Texas Customers: What You Need to Do to Prevent Overwhelming Electric Bills After The Winter Storm

Texas Customers: What You Need to Do to Prevent Overwhelming Electric Bills After The Winter Storm

The 2021 Texas Winter Storm caused a ton of confusion around energy bills. See who was affected and why.

Thad Warren By Thad Warren

Who Will Have a Shockingly High Electric Bill?

Electric bills upwards of $16,000!?

You’ve probably seen the horror stories of those who received an insane electric bill that rivaled the cost of a new car.

Unfortunately, this is a real occurrence for some, but for the most part, these sorts of incidents are limited to a low percentage of Texans. The main factor that will determine your electric bill after the winter storm is the type of energy plan you are on.

Fixed Rate Plans

Fixed rate plans have a set price per kilowatt-hour (kWh) that is used. This rate lasts the lifetime of the contract. Most Texans are on a fixed rate plan that protects them from market fluctuations like the skyrocketing prices we are seeing now.

So good news, if you are on a fixed rate electric plan then you will not see a huge spike in your bill. However, many contracts have legal language around significant changes in cost and, or a change in law. Even customers on a fixed rate plan should keep an eye out for any communication for their energy provider related to the contract provisions of their agreement.

If your energy provider changes your contracted fixed rate for any reason, you should contact your supplier to ask for clarification to the reason and ask for the exact calculation as to how any changes effected your contracted rate. 

There is a chance some energy providers may even cancel contracts. In that case, you should search for a new energy provider

Variable Rate Plans (Month-to-Month)

Variable rate plans have no monthly contract or cancellation fee, but the rate you pay per kilowatt-hour (kWh) can vary from month to month. Your rate can go up or down based on the market and the discretion of your energy provider. 

In the case of the recent winter storms, this is not ideal. Since market rates have increased significantly it is very likely that your rate will increase next month. Since your rate changes month to month, you should not see a large increase in February, but your March rate could be much higher.

If you are on a variable rate electric plan you should look to find a new energy provider as soon as possible.

Indexed Variable Rate (Expired Month to Month)

Index rates are based on real-time market prices.  In Texas, the market settles every 15 minutes and the price per kWh can go up or down every 15 minutes. Index pricing can be very beneficial during normal weather conditions resulting in a low cost of power, but when demand increases in the hot summer months or cold winter months, rates can rise significantly with sometimes little to no warning.  This type of rate may also be referred to as a “wholesale” rate.

It is essential to know that most electricity contracts default to index-based pricing at the expiration of their existing contract term.  If you are unsure if your contract has expired or when it expires, that information may be listed on your bill.  If you do not see that information on your bill, please contact your retail electric provider.

During the winter storms, the real-time market price hit the system cap for the Texas market. Even a very short period of time at high rates can result in bills being higher than normal. This means if you are on an indexed variable rate you are probably going to receive a high electric bill for February. 

If you have questions about your rate, payment options, government intervention in the form of FEMA funds, or anything else, you should contact your energy provider. This is an unprecedented time in the Texas energy market, so like you, providers are trying to navigate issues and figure out the best path forward. 

Working With Your Energy Provider

In deregulated parts of Texas (like most of DFW), your Retail Electric Provider (REP) is the company you pay your energy bills to. For example TXU Energy, Reliant Energy, and Cirro Energy. They are a separate entity from your utility company like Oncor or CenterPoint.

What to do with your next electric bill

You are more likely to use more electricity during an extreme weather event. In Texas, it’s generally a heatwave, but winter storms also result in atypical electricity usage even with gas heating. 

If you see a higher than a normal bill, first check to see how much power you consumed versus the prior month or same month last year. If your usage is up, that often explains most bill increases, but if your rate is different, you should check with your provider for clarification.

If you receive a bill that you cannot afford or have questions about you should contact your energy provider. In most cases, they will work out payment arrangements with customers during financial hardship. 

What you need to do:

This seems like a lot of complicated information. If you are like most people you only think about your electric bills every so often. Here’s what you need to make sure you aren’t on the wrong side of a huge electric bill.

  1. Know your plan
  2. Switch if needed
  3. Monitor your electric bills