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TXU price protection plans
Old 12-02-2006, 09:55 AM   #1
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TXU price protection plans

Hello all, Poundkey's DW here asking a question.....since this is my department. Folks in and around Dallas, Texas are being asked by TXU Energy to select an electric plan to insure price protection. There are several plans ranging from locking a customer into a 24 month program with a guaranteed price lower or equal to what I am paying now plus a sizeable early cancellation fee........to just locking into a guaranteed higher price for a shorter period of time and no early cancellation fee. Of course per TXU's offer, "the only circumstance in which the price could change during the 24 month minimum term is in response to a change in law or regulatory charges". Has anyone researched the options and do the plans benefit TXU Energy or the customer? Am I missing something obvious?
Thanks for your input.
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Re: TXU price protection plans
Old 12-02-2006, 08:48 PM   #2
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Re: TXU price protection plans



I'm glad I live in Garland which operates its own municipal electric company
with rates cheaper than TXU



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Re: TXU price protection plans
Old 12-02-2006, 11:34 PM   #3
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Re: TXU price protection plans

Quote:
Originally Posted by Poundkey
Hello all, Poundkey's DW here asking a question.....since this is my department. Folks in and around Dallas, Texas are being asked by TXU Energy to select an electric plan to insure price protection. There are several plans ranging from locking a customer into a 24 month program with a guaranteed price lower or equal to what I am paying now plus a sizeable early cancellation fee........to just locking into a guaranteed higher price for a shorter period of time and no early cancellation fee. Of course per TXU's offer, "the only circumstance in which the price could change during the 24 month minimum term is in response to a change in law or regulatory charges". Has anyone researched the options and do the plans benefit TXU Energy or the customer? Am I missing something obvious?
Thanks for your input.
It seems hard to believe that TXU has suddenly taken stupid pills and decided to fork over money to their paying customers.

Someone has studied this situation to death and decided that they're in a good position to bet that their cost of generating power will be going down...
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Re: TXU price protection plans
Old 12-03-2006, 05:22 AM   #4
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Re: TXU price protection plans

Quote:
Originally Posted by Nords
Someone has studied this situation to death and decided that they're in a good position to bet that their cost of generating power will be going down...
Our electric co-op (in rural central/west TX) just lowered their rates slightly.
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Re: TXU price protection plans
Old 12-03-2006, 05:33 AM   #5
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Re: TXU price protection plans

With natural gas prices very high, like they are now, it seems a good time for them to lock in your price.
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Old 12-03-2006, 07:45 AM   #6
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Re: TXU price protection plans

Quote:
Originally Posted by Nords
It seems hard to believe that TXU has suddenly taken stupid pills and decided to fork over money to their paying customers.

Someone has studied this situation to death and decided that they're in a good position to bet that their cost of generating power will be going down...
I totally agree with Nords! There was an article about a month ago in the WSJ about how Texans pay the absolute highest rates - 14 cents per kwh!- in the country thanks to TXU and a state legislature that is incompetent (and that is putting it kindly!) They allow TXU to raise rates when electricity goes up, but don't require it to lower prices when electricity costs go down! Therefore good 'ol TXU continues to gouge its customers! I would never trust TXU and sign any type of long-term agreement. We use Reliant (which is just as bad, but is 5% lower than TXU). By the way, according to the article, our neighboring states pay 1/2 the rates per kwh that we do in Dallas!

There will be total deregulation in January. I am waiting to see if competition really works and if out of the ashes will come the "Southwest Airlines" of power companies. That is only way that we will have reasonable rates.

But frankly, I'm not holding my breath...
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Re: TXU price protection plans
Old 12-03-2006, 08:20 AM   #7
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Re: TXU price protection plans

Quote:
Originally Posted by BarbaraAnne
There was an article about a month ago in the WSJ about how Texans pay the absolute highest rates - 14 cents per kwh!- in the country thanks to TXU...
Like Baxter above we have a co-op and pay significantly lower rates than others in TX, especially those living in the area served by TXU. Last year we opted to purchase wind generated power and have paid 8 cents per kwh through all the rate gyrations.

