Many retail electric providers charge a base charge as part of their fees. But what is it, and how does it affect the price of your electricity? Our guide explains what a base charge is, how it is different to the minimum use fee, and whether it can be avoided.
What is a Base Charge?
A base charge is, according to the Public Utilities Commission, a "flat fee applied each month regardless of the amount of ... kWh used". This fee is usually intended to cover administrative costs associated with providing customer service and/or billing. Most retail electric providers that charge such a base cost do so on a monthly basis, though some REP charge a daily base charge to customers on prepaid plans.
Note that a base charge is different from a "base energy charge" which refers to the cost of your electricity supply.
How is a Base Charge Different From a Minimum Usage Fee?
However, some retail electric providers charge different base charges for different usage levels, or only charge a base charge when customers consume under a certain threshold. In this case the base charge is more similar to a "minimum usage fee".
You can find more information about minimum usage fees on our dedicated page, but in short a minimum usage fee is sum charged to customers who consume under a certain kWh threshold in a month. The amount charged varies by retail provider.
Can I Avoid Paying a Base Charge?
Some retail electric providers in Texas offer rates without base charges. These are typically slightly higher rates than those that charge a base charge, so depending on your energy use you may actually be better off paying a base charge or minimum usage fee with a lower rate. In general, customers who consume around 2000 kWh or more per month are probably better off paying a lower rate that includes a base charge and/or minimum usage fee, as the savings on the lower rate are more likely to compensate for the fixed base charge. Many retail electric providers in Texas charge lower base charges at higher consumptions, and the highest threshold for a minimum usage fee in Texas tends to be around 2000 (with many REP waiving minimum usage fees at lower monthly consumption levels).
Small power consuming customers should check whether the energy plans they are interested in charge a base fee, and whether it varies with consumption levels. They would likely be better off paying a slighly higher rate with no base fee charged, but it is important to compare a few cost estimates before coming to a final decision. If you don't know what your monthly consumption is, check out our estimation tool.