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Is the rate worth the reward?
Questions about gift card promotions

Posted by Bobby Dornbos on 12/09/2013 at 2:34 PM

With holiday shopping on everyone’s to-do lists, we’ve noticed that some electric providers are offering gift cards as an incentive to sign up for their plans. But before you grab a gift card offer and sign up for a year of electricity, take this into consideration:

What's the true cost?  

For example, here's an offer for a one-year fixed rate plan with a $200 gift card thrown in. Sure, you have that gift card coming your way after signing up, but how does the electric rate compare to others? Let's take a quick look.

Gift Card Promotional Plan Example
  • All-In Electric Rate (Including pass-through TDSP delivery fees) : 11.9 cents for a 1,000 kWh average monthly usage, or 11.5 cents for 2,000 kWh
  • Usage Charge: $9.95 if monthly kWh usage is less than 800 kWh
  • Promotion/Reward: $200 gift card
After subtracting the value of the gift card, this promotional plan would cost the homeowner about $1,430 for an annual usage of 12,000 kWh, and $2,850 for a 24,000 kWh usage.

Now, what about a current, low price plan on myTrueCost.com?

Current 12-Month Fixed Rate Offer on myTrueCost.com
  • All-In Electric Rate (Including pass-through TDSP delivery fees) : 9.3 cents for a 1,000 kWh or 2,000 kWh average monthly usage
  • Usage Charge: $7.95 if monthly kWh usage is less than 999 kWh
  • Promotion/Reward: N/A
With no special gift card adding to marketing costs, the annual cost is about $1,100 for a 12,000 kWh usage, or $2,230 for 24,000 kWh. Using these assumptions, this pricing would be $330 or $620 cheaper than the plan WITH the free $200 gift card!

The bottom line

Promotional plans can end up costing MORE than non-promotional plans, even after you've cashed in that $200 gift card.

These factors should be considered when signing up for any electric plan, but promotional deals can often attempt to disguise a high price with a minimal reward. If a plan, like the one in our example, offers a nice gift card but carries a higher energy charge, is that really a gift you want to receive?  

As always, the best way to see what your electric bill would look like on any given electric rate is to run the math using your very own meter data before signing up. Or, better yet, let us do it for you. That way, you can select an electric plan that suits your household and use any savings to buy something you really want -- not electricity.

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