Quote:
Originally Posted by BarbaraAnne
...and a state legislature that is incompetent...
Unfortunately, our area of the state is also served by the same wind-generated legislature... :P

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Re: TXU price protection plans
Old 12-03-2006, 09:48 AM   #8
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Re: TXU price protection plans

Thank you all for the great responses. Nords and BarbaraAnne have especially helped me focus on what the situation (probably) is.

First of all.....hardly a day goes by without an article in the Dallas Morning News about TXU and it's plans for 11 new coal burning plants....7 of which would be concentrated in the triangle made up by Houston, San Antonio, and Dallas. The articles are always about enviromental issues (state wide) verses positive economic impacts for the small towns near the new plants. TXU promises to make the air cleaner, but is vague on how this will happen. They also promise prosperity for the citizens of the small towns. After the "open" meetings (where environmentalists have their say) the "backroom" meetings take place between city officials and TXU......where the "deal" is usually struck. See DMN business section Dec. 3 to get an idea on how this works.
Also keep in mind that State and Federal officials are fully behind TXU's plans for new plants. Not fully understanding the business of producing electricity it seems to me that TXU is about to become the 500 pound gorilla in the room. Does anyone see this differently?

So IMO it comes down to this.....TXU is and will be the only game in town. With deregulation in January TXU may have to compete with lower rates.....at least for a while. Once all these new plants are online who knows what will happen. I expect that TXU will eventually be able to set rates where they want them and that folks north of these plants (DFW in particular) will be breathing some very bad air.

I think I agree with BarbaraAnne......signing a long term agreement with this outfit is something I don't want to do.
Thank you all again for the replies.
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Re: TXU price protection plans
Old 12-04-2006, 12:59 PM   #9
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Re: TXU price protection plans

TXU raised their rates through the sky when nat gas went up last year. Naturally, they've been less inclined to LOWER rates now that nat gas is about 50% lower. I told 'em to go f$&% themselves...
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Old 12-04-2006, 01:04 PM   #10
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Re: TXU price protection plans

Shop around: http://www.powertochoose.org/

TXU has just about the worst rates available
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Re: TXU price protection plans
Old 12-04-2006, 03:42 PM   #11
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Re: TXU price protection plans

What gets to me is the little bitty print that says you pay them a fee ($200, if I remember correctly) if you break the contract early.



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Old 12-04-2006, 07:10 PM   #12
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Re: TXU price protection plans

Been looking around a little more. This company is pretty popular.
https://www.startexpower.com/index.aspx
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Re: TXU price protection plans
Old 12-04-2006, 07:22 PM   #13
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Re: TXU price protection plans

I'd wait before locking in prices for multiple years.

If I'm not mistaken TXU's "Price to Beat" is set based on something like a $13 / MMbtu gas price. Current gas prices are around $8. Inventories are full. A warm winter could drive prices down a bunch.

Although there isn't much price competition now, if margins stay that fat, competitors will increasingly look to undercut incumbent (read TXU) pricing to gain market share.

I'd switch to whoever has the lowest month to month plan and keep an eye out for better deals - they should be coming.
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Old 12-04-2006, 08:44 PM   #14
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Re: TXU price protection plans

Quote:
Originally Posted by 3 Yrs to Go
I'd wait before locking in prices for multiple years.

If I'm not mistaken TXU's "Price to Beat" is set based on something like a $13 / MMbtu gas price. Current gas prices are around $8. Inventories are full. A warm winter could drive prices down a bunch.

Although there isn't much price competition now, if margins stay that fat, competitors will increasingly look to undercut incumbent (read TXU) pricing to gain market share.

