With the advent of online shopping, consumers have access to research and a plethora of reviews about products and services. Considering that many Texans spend $1000 to $2000 per year on electricity, it makes sense that they would do their research and check reviews.
So why does ECE recommend Texans ignore ratings of electricity companies when shopping for electricity plans in Texas and only focus on Total Annual Cost? We have three answers to this question:
- Ratings companies can't agree on which providers are best.
- Electricity is a commodity; there is no product differentiation.
- You should never have to talk with Customer Service, especially if you set up auto-pay.
Let's look at these more deeply.
Ratings companies can't agree on which providers are best.
Several companies rate electricity providers, but many of them are biased because someone is paying them to publish the rankings or they get commission from the companies they represent. However, we believe two ratings companies provide unbiased reviews in Texas: (1) JD Power, a recognized name in rating customer service of many products and services, and (2) the Texas Public Utility Commission that publishes the Retail Electric Providers Complaint Scorecard on the Power To Choose website.
Since both of these sources are unbiased, you would expect their top 10 lists to be virtually the same. But that couldn't be further from the truth. None of the top 10 providers on the Power To Choose list are on the JD Powers top 10 list. Further, JD Power gives its highest score to Champion Energy, which is ranked number 26 by Power To Choose. Conversely, Power to Choose rates Alliance Power as the best, and JD Power doesn't even rank Alliance Power.
If these two independent surveys can't agree on which Texas Electricity companies are best, how can ECE use either of their scorecards to recommend one REP over another to our clients?
Electricity is a commodity; there is no product differentiation.
When differentiating products and services, consumers typically consider Cost, Quality, and Reliability. For electricity, Cost is the only differentiator.
Although electricity is generated using different sources, such as solar, wind, coal, and natural gas, all of the electricity generated from these sources have the same quality. When you flip on a light switch, the bulb burns at the same brightness no matter whom you buy electricity from.
Not only is the quality the same, the reliability is too. Electricity providers simply supply you with electricity; they do not own or repair the poles and wires that transmit electricity to your house. That job is managed by your TDU (Oncor, Centerpoint,…). So if your street has an electricity outage, your TDU is responsible for getting the entire street’s electricity turned back on, regardless of the various providers you and your neighbors use.
The only real non-cost difference between electricity plans is the source of the electricity. The PUC requires REPs to state the percent of renewable (wind and solar) electricity that is generated for each plan. Many companies sell plans that that have 100% renewable power sources. These often cost more and some Texans are willing to pay a premium for it. ECE recognizes this product differentiator, so we include renewable electricity plan options with our recommendations.
In summary, electricity is a commodity, like gasoline. If two neighboring gas stations were to sell regular unleaded at different prices, most consumers would fill up at the cheapest station. The same should be true for electricity.
You should never have to talk with Customer Service, especially if you set up auto-pay.
When you buy a new car and the steering goes out in the first month, you talk to the dealer. When you buy a Venti Caffe Latte at Starbucks and get a tall Caffe Mocha instead, you ask them to replace it. But what can go wrong with electricity? Nothing, except power can go out— and then you call your TDU, not your provider.
The point is you should never have to contact your electricity company, especially if you sign up on-line and set up auto draft from your checking account or credit card. This is our personal experience.
- The founders of Energy Choice Experts have changed electricity providers every year for the past 15 years, using over 20 different providers. We always set up auto draft and have never had to talk to anyone in customer service.
- In fact, one Founder is currently using HINO, which is not only ranked dead last (#56) by Power To Choose, but was also called the “worst electric company in Texas” by Dave Lieber of the Dallas Morning News. What has been his experience with HINO? He has never had to contact their customer service and has paid less than 4 cents/kWh since signing up with them last May.
So there you have it — three reasons that Energy Choice Experts does not take into account electricity company ratings. We are firm believers that you should only consider TOTAL ANNUAL COST when comparing electricity companies and plans, and possibly the percent of renewable electricity. There is no difference in the quality of electricity, there is no good source that compares the customer service of one company over another, and in reality, you should never have to contact Customer Service anyway.