How to Understand An Electricity Facts Label

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What is an Electricity Facts Label?

An Electricity Facts Label (EFL) is an important document that breaks down key details of an electricity plan, such as pricing at different usage levels or early termination fees (ETFs). Think of it as a nutrition label for your electricity plan — and it’s very important to review and understand it before signing up for an energy plan.

EFLs explained

EFLs include information about:

• The average price per kilowatt-hour (kWh) based on monthly energy usage
• Usage credits for electricity
• Utility company charges for electricity delivery
• The length of the plan’s contract
• Early termination fees
• Percentage of renewable content in the plan
• Energy provider contact information

EFLs are important, but they cover a lot of confusing information if you’re new to shopping for an energy plan or are unfamiliar with deregulated energy. Read on to learn how to read an EFL and decipher its details to choose the right energy plan for you.

Why the Electricity Facts Label matters

When shopping for an energy plan, the Electricity Facts Label is the most important tool for understanding a plan’s energy rate, fees, and terms. You can find out about green energy content, early termination fees, and other critical plan details. Plus, with typical usage info from your energy bill, you can use the EFL to compare plans and choose the best option for your usual energy consumption.

If you have questions about how to read an EFL or would like to discuss your energy plan options, call the number on your screen to speak with a member of our team.

Where to find an Electricity Facts Label

Electricity providers are required to provide Electricity Facts Labels for every plan they offer. Here’s how you can find the EFL for every plan on the SaveOnEnergy marketplace.

Step 1: Enter your ZIP code on our marketplace, and we’ll show you available plans near you. You can then use our filtering tools to compare available energy plans and providers in your area.

Step 2: Once you’ve found an energy plan you want to learn more about, click “More details” underneath the basic plan information.

Step 3: From there, you’ll find a few tabs with plan details, including “Plan documents.” The first option under “Plan documents” is “Access the EFL,” which will open the plan’s Electricity Facts Label in a new tab on your browser.

The next section of this guide will explain how to read an Electricity Facts Label and use the information when shopping for a plan.

How to read an Electricity Facts Label

The following image is an Electricity Facts Label detailing a Texas energy plan from 4Change Energy in 2023. The EFL for your plan may look slightly different from this sample, but it should include the same information in a similar format. We’ll break down each section to clarify how to read the EFL and understand what the numbers and information mean.

EFL by Save On Energy

1.     Average Monthly Use

This row shows three numbers: 500 kWh, 1,000 kWh, and 2,000 kWh. These are usage tiers, which represent how much electricity your household may consume each month. The Public Utilities Commission (PUC) in Texas mandates that providers show their electricity rates in these three tiers. You’ll notice that rates vary, sometimes significantly, between 500 kWh vs. 1,000 kWh vs. 2,000 kWh, so it’s important to know how much energy you typically consume. You can check your previous energy bills to find how much electricity you normally consume in a month, or visit the SaveOnEnergy usage calculator to get an estimate.

2.      Average Price per kWh

This row shows three prices per kWh under each usage amount. This section shows you the rate for each usage tier from Section 1. The average price per kWh factors in the energy charge, other fees, and bill credits to provide this average estimate for each usage tier. Occasionally, the usage tiers will charge the same rate per kWh.

3.     Base Charge

The base charge is a set amount you pay each month to cover operational costs. It should not change during your contract. In this example EFL, the base charge is $0, but that is not always the case.
Energy Charge

4.      Energy Charge

This section shows you the default rate the provider charges for this plan. We’ll explain why this is different from the average price per kWh (Section 2) later on in this guide.

5.      Monthly Bill Credit

This section displays any bill credits you will receive with this plan. A usage credit is a discount on your energy bill that applies when your energy consumption falls into a certain range. In this example, there is a $100 bill credit for electricity each month you use at least 1,000 kWh. That’s why the average rate is lower for the second usage tier on this plan.

6.      TDU Charges

The TDU (sometimes called TDSP) is the utility company in your area. The utility is responsible for delivering electricity to the consumer and restoring power during an outage. Because the utility delivers electricity and maintains power lines, it charges fees that vary based on location and other factors. There are two TDU charges — one is a fixed charge per billing cycle, and the other is a usage charge per kWh that you consume. In this example, the EFL provides a link to a TDU charge page showing each utility’s rates.

7.      Type of Product

This section states the type of plan, which is usually fixed rate, variable rate, or indexed rate. In this case, the EFL is for a fixed-rate plan, which means the base rate will stay the same throughout the contract period. SaveOnEnergy can help you learn more about the different types of energy plans to ensure you choose the right one for your household.