I'd switch to whoever has the lowest month to month plan and keep an eye out for better deals - they should be coming.
I agree and think that's why we are getting bombarded by TXU and Reliant to lock-in now. I have gotten at least 5 mailings from Reliant in the last week, including one today. I don't think they are trying to help consumers...they are trying to protect profits!
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Old 12-04-2006, 09:07 PM   #15
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Re: TXU price protection plans

Quote:
Originally Posted by 3 Yrs to Go
I'd wait before locking in prices for multiple years.

If I'm not mistaken TXU's "Price to Beat" is set based on something like a $13 / MMbtu gas price. Current gas prices are around $8. Inventories are full. A warm winter could drive prices down a bunch.

Although there isn't much price competition now, if margins stay that fat, competitors will increasingly look to undercut incumbent (read TXU) pricing to gain market share.

I'd switch to whoever has the lowest month to month plan and keep an eye out for better deals - they should be coming.
Quote:
Originally Posted by BarbaraAnne
I agree and think that's why we are getting bombarded by TXU and Reliant to lock-in now. I have gotten at least 5 mailings from Reliant in the last week, including one today. I don't think they are trying to help consumers...they are trying to protect profits!
Goods points from both of you, and pretty much the conclusion I've come to.......shop for the lowest monthly price and keep an eye out for an even better deal.
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Re: TXU price protection plans
Old 12-05-2006, 10:53 PM   #16
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Re: TXU price protection plans

I suppose you've seen the news stories that last quarter was TXU's most profitable quarter ever...by like 4x the previous high I think. Anyway, over a billion of profit due to lower energy costs but no price drops. Everyon'es pretty peeved about it, so I imagine pressure of one sort or another may drive prices down. But prices are ridiculous now. I'm sure they'd love to lock you into this price and were telling the legislature about how nice their plans are to protect against future hikes.

I'm mainly griping. I don't have the answer. I'm temporarily staying with family so I haven't had to work out the details myself yet.
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Re: TXU price protection plans
Old 01-20-2007, 08:34 AM   #17
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Re: TXU price protection plans

Hey Poundkey and DW,
I don't know if you saw but within the last couple of weeks a bill was introduced into the TX legislature that would force utilities to reset their default pricing (what used to be know as the "Price to Beat") to levels based on current natural gas prices. For TXU that would mean a reduction to about 11.5 cents / kwh from something like 14.3 cents. Considering that most of the competitive offerings in TXU's service territory are above 11.5 cents, the legislation, if passed, would force down the entire pricing complex. I don't know how much support the bill has, but it seems like a political no-brainer to me.
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Old 01-20-2007, 09:35 AM   #18
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Re: TXU price protection plans

In addition, if you look at Powertochoose.com there are some companies offering around 12 cents/kwh. I am seriously considering Spark Energy.

This is why TXU and Reliant were trying to lock folks in at higher rates. As Nords said, the energy companies weren't taking "stupid pills"!
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Old 01-20-2007, 09:42 AM   #19
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Re: TXU price protection plans

Quote:
Originally Posted by BarbaraAnne
In addition, if you look at Powertochoose.com there are some companies offering around 12 cents/kwh. I am seriously considering Spark Energy.

This is why TXU and Reliant were trying to lock folks in at higher rates. As Nords said, the energy companies weren't taking "stupid pills"!
Yes, the "Price to Beat" scheme ended Jan 1, 2007. The incumbents were aware that the legislature could try to meddle with things this year. Their intent was two fold 1) lock people into long-term deals at record high rates 2) have as many people as possible switch to a "competitive offer" before Jan 1, 2007 so they could argue that competition was working and legislative intervention wasn't needed.
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Old 01-20-2007, 09:56 AM   #20
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Re: TXU price protection plans

Thanks for the update, 3 Years to Go.

Let's use this thread to compare notes as to the best deals going forward. By communicating we can all hopefully get a better deal than in the past.

We are all tired of paying outrageous prices for energy compared to neighboring states. When we move in a couple of years, if we stay in Texas, we will most likely move to an area with an electric co-op. Rates are much cheaper!

I'm embarrassed to say what we pay for A/C in the summer. It probably is greater than some folks' mortgages!
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