Electric Miles – The NRG United Promotion

You’ve heard of those deals before.  They draw you in with a great promotional rate or a free month of something.  You’re pretty happy with what you get, and then they smack you with a high charge, just when you thought you were safe!

If you’re careful though, you can come out ahead.  I was able to net a decent chunk of MileagePlus miles with a recent offer from NRG Home.  We’ll likely be using our MileagePlus miles to fly Lufthansa to Germany.  We have some family that will be there for a few years, what better way to explore a new country, than on free miles with your family and friends?

So, here’s what I did.

The Offer

NRG offers miles on the supply portion of your electricity bill.  I’ve seen partnerships with Southwest, United, and American Airlines in the past, though I’m sure they also work with other folks too.  NRG isn’t the only supplier either!  Depending on your location, you’ll be able to find similar deals from Energy Plus or another supplier as well.

I opted for a deal to earn some extra MileagePlus miles.  Basically, the offer had two requirements:

  1. Sign up for NRG electric supply.
  2. Keep NRG for 3 months of service.

In exchange, I received 10,000 MileagePlus miles, an additional 2,500 miles for being a United MileagePlus Explorer cardholder, and 3 miles per dollar spent on the supply portion of my electric bill (2 with the deal, plus 1 more for being a cardholder).

There is a catch, but, you knew that was coming…  For the first three months, you get NRG’s “promotional pricing.”  Hint, it’ll still be higher than your current electric supply price.  After those three months, it’ll go up even more.  This deal, like most, is all about timing.  Be sure to cancel as soon as you pay your third bill with NRG as your supplier!  There’s a little disclaimer that cancellation may take 1-2 billing cycles, but mine was almost immediate.  I may have just gotten lucky, so be sure to cancel your NRG service on time!

How does NRG work, anyway?

If you want to get to the important part of this deal,  scroll down to the next session.  For a quick lesson on the electric infrastructure and industry in the states, keep on reading!

For a bit of the regulation behind these kinds of offers, it helps to understand what’s going on when you see your electricity bill.  Basically, in a deregulated utility industry, you’re allowed to choose your energy supplier and distributor.  In reality, your distributor is almost always based on your location.  For me, that’s National Grid.  They run power lines to the apartment I’m in, so I sign up with them for electricity.  Now, that’s usually where it stops.  Your typical consumer signs on with their distributor for the distribution and the supply portion of the bill.  You don’t have to though:  you typically have a bit more flexibility with where you actually purchase the electricity from.  In my case, I opted to purchase my electricity from NRG (in exchange for some miles).

Better yet, the billing process doesn’t even change.  I still got one bill from National Grid every month, they just charged me for the NRG supply portion right on the same bill!  Essentially, you’re just directing National Grid to purchase electricity form NRG on your behalf.

In the same way, you can usually choose to pay a bit more for having “renewable” energy sent to your house.  You’ll pay a small premium, and essentially be subsidizing the renewable energy industry.  Due to the way the grid works, you can’t be sure that the actual kilowatt you just used is from the wind turbine you see as you drive down the highway, but your money is still supporting the renewable sources!

Watch out for the cost though.  First and foremost, your electricity bill will increase.  Plan to do this when you use the least amount of electricity.  For most, this will be in the winter, without all those air conditioners running.  Those with electric heat are the exception to this rule, under no circumstances, ever, increase your electric cost in the winter if you have electric heat!  Your bill will skyrocket, and it won’t be worth the miles.  Better yet, sign up before you go for a long trip abroad, when you’ll be using precisely zero watts of electricity!

nrg-national-grid-bills

You can see my increased electricity cost from the three bills in the middle, while I was a customer of NRG.

If you haven’t figured it out already, this deal is designed to lure people in.  You get a bunch of miles quickly, and then they bring the price up on you, after you forget about it.  After all, NRG has to purchase all those airline miles, adding to their own costs.  If they didn’t sell their electricity at a premium, they’d be underwater pretty fast.

Timeline

Here’s how it went down.

I signed up for NRG through the United promotion on June 30th, 2016.  Starting with my next bill, June 30th to July 29th, I started receiving the supply portion of my electricity from NRG.  For the next three months, I received my electricity from NRG.

I received my first miles from NRG on August 18th, from my bill ending on July 29th.  58 miles, which was 3 miles for each dollar of a $19.55 supply charge.  2 miles/$ for the regular promotion, and 1 extra mile/$ since I’m a United MileagePlus Explorer cardholder.

