Why The Sudden Electricity Bills Spike In Texas This Summer?

Is There an Electricity Production Deficit in Texas?

Texas is America’s seventh largest producer of solar power, especially now after the industry’s growth by over fifty-nine percent in the last year alone.  Furthermore, Texas has the most potential for renewable energy in the country. But even though that seems like a big deal, the electricity generated is still not enough to sustain the 9 million homes in the state. While solar energy is not the sole supplier, the energy deficit has been increasing gradually because of the high numbers in migration Texas has seen. It is estimated that more than 400,000 people moved to Texas in 2017 alone, and it’s no wonder why, but with two coal-powered plants closing at the start of 2018, the electricity situation has worsened.


With the approach of the summer, the demand for electricity is expected to hike dramatically and the shortage in response to the high demand will end up spiking the prices per unit. People whose contracts are about to expire in a month or two or until August will be the ones who’ll suffer the most as the renewing of their contracts will cost them a lot while people whose contracts don’t expire yet will suffer from the hike but not as much.


Increased Electricity Prices and How to Avoid Them


Anyone renewing their electricity contract in Texas knows the dilemma they are faced with. The prices have skyrocketed, and the contract prices have all but doubled in anticipation of the hot weather and power shortages. Just a year ago, the people of Texas were shopping for contracts with prices that were low and affordable but now the consumers can’t help but choose from the pricier ones.


The retailers might not be willing to go vocal about the price hike and are trying to keep the whole matter under wraps, but it is estimated that the prices have gone up by more than twenty percent in the last year alone. The last time such a hike was experienced was in 2011 and it was bound to be a change in those low prices.


There are some distributors that are offering contracts at prices as low as 2.7 cents per kWh but that price is for a limited amount. If you go up even one kilowatt over 1000 in the contact, you are not penalized heavily and the overall rate goes up to 15 cents a kWh which is even more than the ones in the other seemingly pricier contracts.


The best way to deal with the price hike is to renew your contract as soon as possible especially if it is set to expire in the coming months and while choosing the plan you want, don’t forget to read the ‘fine print’ available on the sites of the distributors. Compare and after learning everything there is to know, make an informed choice and get the plan most suited.


Another thing you can do to help is finding a good Texas electricity calculator website such as TexasElectricityExaminer.com which calculates all the specifics of your plan and your electricity bill. Doing so will help keep you informed when you are choosing the electricity provider.  Don’t forget to check out resources that help using electricity more efficiently in your home.


What’s Behind the Ever Increasing Texas Electricity Rates?

Now that you know how to avoid and manage the coming hike in Texas electricity bills, let’s take a look at what’s behind the ever-increasing Texas electricity rates in the first place. It is not the retail companies that are increasing the prices of a unit but rather the electricity markets where they buy the power from. The surge in pricing is more in expectation of the hike in consumption as reports of extremely hot weather and increased demand for electricity in the region are forecast.


Not just that, but the shutting down of the coal-power plants have contributed to the energy deficit and it is being estimated that the wholesale prices are bound to go up from around $50 per megawatt hour to $200 per megawatt hour. A very steep surge in prices expectation has made some of the retail companies withdraw their usual prepaid packages that offered variable rates depending on the wholesale price changes. The consumers are being encouraged to go for longer-term plans so that the surge experienced wouldn’t affect them too acutely.


The companies that buy wholesale power have to pay double for the same number of units as they did last year, but there have been expectations of this happening for some time now. There have been so many recent changes in the economics of power development that there was bound to be a price hike sooner or later.


The heavy shale drilling with all its benefits and consequences, combined with the increase in renewable resources like wind and solar power have been producing electricity at such a low cost that coal-powered electricity plants had to be shut down. While it wasn’t a bad decision at the time, it has adversely affected the electricity market.


Even though the new power plants have been producing energy at a lower cost than the coal ones, the profits of the investors are not as abundant as they used to be. This has discouraged people from investing in new power development projects. The lack of interest in the power industry combined with the increased demand is the reason that the prices have been rising and are expected to increase even more. There have been reports that the wholesale prices have peaked in demand especially during mid-afternoon times when the heat is unbearable and the air conditioners are working full force. At that time, the prices can go up to $200/megawatt hour instead of the $55 they were last year.


There are some long-term effects that the public and industry experts alike are expecting after this power shortage and increase in prices.  Power companies might end up shutting down if they don’t have enough capital to pay for the wholesale price of Texas electricity in the market. That would further cause a decline in the available energy as well as a further increase in prices. The only thing that can be done to save consumers from the sudden increase in the cost of electricity in Texas is to avail plans that have fixed costs instead of monthly variable plans that 10 percent of the Texans have. Experts have advised that the surge in pricing would trickle down with the public’s preference for fixed-price plans. Thus, consumers on fixed priced plans don’t have much to worry about in the upcoming pricing crisis.