How to Read an Electricity Facts Label (EFL)

How to Read an Electricity Facts Label (EFL)

Electricity Facts Label (EFL) discloses important information about an energy plan like rate type, term length, etc.

Thad Warren By Thad Warren

Residents of Texas all have one thing in common: they all receive an electricity facts label with their first electric bill. A Texas electricity facts label, also known as an EFL, is every Texan’s guide to their electric service from their private provider. 

It’s important to check your electricity facts label to understand how your utility company calculates your electric bill each month and ensure that your electricity price is accurate. In order to understand each charge on your Texas electricity bill, you must know how to read an EFL. 

What Is an EFL?

An electricity facts label is a legal disclosure about your electric service that is required by the Public Utility Commission of Texas (PUCT) for every retail electricity customer in the state of Texas. It includes important information about your electricity plan, monthly energy charges, and contract terms. The electricity facts label was designed to give utility customers full transparency about each variable that affects the cost of their service, such as zip code, usage, and other factors. Every Texan can expect to receive an electricity facts label when they start a new service contract with a Retail Electricity Provider (REP) in Texas. The EFL typically accompanies your first bill.

Commercial electricity plans in Texas do not have an EFL. 

Why Reading Your Texas EFL Is Important

Understanding each component of your electricity facts label ensures that you know exactly what you are paying for when you send money to the electric company each month. Just like a nutrition label, the EFL gives you detailed information about the product that you and your family consume every day. 

How to Read an EFL

Every Texas EFL includes three sections: electricity price, rate calculation, and contract terms. Each of these sections contains important information that will help you calculate your energy bill each month. 

  • 1) Electricity price. Every utility company charges a different amount for its product. Your provider’s price for their electricity and related services can be found in the first section of the EFL. Hint: look for the table that outlines the cost for different usage levels.
  • 2) Rate calculation. Your electricity usage, or how many kilowatt-hours (kWh) you use per month, typically affects the rate that you’ll pay for each kWh. In addition to the average price per kWh, you’ll also pay a base (or minimum) charge that covers the bare necessities of having your home connected to power. Each of these figures should be listed in the second section of the EFL.
  • 3) Contract terms. The third section of the EFL is the longest, as it contains all of the additional details about your electricity service. This section covers whether you’ll pay a fixed or variable rate, the length of your contract, early termination fees, the renewable content of your electricity, and other fine print information.

Important Terms on Your EFL

The format of your EFL will depend on your supplier and plan, but for the most part, there are 4 key terms you should look for. 

  1. Base Energy Charge. This is the price your provider is charging for electricity. Excludes TDU charges. 
  2. Transmission and Delivery Charges. This price is set by the utility (a.k.a there's not a way to negotiate it) and goes towards maintaining the grid. 
  3. Electricity Price Table. This shows you the expected price for a given monthly usage. 
  4. Disclosure Chart. This area is where you will find important terms about your plan life if it is variable vs fixed, term length, etc...


How to Calculate Your Monthly Energy Charge

Once you understand how to make sense of all of the information presented on your EFL, you can estimate how much you’ll pay for electricity each month. Follow these simple steps to calculate how much electricity will cost with the plan offered by your provider:

  • Step 1: Locate the base charge, sometimes called the minimum charge, near the top of the EFL. This amount will stay the same each month.
  • Step 2: Next, look for the TDU. This portion of your bill covers the Transmission and Distribution Utility, which simply means the cost to transmit and distribute the electricity from the power plant to your home. This cost will remain the same month-to-month but is subject to change on a yearly basis depending on local regulations and conditions.
  • Step 3: Find the electricity price table, which should contain six boxes that list different cost rates for varying energy usage levels. Here you’ll see two rows: 1) average monthly use and 2) average price per kWh. The listed prices often include rates for 500 kWh, 1,000 kwH, and 2,000 kWh usage.
  • Step 4: Add the base charge and TDU to the amount of your electricity price multiplied by your estimated usage. This should approximately equal what you’ll pay for electricity.

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Other Things to Know About a Texas EFL

A few factors can affect the cost of your electricity. 

Whether you’ve signed a contract for a fixed rate or variable rate can significantly affect what your bill looks like each month. A fixed-rate contract means that the utility provider cannot change the price per kWh of your electricity for the duration of the contract term. Some providers can advertise cheap energy rates for the first few months of service because they offer variable rate plans, which allow them to raise your electricity price at any given time. 

Your EFL lists whether you are on a fixed rate or variable rate energy plan. If you choose to cancel your electricity service before the end of your contract term, an early termination fee will likely apply. This information can also be found on your EFL.

Reading a Texas electricity facts label can be confusing, and reading one incorrectly often leads to unwelcome surprises when you receive your monthly electric bill. But the good news is that EnergyBot makes it easy to find the best electricity plan for your home or business.

Enter your zip code to compare energy plans offered by electricity providers in your area today!

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