On the second bill, I earned 69 MileagePlus miles on about 23 kWh of electricity supply.  At the same time, I also earned my 12,500 bonus miles from signing up and having service for 3 months.  But wait, that was only 2 months!

nrg-mileageplus-activity

Due to timing issues on the grid, by the time you get your energy bill for month 2, you’ll already have started month 3.  The energy provider (National Grid, in this case), can’t switch your supplier mid-bill, so by this time, you’re locked into NRG for another month.  Therefore, NRG can release those bonus miles by the time you pay your second month’s bill.  For the same reason, NRG didn’t give me miles for the 3rd month of service.  I cancelled the day after I got the bill for the 3rd month, before they were able to send me the miles for that third month.  No hard feelings!

..and now, the numbers!

Adding this all together, and valuing MileagePlus miles at 1.5 cents apiece, we now have:

12,500 MileagePlus bonus + 127 MileagePlus supply = 1,377 MileagePlus miles

13,877 MileagePlus miles = about $208.15

The utility market is always changing.  For my June bill before NRG, I was at 8.04 cents/kWh.  After NRG, in September, I was at 8.08 cents.  Let’s just call that 8 cents, shall we?

For all three of my NRG bills, my supply rate was 10 cents/kWh.  An increase of 2 cents/kWh, or 20% over my current rates.  That’s not actually that bad.  But remember, this was the promotional rate for my first three months.  Considering I use so little electricity (I’m not home much), the increase in the actual bill isn’t much.  For example, I only would have saved $4.88 on that first month of service, by sticking with National Grid.

Forgot to mention, kWh stands for kilowatt hour.  1,000 watts, for 1 whole hour.  See that lightbulb above your head?  No no, not that one, the fancy LED bulb over there!  With one kWh, I can power one of those for 72 hours straight.  That supply of electricity will cost me 8 cents on National Grid, or 10 cents on NRG.

I’m estimating the total cost from using NRG as my electricity supplier at about $12.83 for those three months.  That’s the 20% increase on the supply portion of my bills.

($19.55 + $23.30 + $21.32) x 20% = $12.83

So, that gives us a net gain of about $195.32 (the cash value of the miles), or about 13,000 MileagePlus miles.

Let’s run with that profit of $195.32.  That number doesn’t include my time spent on this.  Admittedly, it wasn’t much time.  I’d estimate 40 minutes between sign up, cancellation, and NRG’s follow up call, trying to convince me to come back.  In case you were wondering, I didn’t go back.  You can cancel via email though, so that’s a huge plus.  I’m sticking with my recent estimates of $15/hour in my own labor costs.  So that’s $10 in labor.

 Value of miles earned – (Additional electric cost + Cost of time) = True Value

$208.15 – ($12.83 + $10) = $185.32

Shoot, that doesn’t look good.

But what about without that credit card?

Would it still be worth it?

Well, my existing relationship with Chase and United earned me an extra 2,500 bonus miles, and an extra 42 miles on two months of bills.  That’s is an additional 2,542 MileagePlus miles, worth somewhere around $38.13.  Not including the bonus cardholder miles, here are the numbers:

10,000 bonus + 85 supply miles = 10,085 MileagePlus miles

10,085 MileagePlus miles = about $151.28

Now, lets take out those costs again.  Increased electric supply cost, and my precious time.

 Value of miles earned – (Additional electric cost + Cost of time) = True Value

$151.28 – ($12.83 + $10) = $128.45

You’d still be in decent shape, even without the card.  Keep in mind though, that NRG partners with other airlines too.  So, if you don’t have the United MileagePlus Explorer card, but you do have, say, the Southwest Companion Pass, it probably makes more sense to do the Southwest deal.  Just be sure to do the math and double check.

So, should you do it?

Yes.  Well, if the following statements are true about you:

  1. I keep track of deadlines.
  2. I will be able to use the miles I earn.
  3. I have disposable income.

At the end of the day, the answer is going to depend on you.  If you can’t check off all those boxes, it’s probably not worth it for you.  Forgetting to cancel on time could raise your out of pocket cost dramatically.  My numbers look good up there, but that’s because I canceled immediately after my third month of service, when the promotional supply rate ended.

Number 2 is easy.  If you can’t use the miles, don’t earn them.  There’s no point in going through the hassle of points and miles if you can’t redeem them all.  For me, it’s free money.  For someone who doesn’t want to travel, not so useful.

Let me get all Mr. Money Mustache on you for a minute.  If you’re in debt…DON’T DO THIS.  Anything that increases your living expenses, even if only by 12 dollars and 83 cents, is not worth it.  Miles and points are not a good trade compared to high interest credit card debt, student loans, or anything else hanging over your head.

For the rest of you, go for it!  You’ll find all sorts of blogs and articles about why you shouldn’t fall for the airline miles scheme from power companies.  This post is a counterpoint:  you can come out ahead, as long as you make a plan, and execute your plan.  Run the numbers, see if it works for you, and rake ion those miles!

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s