Your rate, your choice, the postcard says. Xcel Energy makes it sound like you’re choosing the chicken or the beef. It also doesn’t end up telling you how much the rate you choose is going to cost you. I guess it’s more complicated than a postcard can convey, even with a little bar graph showing On-Peak energy from 5:00pm to 9:00pm costing three dollar signs instead of the Off-Peak time when it costs one dollar sign.
Xcel Energy And The Rate Choice
Xcel Energy is a for-profit corporation, like most big American companies. You can buy shares of Xcel stock if you choose. Xcel’s ticker symbol is XEL. It trades on the NASDAQ even though they got a three letter stock symbol. As I type this, the stock closed at $80.40 a share. I don’t know if that’s higher or lower. I don’t have any Xcel stock.
Unlike most American companies, Xcel Energy trades it’s near monopoly in the areas it serves for oversight by regulators who keep Xcel from doing what most American companies seem to do these days. Run, a rational business charging a fair, but profitable price for a good service supplied by competent, skilled workers that the company treats decently. Until they bring in a Wall Street MBA CEO who doesn’t care about customers, the service, or the workers. All he or she cares about is the share price and doing whatever it takes to make it go up. If he ruins the company, he needn’t worry. He will still get millions of dollars in a buyout before a simpering board or directors sells the still profitable, still solid business to private equity, who load it with debt, charge it millions for management fees and then spin it back out to the terminally stupid who have somehow not figured out yet that everything private equity touches dies.
But, today, Xcel Energy is a profitable company. Any excesses are reigned in by regulators who, while not perfect, do not allow the company to openly pull a scam on its citizens. Still, there are plenty of people, even on my street, who are convinced that Xcel Energy is screwing them over with smart meters and using those to charge them way more money than they ever did with their dumb meters. The reality is not so dramatic.
Yes, the smart meters allow Xcel to better track your energy usage, and it keeps them from having to spend money to have someone come out and read your meter, but that’s about all it does. It also lets you use an app to monitor your electricity usage in real-time. It can be an eye-opener to sit and watch what happens to your usage when the air conditioner kicks on or the dryer stops. If you’re like me, you can wander around the house turning things on and off to see how much electricity they use.
If you insist on keeping your old meter, they will let you and charge you the same flat rate for your electricity as they do the people with smart meters who choose the flat rate for their electricity. There is no plot. You can pick which one you want. You can’t flip back and forth willy-nilly. They don’t want people gaming the system, plus it makes your billing more complicated that you and they can probably handle.
Xcel Energy Rate Change for Winter
The Time of Use (TOU) pricing, or Peak Pricing if you prefer, isn’t new, although some people were only recently given the choice. You can only use TOU pricing if you have a smart meter, otherwise Xcel can’t tell when you are using the energy, only that it has been used. In a typical display of poor mathing, some people insist that the flat rate is cheaper. Unless you have uncommon circumstances, that probably isn’t true.
Xcel asking for (regulators) and getting yet another change in the way they charge for TOU is pretty much proof that the former TOU was a better deal for you. If Xcel was overly benefiting from tricking most people into TOU pricing, why would they want to change it?
Still, a new rate plan is a new chance for people to be suspicious. So, is it better? I suppose that depends on when you are home and what you do when you are there.
Choose Your Xcel Rates
The peak hours and the rates charged during that time are only part of the story. The new rates represent a cut in the rate, and the peak hours are shorter. But, the most important fact has nothing to do with those.
In winter, the average house in Colorado uses way less electricity than in the summer. The reason? Air conditioning. You don’t run your air conditioner in the winter. You still have to manage the temperature in your home, which most of us do with our furnace. And, for most of us, that furnace runs on natural gas. So your utility bill in the winter represents the cost of the gas more than the cost of electricity.
Be that as it may, in Winter your peak electricity rate is $0.18331 per kWh. Your off-peak rate is $0.06792. The peak hours are now 5:00pm to 9:00pm. There is no mid-peak anymore.
