Smarter energy? TXU rolls out new three-tiered rate plan

By: SGN Staff

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Quick Take: There have been many dynamic pricing experiments but few deployments. Now a Texas power retailer is promoting a new tiered plan that features an extremely steep peak rate.

Because Texas is a liberalized system, TXU Energy cannot mandate rates, since its customers have the option of choosing a different plan from a different retailer. So it has had to construct and market the program as a benefit to customers, rather than a necessary evil. We think utilities in regulated territories should keep a close eye on TXU's efforts and learn lessons on how to promote and market to consumers. For instance - TXU doesn't call it a high peak rate. Instead, it refers to deep discounts for nights and off peaks. - By Jesse Berst

TXU Energy has rolled out a new three-tiered rate plan designed for customers who watch their household budgets and are willing to make some changes in when they fire up the dishwasher or do laundry. The power retailer also says its new plan is a sensible option for homes with solar installations or an EV in the driveway.

"During the summer heat wave, we saw that Texans were willing to reduce electricity usage during peak hours to relieve strain on the state's power grid. Our new rate plan offers financial incentives for residential customers to change their energy habits, and it can reduce pressure on household budgets at the same time," said Nancy Perry, senior VP of sales and marketing for TXU Energy.

Offering lower rates during specific periods - time-of-use rates - mimics the fluctuations in wholesale electricity costs that occur throughout the day. Perry said TXU has structured its new rate plan so over 90% of the hours in a year are nighttime or off-peak hours. And the difference between peak and nighttime rates is substantial: Compare peak rates (from 1 p.m. to 6 p.m. Monday through Friday, May through October) of 21.9 cents per kilowatt hour to the discounted nighttime rates (10 p.m. to 6 a.m. all year) of 6.8 cents per kilowatt hour.

The TXU PowerSmart PM 24^SM plan is available for customers with smart meters who live in Oncor and CenterPoint Energy service areas. And barring legal or regulatory changes, prices for the 24-month plan are guaranteed.

TXU also says the plan is a good fit for homeowners with solar panels who usually generate their own electricity during peak hours. And Russ Keene, head of the Plug-In Texas coalition, said that since most EV owners charge their vehicles at night, the time-of-use plan makes them more economical.

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