-cent plan before delivery charges.
3. Bill Credits with Narrow Windows
“Use 1,000 kWh and save $50!” But use 950 kWh or 1,050 kWh and you get nothing. These plans are designed to lure you in with a great rate that only applies if you hit a precise target.
4. Excluding TDU Charges from Ads
Providers love to advertise the energy charge alone: “Just 8 cents per kWh!” But TDU delivery charges add another 3-5 cents per kWh. Your real rate is closer to 11-13 cents.
EXAMPLE: A company advertises “9.0 cents per kWh for 12 months.” The EFL shows:
- Energy charge: 7.2 cents per kWh
- Base charge: $9.95
- TDU delivery: 4.1 cents per kWh
- Bill credit: $20 if you use 1,000 kWh exactly
If you use 1,000 kWh:
- Energy: $72
- Base: $9.95
- TDU: $41
- Bill credit: -$20
- Total: $102.95 = 10.3 cents per kWh (not 9.0 cents)
If you use 900 kWh:
- Energy: $64.80
- Base: $9.95
- TDU: $36.90
- Bill credit: $0 (didn’t hit 1,000 kWh)
- Total: $111.65 = 12.4 cents per kWh (38% higher than advertised!)
This is legal. This is common. This is why you need to read the EFL.
Red Flags to Watch For
1. Huge Rate Gaps Between Tiers
If the 500 kWh rate is 18 cents and the 2,000 kWh rate is 9 cents, this plan is designed to punish low-usage customers. Avoid unless you consistently use 1,500+ kWh per month.
2. Base Charges Over $10
Some providers charge $15-30 per month in base fees. For low-usage customers, this can double your effective rate. Always factor base charges into your comparison.
3. Bill Credits with Exact Thresholds
“$50 credit if you use exactly 1,000 kWh” is a trap. Your usage fluctuates month to month. You’ll miss the threshold more often than you hit it.
4. Minimum Usage Fees
“If you use less than 1,000 kWh, you’ll be charged the difference.” This means if you use 800 kWh, you’ll be billed as if you used 1,000 kWh. Avoid these plans if you live in an apartment or don’t use AC year-round.
5. High Early Termination Fees
$300+ ETFs are a warning sign. If a provider is locking you in that hard, they’re probably planning to jack up your rate at renewal. Compare this to providers like TXU Energy or Reliant Energy, which typically charge $100-200 ETFs.
How to Use the EFL to Compare Plans
Here’s your step-by-step process:
Step 1: Find your average monthly usage
Check your past 12 months of electricity bills. Calculate your average kWh per month. This is your baseline for comparison.
Step 2: Download EFLs for 3-5 plans
Every provider is legally required to make EFLs available on their website. If you can’t find it easily, that’s a bad sign.
Step 3: Compare the rate closest to your usage
If you use 850 kWh per month, compare the 1,000 kWh tier across all plans. Ignore the 2,000 kWh rates—they don’t apply to you.
Step 4: Check for base charges and bill credits
Add the base charge to your monthly bill estimate. If there’s a bill credit, check if you’ll realistically hit the threshold every month. If not, ignore the credit.
Step 5: Calculate your total estimated bill
Use the formula: Monthly bill = (kWh × Energy Charge) + Base Fee + (kWh × TDU Charge)
Do this for all plans. The lowest total bill wins, not the lowest advertised rate.
Step 6: Verify contract terms
Check the ETF, contract length, and auto-renewal terms. A slightly higher rate with no ETF might be better than a low rate with a $300 cancellation fee.
Need help comparing? Use ComparePower.com to see plans side by side with your actual usage factored in.
Real-World EFL Comparison
Let’s compare two plans for a customer who uses 1,000 kWh per month.
Plan A: “Low Advertised Rate”
- Advertised rate: 9.5 cents per kWh
- Energy charge: 6.8 cents per kWh
- Base charge: $12.95
- TDU charges: 4.2 cents per kWh
- Bill credit: $30 if you use exactly 1,000 kWh
If you use 1,000 kWh:
- Energy: $68
- Base: $12.95
- TDU: $42
- Credit: -$30
- Total: $92.95 = 9.3 cents per kWh
If you use 900 kWh:
- Energy: $61.20
- Base: $12.95
- TDU: $37.80
- Credit: $0
- Total: $111.95 = 12.4 cents per kWh
Plan B: “Straightforward Rate”
- Advertised rate: 10.5 cents per kWh
- Energy charge: 8.0 cents per kWh
- Base charge: $4.95
- TDU charges: 4.2 cents per kWh
- No bill credits or minimum fees
If you use 1,000 kWh:
- Energy: $80
- Base: $4.95
- TDU: $42
- Total: $126.95 = 12.7 cents per kWh
If you use 900 kWh:
- Energy: $72
- Base: $4.95
- TDU: $37.80
- Total: $114.75 = 12.8 cents per kWh
Verdict: Plan A looks better at exactly 1,000 kWh. But Plan B is more consistent—your rate doesn’t spike if you use 50 kWh less than expected. For most customers, predictable pricing beats gimmicky bill credits. This is why understanding fixed vs variable rate plans matters when comparing options.
The Bottom Line
The Electricity Facts Label is the only document that shows you what you’ll actually pay. Ignore marketing. Ignore advertised rates. Read the EFL.
Here’s your checklist:
- Compare the usage tier closest to your average monthly consumption
- Add up all fees: base charges, TDU delivery, and minimum usage penalties
- Be skeptical of bill credits—they’re usually designed to disappoint
- Calculate your total estimated bill, not just the per-kWh rate
- Check contract terms and early termination fees
Still confused? That’s the point. The Texas electricity market has been deregulated since 2002, and providers have spent two decades perfecting the art of confusing pricing. But now you know how to decode the one document they can’t hide: the EFL.
Want to compare plans without doing the math yourself? ComparePower.com factors in your actual usage and shows you the real cost of every plan.
For more on understanding your electricity costs, check out our guide on how to read your Texas electricity bill or learn about TDU delivery charges.