If you choose the flat rate, you pay $0.08570 per kWh all the time, 24/7.
Which Rate is Cheaper TOU or Flat Rate?
At first glance, it might look like the flat rate is obviously the better deal. It’s only two cents more than the off-peak rate, and you never have to pay the peak rate, which is more than double the flat rate. However, when it comes to money, you always want to check the math.
First, just four out of 24 hours are peak rate. In other words, 20 hours per day, you pay two cents less than the flat rate. Granted, 5pm to 9pm is when most people are home, and if you work during the day, it might be when you use the most of your electricity. The question is, how much is most?
Before we get to that question, let’s throw in the fact that weekends are always the low rate. There is no peak rate charges on the weekend. If you do work sort of regular 8-5 hours M-F that means that you could be in your home using electricity not only from 5-9, but from those 8 hours that you would normally be at work as well. Throw in some kids that are also home on the weekend, and you spend a lot more hours in off-peak time than you do in peak time.
If we do some math, for 148 out of 168 hours, you pay off-peak rate.
So, then which rate is cheapest?
It still depends upon how and when you use your electricity. For example, if you are busy most evenings so the only appliances you really use are the stove, the microwave, the TV and the lights, but you can’t get around to things like laundry, running the dishwasher, and baking until the weekend, then that TOU is going to end up being cheaper.
If everyone in your house is gone from 8-5 until you all come crushing back into the house where you obviously run the dishwasher every night at like 8pm, and you’re constantly doing laundry that you can’t wait until after 9pm to do because you have to wash and dry before you go to bed, then maybe flat rate might be cheaper, but even then it can be close unless you all disappear on the weekends or your kids are in travel sports, and you’re always on your way to somewhere in Nebraska or Kansas on the weekends.
There is a comparison too on the Xcel website, but they don’t show you the math, so it’s easy to think maybe they’re fudging the numbers. Fortunately, it’s easy to do your own comparison. Grab your bill. Your actual bill with your real, not projected energy use. You’ll have to wait until you get your November bill because the October one used different times.
Once you have it, all you have to do is find your “Usage Units” for On-Peak and multiply that number by $0.18331. Then find your Off-Peak and multiply those by $0.06792. Add them together. That is the part of your electric bill that is based on you and your usage. All those other numbers are fees and taxes and stuff that you are going to pay the same for either way. Now, take the total number of Usage Units for both categories and multiply them by $0.08570.
Weird, huh?
Chances are the numbers are pretty close but cheaper with TOU. If not, consider if you can move some of your usage outside of the 5-9pm hours. Remember, it’s not your lights, TVs, and computers that use up lots of electricity. It’s your oven, dishwasher, and washer and dryer. The refrigerator uses a bunch too, but that’s going to happen one way or another so it really isn’t worth worrying about. If not, you can look into switching back. For our family, I was surprised at how clear-cut it was that TOU was better.
Have You Gotten an Electric Car Yet?
If you have an electric car, then TOU is the hands down, no-brainer choice for you. You want that lowest rate possible for when you are charging your car. Then, just set your charger to only run between 9:00pm and 5:0pm (the hours that are NOT 5-9pm) and your car will always charge at the cheapest rate.
You can charge 60 kWh, or about 70% of our Nissan Ariya battery, for $4. That’s way cheaper than buying gas! Plus, your car is faster and quieter than pretty much any gas car out there. It’s almost like a cheat code. I sometimes think that it’s actually kind best for those of us with EVs if everybody else still thinks they should have gas cars. I guess, “Thanks oil industry. Doing us a solid here.”
In conclusion (I hate when people say that), it probably won’t matter too much for the winter which rate you choose. Maybe that’s why Xcel is kind of flippant on that card. They don’t care what you pick either. Come summer, when electricity is the major part of your utility bill, it’s probably worth checking again.