The 2000 kWh Trap: Why Texas EFL Rates Are Misleading 2026

Q: Are bill credits illegal or unethical?

Bill credits are legal and disclosed in Electricity Facts Labels. Whether they're ethical depends on perspective. They're transparent to anyone reading the EFL carefully, but many consumers don't realize a low advertised rate only applies at a specific usage level. The practice is legal; the challenge is shopping at YOUR usage instead of benchmark rates.

Quick Answer

Comparison sites show rates at fixed benchmarks, but your home does not use a benchmark. Here is how that mismatch costs you money and what to do about it.

The Root of the Problem

Electricity comparison sites—including Power to Choose—show rates at fixed benchmarks.

The Electricity Facts Label (EFL) displays rates at 500, 1,000, and 2,000 kWh.

But your home doesn't use a benchmark.

Maybe you use 680 kWh in spring and 1,350 kWh in August. Maybe your apartment never exceeds 550 kWh.

REPs exploit these fixed benchmarks with bill credits structured around 1,000 kWh thresholds:

At exactly 1,000 kWh: Credit creates artificially low effective rates
At 500 kWh: No credit applies—rates skyrocket
At 2,000 kWh: Credit impact diluted across more kWh

The solution isn't finding the right benchmark—it's shopping by YOUR actual usage history.

How Bill Credits Create Phantom Savings

SimpleSaver 7 includes a $125 bill credit when you use 1,000+ kWh.

Here's how that plays out:

Usage	Credit	Energy Cost	Effective Rate
500 kWh	$0	$109	21.8¢/kWh
1,000 kWh	$125	$89	8.9¢/kWh
2,000 kWh	$125	$298	14.9¢/kWh

The 8.9 cent rate only exists at exactly 1,000 kWh.

It's a mathematical artifact, not a real price. Yet this number appears prominently in comparison shopping.

Who Gets Hurt by Fixed Benchmark Shopping

Low-usage households (under 750 kWh):
Apartments, condos, and efficient homes never trigger bill credits. They pay penalty rates while plans advertise credits they can't access.

Variable-usage households:
Most Texas homes swing between 600 kWh (spring/fall) and 1,500+ kWh (summer). Bill credits help some months and hurt others—but the hurt months often exceed the help.

New Texas residents:
Moving from states without deregulated electricity, newcomers trust the displayed rates. They pick a plan showing low rates at a usage level they never hit and discover their actual bills are 50-100% higher.

Only households with consistent usage near the credit threshold benefit from these structures.

The Flat-Rate Alternative

Flat-rate plans charge essentially the same per kWh regardless of usage:

Plan	500 kWh	1,000 kWh	2,000 kWh
True Simple 6	14.5¢	14.1¢	13.9¢
Come & Take It 12	14.7¢	14.8¢	14.8¢

The small variance (0.3-0.6 cents) comes from fixed monthly charges spreading across usage—not bill credit manipulation.

At 500 kWh: Flat-rate plans cost $72-74 versus $107-109 for bill-credit plans.

That's $33-35 monthly savings—$396-420 annually—by avoiding the credit trap.

Flat rates appear "more expensive" at 2,000 kWh because they don't benefit from credit dilution. At real-world usage, they're often cheaper.

Why Fixed Benchmarks Fall Short

Comparison tools—whether Power to Choose or any other site—share common limitations:

Fixed benchmark display: Showing rates at 500, 1,000, and 2,000 kWh means YOUR usage (maybe 680 or 1,350 kWh) falls between the cracks
Rate sorting: Default sorts reward credit-manipulated plans with artificially low rates at specific benchmarks
No usage personalization: Most sites could request your actual usage—but they show fixed benchmarks instead
Limited filtering: No easy way to filter for "flat-rate only" or "no bill credits"

The solution is shopping with YOUR usage data from Smart Meter Texas, not relying on any benchmark display.

What Regulators Could Change

The Public Utility Commission of Texas (PUCT) oversees Power to Choose.

Potential reforms include:

Usage personalization: Let consumers input their typical usage and see personalized rates
Credit transparency: Require prominent disclosure of bill credit amounts and thresholds
Rate variance indicator: Flag plans with more than 3 cents variance across usage levels
Comparison at multiple benchmarks: Display all three EFL benchmarks prominently
Smart Meter integration: Allow consumers to import actual usage history

These changes wouldn't eliminate bill credits but would expose their true impact to consumers.