8.      Contract Term

This section shows how long the plan’s contract will last. The most common contract lengths are 12, 24, and 36 months. In this example, the contract lasts 12 months. After the term ends, you can renew your plan at the current rate or switch to a new plan with no penalty.

9.      Do I have a termination fee?

This portion of the EFL notes whether the provider will charge an early termination fee if you cancel your contract before it expires. Most providers will waive this charge if you move outside of their service area. The ETF section is important to note when searching for an energy plan. Some EFLs mention a flat cancellation fee, normally between $100 and $395, depending on the plan length. This example plan charges $20 for every month left on your contract.

10.    Can my price change during my contract period? If my price can change, how will it change and by how much?

This section will usually begin with a simple “Yes.” Even though the rate for a fixed-rate plan stays the same, the total amount you pay could change throughout your contract because of fluctuations in utility fees, regulatory charges, or local government taxes.

11.     What other fees may I be charged?

This is where you may find information about any other monthly fees or deposits you might owe. Typically, the provider will direct you to its Terms of Service (TOS) document for these details. We recommend reading the TOS carefully before signing up for a plan to avoid any surprises on your bill.

12.     Does the REP purchase excess distributed renewable generation?

Some consumers have power-generating equipment like home solar panels or wind turbines. This section notes whether the provider will purchase extra electricity that the consumer generates and does not use, similar to a net metering program. If the provider buys excess renewable energy, you could receive credits for the electricity your system sends to the power grid. This section is highly relevant if you own a solar panel system, as providers that don’t participate won’t provide bill credits for excess renewable energy.

13.     Renewable Content

Here, you’ll find the exact percentage of renewable energy in the plan. Every energy plan in Texas has at least some renewable energy in the mix. Green energy plans, meanwhile, have 100% renewable content. This example notes that the renewable content will either be 7% or 100%, depending on whether you choose a renewable energy option for this plan.

14.     Statewide average for renewable content

This section notes the average percentage of renewable energy included in electricity plans for the state where the plan is sold. In this example from 2023, the amount is 31%, but the current statewide average in Texas is 33%.

15.     Contact Information

The EFL ends with contact information for the provider. Remember — the provider you choose is not responsible for restoring power during an outage. If you experience an electrical outage, contact your utility company instead.

How to calculate your monthly electricity bill

Providers often put their plans into a tiered-rate structure, which designates different energy rates for three usage tiers. For example, a plan may charge one rate for the first 500 kWh per month but a different rate for every additional kWh you consume. On the SaveOnEnergy marketplace, we feature plan rates for 1,000 kWh of usage.

These three tiers are normally shown on the EFL as 500 kWh, 1,000 kWh, and 2,000 kWh. There, you’ll find the average price per kWh for each tier. This average price includes the base charge, utility charges, and other fees that go into the total cost of electricity. It also factors in any applicable usage credits.

In the example EFL, the three usage tiers look like this:

The standard rate for the plan is noted on the EFL in the Energy Charge section. In our example EFL, the energy charge is listed as 16.490 cents per kWh. Some math is required to get from the energy charge rate to the average price per kWh. Use the following EFL formula to understand how providers calculate your average price per kWh.

Energy Charge + Per-kWh Utility Fee + [(Per-month Utility Charge + Base Charge)/Usage]

Let’s use the sample EFL above as an example. This is the information we will need from the EFL.

• Energy charge: 16.490 cents per kWh ($0.20715)
• Per-kWh Utility Fee: 5.3770 cents per kWh ($0.05377)
• Per-month Utility Charge: $4.39
• Base Charge: $0
• Usage amount: For this example, we’ll assume you use 1,000 kWh of energy in a month.

When you plug the numbers into the EFL formula, it will look like this: 

$0.16490 + $0.05377 + [($4.39 + $0) / 1,000 kWh]
$0.16490 + $0.05377 + $.00439 = 22.3 cents per kWh
$0.223 X 1,000 = A bill of $223

This plan offers a $100 bill credit when you use 1,000 kWh or more, which brings the estimated average monthly bill down to $123.

$123 / 1,000 kWh = an average electric rate of around 12.3 cents per kWh, roughly what is shown for the 1,000 kWh usage tier at the top of the EFL.

All the math can seem a bit complicated, but the plan’s EFL has all the information you need to make an educated and informed decision on which energy plan is right for your household.