By: Jordan Hobfoll, Co-Founder and CEO, Energy Simply LLC
In an earlier post, we wrote about how some companies are gaming the Power to Choose system to inflate their rankings. They do this by having bill credits that you only earn if you can hit the 1000 kWh per month threshold. And since the Power To Choose website defaults to showing the top plans based on per kWh cost at 1000 kWh per month, the companies pursuing this strategy were showing up near the top of the rankings even though they are not the best option for most customers.
In recent days, one of the most egregious users of this strategy from my last post, Gexa Energy, has decided to double-down on the strategy. They have upped their $30 credit for hitting 1000 kWhs in a month to $60, further warping the rankings on Power To Choose. Check out the screenshot below for an example:
Gexa Energy appears at the second highest ranked plan on the site for a someone who just entered a Houston zip code and clicked view plan. In fact, it looks to be the same price as the highest ranked plan at 6.2¢/kWh. However, if you look a little closer you will notice that at 500 kWh the plan is 45% more expensive then the top rated plan and a whopping 82% more expensive than the plan ranked just below it.
On the high-side the story is even worse for Gexa either. If you use 2000 kWhs in a month you will pay ~55% more than for either of the other 2 plans or more than $60 more every month. These trends essentially scream at you when you look at the following graph of ¢/kWh by monthly usage.
However, what if you use ~1000 kWh a month, where Gexa is cheapest? Is it a good deal then. If someone used just over 1000 kWh each month it would be an ok deal, but that is not how people use power. Households power supply varies throughout the year based on the season. In the summer you run your AC. In the winter there is less daylight so your lights are on earlier and longer. This can be seen the energy profile of a typical Texas household that follows.
If this person had the Gexa plan they would just miss out on the $60 credit in April and November. Essentially forcing them to pay $60 more each of those months than with the other 2 plans. In fact, over a year the household portrayed would pay over $320 more with the Gexa plan, or 34% more, than with the Pennywise plan.
You can’t take Power To Choose rankings at face value, which is one of many reasons why you should sign up for an Energy Simply Gold Plan. We keep up with all the latest tricks and make sure you are always getting the best deal possible…automatically.
Jordan Hobfoll is the Co-Founder and CEO of Energy Simply. He previously worked at McKinsey & Company, where he was a consultant for some of the largest electric utilities in the United States. Jordan also holds an MBA from the University of Texas at Austin and a B.S. in Finance with High Honors from the University of Illinois.