A beginner's guide to buying energy

January 22nd, 2024

A beginner's guide to buying energy

Ever feel like the energy industry’s speaking another language? Kilowatts, hours, unit prices, standing charges, plans – enough to make your head spin, right? We get it. We’re all about making energy buying as breezy as picking up your favorite cereal box, but let’s face it, the jargon and complexities can be a real maze.

To cut through the confusion, we’ve whipped up a quick guide. Think of it as your energy ABC’s – from picking the right plan to cracking the code on your usage.

Let’s start at square one.

How does the energy market work?

First let’s break down the energy market, which is made of three parts:

  • First up, there’s us – energy suppliers, the folks making sure your lights stay on and your home stays cozy.
  • Second, there are the energy generators – think wind farms, solar setups, nuclear power and gas.
  • Third, the infrastructure managers, handling the pipes, pylons, and cables. They balance the energy flow, making sure there’s enough for everyone, and sort out the nitty-gritty of getting that power to your home.

As an energy supplier, we’re the middle players. We hustle to snag energy from generators and deal with the complex side of things. Chatting with generators, keeping in tune with the fine infrastructure managers, and staying buddy-buddy with the regulators. We’ve got your back so you skip the industry headaches.

How the energy you use is measured

Energy use is measured in kilowatt-hours (kWh). A kilowatt-hour represents the amount of energy consumed when a device with a power rating of one kilowatt operates for one hour. This uni helps quantify the total electricity consumption and forms the basis for billing customers. The electric meters installed in homes and businesses measure the amount of electricity consumed in kilowatt-hours, allowing accurate tracking and billing based on usage.

How you're charged for energy

Energy is charged based on the amount of electricity consumed, measured in kilowatt-hours (kWh). The billing process involves multiplying the energy consumption (in kWh) by the unit price or rate charged by the electric company. The resulting total reflects the cost of the electricity used during a specific billing period.

For example, if you use 1000 kWh of electricity and the rate is $0.10 per kWh, the calculation would be:

  • Total Cost = Energy Consumption (kWh) x Unit Rate
  • Total Cost = 1000 kWh x $0.10/kWh =$100

The total cost, sometimes inclusive of additional fees or taxes, constitutes the amount charged for the energy consumed during that billing cycle. Different energy plans and providers may have varying rate structures, including fixed rates or tiered pricing, influencing how cost is determined.

What exactly is an energy plan and how do they work?

Plans are the mastermind behind your energy costs. It is a structured agreement between an energy provider and an energy consumer, outlining the terms and conditions of their service. Energy plans specify the pricing details, contract duration, and any additional terms that govern the supply of energy to the consumer.

There are three types:

Fixed-tier: These plans are like the rockstars of energy plans, everybody knows them. Here’s the lowdown: these plans aren’t doing the time-of-day tango. Nope. They’re sizing you up based on how much energy you’re using over the month.

Companies throw around tiered rate plans, usually based on a 1000kWh average. Sounds straightforward right? Well, if your monthly usage waltzes around that 1000kWh mark, congrats! You’re scoring the lowest rate. But here’s the plot twist: dance a bit more or take it slow on the kilowatts, and suddenly, your bill is cutting a different rug with a whole new rate. It’s like a monthly energy dance-off, and your bill is the judge.

Free nights and weekends: Who doesn’t perk up at the word ‘free'? Sounds sweet, right? It’s like music to our ears! Now, when a plan flaunts that ‘free’ label, it’s bound to turn heads. Enter Free nights and weekend plans – sounds like a dream, doesn’t it? Picture this: from 11 PM to 7 AM or the whole Saturday and Sunday, your electricity bill takes a vacation. It’s the stuff dreams are made of. 

But hold on, the daytime rates might throw a curveball into that sweetness, potentially jacking up your monthly bill. When the sun is up from 7 AM to 11 PM on weekdays, Monday through Friday, your rates will be considerably high.

Flex plans – Now let’s talk about the chameleons of the energy world. Flex plans roll with not one, but two rates, depending on the time of day. Picture this: during their laid-back, off-peak times (for example, 10 PM to 4 PM), you’re cruising at a smooth 11¢/kWh. But when the spotlight’s on during the peak hours (from 4 PM to 10 PM), buckle up because you might be dancing to a higher rate, somewhere between 20¢/kWh to 26¢/kWh.

You can skip the flex and free and cut the tiers with Intelligent Octopus. Our technology seamlessly integrates with your home thermostat or electric vehicle charger to optimize these high-energy devices to turn on when it's cheapest on the grid. We pass all those amazin' savins' back to you.

Intelligent Octopus is these flex, free, and tiered plans all wrapped into one and guess what- you don't even have to lift a finger (our tech does the work) AND you unlock one of the cheapest rates in Texas. With Intelligent Octopus, you're golden!

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