1. How Bill Credit Plans Work
The structure: You pay a higher base rate (12-15¢/kWh). If your usage exceeds a threshold (usually 1,000 or 2,000 kWh), you get a lump-sum credit ($50-100) applied to your bill.
| Component | Example Plan |
|---|---|
| Base energy rate | 14.2¢/kWh |
| Credit threshold | 1,000 kWh |
| Credit amount | $75 |
| TDU delivery | ~4¢/kWh |
At exactly 1,000 kWh: - Energy: 1,000 × $0.142 = $142 - Credit: -$75 - TDU: ~$52 - Total: $119 → effective rate = 11.9¢/kWh
At 999 kWh (1 kWh short): - Energy: 999 × $0.142 = $141.86 - Credit: $0 - TDU: ~$52 - Total: $193.86 → effective rate = 19.4¢/kWh
One kWh difference = $75 swing in your bill.
2. Who Bill Credit Plans Actually Help
Bill credit plans work when:
- You **consistently** exceed the threshold every single month
- Your usage is well above the threshold (not borderline)
- The credit amount is large enough to offset the higher base rate
Good fit (2,000 kWh threshold, $75 credit):
| Monthly Usage | Effective Rate | vs. Fixed 9.8¢ Plan |
|---|---|---|
| 2,500 kWh | 10.1¢/kWh | Saves $7/month |
| 2,000 kWh | 10.8¢/kWh | Saves $2/month |
| 1,800 kWh | 14.2¢/kWh (no credit!) | Costs $79/month MORE |
The threshold is a cliff, not a slope. There's no partial credit.
3. The Seasonal Trap
Here's what catches people: you might exceed 2,000 kWh in summer but fall short in winter.
| Month | Usage | Hit Threshold? | Effective Rate |
|---|---|---|---|
| July | 2,400 kWh | Yes | 10.3¢ |
| August | 2,200 kWh | Yes | 10.6¢ |
| March | 1,100 kWh | No | 14.2¢ |
| April | 900 kWh | No | 14.2¢ |
| November | 1,000 kWh | Barely | 11.9¢ |
Result: You get the credit 5-6 months out of 12. The other 6 months you're paying 14.2¢/kWh instead of 9.8¢.
Annual cost on bill credit plan: $2,340 Annual cost on flat 9.8¢ plan: $2,090
The "cheaper" bill credit plan costs $250 more per year.
4. When to Choose a Bill Credit Plan
Choose a bill credit plan if: - You exceed the threshold 10+ months per year - Your lowest month is still above the threshold - You have a large home with high base load (pool, multiple AC units)
Avoid bill credit plans if: - Your usage drops below the threshold in winter or spring - Your usage fluctuates significantly month-to-month - You're in an apartment or efficient home - The threshold is 2,000 kWh and your average is 1,500 kWh
The safest bet for most people: A simple fixed-rate plan with no gimmicks. You know exactly what you'll pay.
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Upload Your Bill →Frequently Asked Questions
Can I get a partial bill credit if I almost hit the threshold?
No. Bill credits are all-or-nothing. Use 999 kWh on a 1,000 kWh threshold plan and you get zero credit. There's no pro-rating.
Why do bill credit plans show the cheapest rates on PowerToChoose?
Because PowerToChoose calculates the rate at exactly 1,000 and 2,000 kWh — the typical threshold levels. At those exact points, the credit makes the effective rate look very low. At any other usage level, the rate is much higher.
How do I know if I consistently hit the threshold?
Check your last 12 months of bills. If you exceeded the threshold every single month — including spring and fall — a bill credit plan might work. If you dipped below even 2-3 months, you'll likely pay more overall.
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This article is for informational purposes only. Electricity rates and plans change frequently. Always verify current rates before switching.