Protecting Yourself From the Benchmark Trap

Step 1: Know YOUR usage
Check Smart Meter Texas for your 12-month consumption history. Note your high month, low month, and average—YOUR numbers, not benchmarks.

Step 2: Stop shopping by benchmarks
The rates shown at 500, 1,000, or 2,000 kWh only matter if you use exactly those amounts.

Step 3: Compare at YOUR usage level
Use comparison tools that let you enter your actual usage to calculate real costs.

Step 4: Spot bill-credit plans
If the 500 kWh rate is more than 2 cents higher than the 1,000 kWh rate, the plan uses bill credits that may not benefit you.

Step 5: Consider flat-rate plans
Unless your usage consistently exceeds 1,000 kWh monthly, flat rates provide better overall value.

Step 6: Use ElectricRates.org
Enter your actual usage and compare what you'll really pay—not benchmark rates.

Why This Matters for Texas Deregulation

Texas deregulation promised consumer choice and competitive pricing. Fixed benchmark comparisons undermine both.

The problems:

Consumers can't make informed choices when comparison tools show rates at usage levels that don't match their homes
Competition shifts from genuine value to marketing manipulation around benchmark thresholds
Trust in the system erodes when bills don't match expectations
REPs face pressure to adopt credit structures because flat-rate plans look "expensive" at certain benchmarks

The solution is simple: Shop by YOUR actual usage history, not by any fixed benchmark—whether 500, 1,000, or 2,000 kWh.

Frequently Asked Questions

Why do comparison sites use fixed benchmarks like 1,000 kWh?

Fixed benchmarks provide standardized comparison points—but they're not YOUR usage. EFLs show rates at 500, 1,000, and 2,000 kWh because regulations require these disclosure points. The problem: your actual usage (maybe 680 or 1,350 kWh) falls between these benchmarks, and bill credits exploit the gaps. Solution: Shop by your actual usage, not by any benchmark.

Why do REPs use bill credits instead of just offering low flat rates?

Bill credits let REPs offer headline-grabbing rates at specific usage levels while maintaining margins across their customer base. A plan offering 8.9 cents to everyone would lose money on high-usage customers. Credits let them appear cheap at the threshold (usually 1,000 kWh) while charging 14-20+ cents to customers above or below that level.

Do other states have this same problem?

States with retail electricity choice (Pennsylvania, Ohio, Massachusetts, etc.) have similar challenges with comparison complexity. Texas has a particularly active market for bill-credit structured plans. The core issue—fixed benchmarks not matching YOUR usage—exists anywhere comparison tools show standardized rates.

Are bill credits illegal or unethical?

Bill credits are legal and disclosed in Electricity Facts Labels. Whether they're ethical depends on perspective. They're transparent to anyone reading the EFL carefully, but many consumers don't realize a low advertised rate only applies at a specific usage level. The practice is legal; the challenge is shopping at YOUR usage instead of benchmark rates.

What should comparison sites show instead of fixed benchmarks?

Ideally: let consumers enter their actual usage and see personalized costs. Better options:

Show all three EFL benchmarks (500, 1,000, 2,000 kWh) prominently
Smart Meter integration for the most accurate comparisons

Until sites improve, use tools like ElectricRates.org where you can enter YOUR usage to see real costs.

Looking for more? Explore all our Texas Energy guides for more helpful resources.

About the author

Enri Zhulati

Consumer Advocate

Enri knows the regulations, the fine print, and the tricks some suppliers use. He's spent years learning how to spot hidden fees, misleading teaser rates, and contracts that sound good but cost more. His goal: help people avoid the traps and find plans that save money.

Electricity deregulationTexas retail electricity providersPUCT consumer regulationsTexas satisfaction guaranteesERCOT electricity market

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Topics covered

Texas 2000 kWh Power to Choose rate comparison bill credits misleading

Sources & References

U.S. Energy Information Administration (U.S. Energy Information Administration): "Average Texas residential electricity consumption data"Accessed Dec 2025
Public Utility Commission of Texas (Public Utility Commission of Texas): "Official Texas electricity comparison site"Accessed Dec 2025