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In Texas, New Retail Plans Ensure that Less Won’t Cost More

July 22, 2015 By Cheryl Kaften

Last March, Texas State Representative Sylvester Turner, a Houston Democrat, introduced legislation (HB 2254) that would prohibit retail electric providers from imposing surcharges – called “minimum use fees” – that actually penalize homeowners and small business customers who are trying to conserve energy and keep their bills low.

While the measure has not advanced – and has been hard-fought by several utilities that see the surcharge as their only way of continuing to spend money on fixed costs, despite wide disparities in power usage – several energy retailers in the ERCOT market are trying to solve the problem on their own. In doing so, they are gaining business from frugal customers statewide, according to the The Dallas Morning News.

Based on data from the US Energy Information Administration, the average Texas household uses 1,801 kWh each month. However, to protect the bottom line, the majority of retailers have been activating surcharges when consumers and small business customers succeeded in limiting their energy consumption to less than 1,000 kWh per month.

Now, the Morning News reports, Houston-based electric retailer Infinite Energy has begun making a “conservation plan” available, which credits a customer $9.95 for using less than 1,000 kWh in a month.

“We’ve gotten some feedback from customers. Most of them expressed a concern with minimum-use fees. They say, ‘I’ve been trying to reduce my usage, and I’m being penalized for it,’” said Infinite COO Steve Madden.

What’s more, on July 14,  Direct Energy introduced Direct Your Plan, which the retailer described as “a new way to shop for residential energy that lets customers build their own electricity plan from a robust menu of choices while seeing how their choice affects the price-per-kilowatt-hour in real-time.”

“Direct Energy is … focused on empowering our customers with tools that help them manage their energy use and find the solutions to meet their individual needs,” said Robbie Wright, vice president of Digital & Innovation at Direct Energy Residential. ”

The centerpiece of the Direct Energy plan is a step-by-step interactive guide that presents customers with an array of options – including two that will appeal to energy savers: the Fixed-Rate or Month-to-Month Plan and the Reduce-Your-Use Rewards Plan.

Direct Your Plan is currently available in Texas only. Direct Energy plans to continue expanding the program in markets across North America, and expects to include more features in the future.

And there’s apparently a third choice: On the state-run website PowertoChoose.org on July 17, Gexa Energy of Houston was offering a plan nearly identical to Infinite’s, with a $25 monthly credit.

However, the Morning News labels these three new and attractive plans as “outliers” in this energy market, noting that there are hundreds of electric plans on offer in the Texas power market, and minimum use fees persist: Infinite, for instance, has other plans that do impose a surcharge.

Going forward, industry pundits predict that the new plans will drive marketwide changes, if droves of customers are willing to switch providers in order to dodge minimum-use fees.

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