How to Read an Electricity Facts Label (EFL)

An Electricity Facts Label, or EFL, is a document that provides details about an electricity plan. It displays important information, such as the price you’ll pay at different usage levels, the contract length, and any additional fees. The purpose of the EFL is to help you compare electricity plans and understand exactly what you’re signing up for before you actually enroll.

The EFL is important because it provides a clear picture of what your electricity plan will actually cost. Advertised rates can be misleading because they often only show the price at a specific usage level, which may not accurately reflect the amount of electricity your household actually uses. Reviewing the EFL lets you see the breakdown of rates, fees, and contract terms before you commit. This helps you avoid surprises on your bill and makes it easier to compare plans fairly.

Electricity Facts Label Example

EFLs look a little different depending on your electricity provider. However, they typically follow a similar format to the example below.

Electricity Facts Labels are full of industry jargon you may not be familiar with. This can make reading the EFL feel confusing. However, it’s not as complex as it seems at first glance. Below, Power Wizard’s energy experts have broken down the terms you need to know to understand an EFL, along with which section they can be found in. Note that these terms may be slightly different from company to company.

Section One

• Electricity Provider: The company you buy electricity from.
• Utility Company or TDU: The Transmission and Distribution Utility (TDU) responsible for electric grid maintenance and restoring power after an outage.
• Plan Name: The name the Retail Electricity Provider (REP) chose for the plan.

Section Two

• Average Monthly Use: The kWh used to determine the provided average price per kWh (500, 1,000 and 2,000).
• Average Price per kWh: Shows the estimated cost of electricity at different usage levels, such as 500, 1,000, or 2,000 kWh. It helps you compare plans more accurately. Just remember that these numbers are averages and may not reflect your actual usage.

Section 3

• Energy Charge: The rate you pay per kilowatt-hour (kWh) of electricity used. This is written as cents/kWh. It is set and controlled by your retail electricity provider (REP).
• Base Charge: Not every REP will have or show this.  Some companies charge a base charge per billing cycle.

Section 4

• Bill /Usage Credits: Discounts or credits applied when your monthly usage meets certain thresholds (usually 1,000 or 2,000 kWh). They are typically a fixed dollar amount, such as $75. Only plans with usage credits will have this. 

Section 5

• TDU/TDSP Delivery Charges: Two separate fees (one per kWh and one per month) from your Transmission and Distribution Utility (TDU) for delivering power to your home. These are regulated charges that all customers within a TDU pay, regardless of who their electricity provider is. It can be listed under different names, such as “TDSP Distribution Charge.” TDSP stands for Transmission and Distribution Service Provider.

Section 6

• Type of Product: Identifies what type of electricity plan you have, such as fixed-rate or variable-price. This informs you about if your energy charge can change on a monthly basis or if it’s fixed for the duration of the contract, depending on the type of electricity plan you select.

Section 7

• Contract Term: This indicates the duration of your electricity contract. Electricity plans usually have contracts ranging from a month to 60 months.

Section 8

• Early Termination Fee (ETF): A fee you may incur if you terminate your contract before it expires (unless you are less than 14 days from your expiration date) for any reason other than relocation. These are either a set dollar amount or a dollar amount multiplied by the number of months left in your contract.

Section 9

• Price Changes: Adjustments to your plan’s rate, often tied to changes in TDU fees (these can happen multiple times per year) or costs from the Electric Reliability Council of Texas (ERCOT).

Section 10

• Pre-pay or Pay-in-Advance Product: A plan where you pay for electricity in advance, rather than receiving a monthly bill. These are typically referred to as prepaid or no-deposit electricity plans.

Section 11

• Renewable Content: The percentage of your electricity that comes from renewable energy sources, such as wind, solar, or more.

You can usually find the Electricity Facts Label on the electricity provider’s website. It should be listed with the electricity plan you are reviewing. Most providers include a link to download the EFL in PDF format, allowing you to review the terms before signing up.

If you’re comparing multiple electricity plans from different providers, enter your ZIP code into Power Wizard’s smart comparison tool. We’ll show you dozens of providers and plans that service your area side by side, so you can review each EFL without hopping between provider websites. Follow the steps below:

Now that you know the key terminology used, reading an Electricity Facts Label is simple. Just follow the steps below.

Start with the Basics at the Top

The top section of the EFL lists the essential plan details. You’ll see:

• Electricity Provider Name: The company selling you electricity.
• Plan Name: Identifies the plan when comparing options or contacting customer service.
• TDU: It will mention the utility responsible for your area.

Look at the Price per kWh

This section shows what you’ll pay for electricity at different usage levels, like 500, 1,000 or 2,000 kWh. However, these numbers are just averages. It will help you see if the plan works for your household and gauge more or less how much you’ll pay. This section is important because electricity rates or overall pricing may change based on your usage.

Understand the Components of the Price

The EFL breaks down how your total rate is calculated. Knowing the parts makes it easier to identify where your costs originate. This section includes:

• Energy Charge: The provider’s price per kWh of electricity.
• Usage Credit: A dollar amount credited when you meet or exceed a specific electricity usage. Only certain plans and EFLs will have this.
• TDU Delivery Charges: Fixed fees and per-kWh charges from your utility company, passed directly to you.
• Total Average Rate: The combined cost of energy and TDU charges.
• Base Charge: A flat monthly fee from your provider that applies regardless of usage.

To find your total rate, use this formula:

Energy Charge + Per-kWh TDU Fee + [(Per-month TDU Charge + Base Charge) ÷ Usage]

For example, let’s say your home uses 1,000 kWh in a month. Your EFL lists:

• Energy charge: $0.09 per kWh
• TDU charge: $0.03 per kWh
• Base charge: $7
• TDU charge: $4

Your total rate would be:

$0.09 + $0.03 + [($7 + $4) ÷ 1,000 kWh] = 13.1¢ per kWh

Scan for Special Conditions Under Components of the Price

Some plans include additional rules or incentives that may affect your bill. This section tells you what to watch out for.

• Usage Thresholds: Credits tied to how much electricity you use.
• Time-of-Use Pricing: Different rates for nights, weekends, or daytime hours.

Check the Disclosure Chart

Here you can see the length of your contract and fees other than your energy rate and TDU charges that can impact your bill, such as:

• Contract or Term Length: The duration of your contract, typically 12 or 24 months.
• Early Termination Fee: A penalty for canceling before your contract ends.
• Other Fees: Possible charges for late payments, paper billing, or insufficient funds.

Review the “Other Important Information”

The final section outlines what happens after your contract ends and highlights any important details you should be aware of. This includes things like:

• Renewable Content: The percentage of power from renewable sources.
• Minimum Usage Requirements: Rules that may apply if you use below a set amount of electricity.

Reading an Electricity Facts Label is the best way to understand what’s really behind an electricity plan. It shows you the rates, fees, and conditions that can significantly impact your monthly bill. But going through every detail on your own can be time-consuming, especially when you’re trying to compare multiple plans.

Power Wizard makes shopping for electricity easy. Simply enter your ZIP code into our comparison tool to instantly view the electricity providers and plans available in your area. You can read EFLs and enroll in an electricity plan directly through our website.