In short, energy providers are paying more for wholesale electricity, causing rates to increase.
Market conditions have caused the cost of fuel, specifically, natural gas, to increase. Natural Gas is still the leading fuel for electric generation, which is a driving factor in electricity prices. Additional factors such as the invasion of Ukraine, weather-related disruptions from the February Texas freeze, halted oil production in the Gulf Coast due to Hurricane Ida, and supply constraints have led to higher prices.
After Winter Storm Uri in February 2021, there were several changes to laws, regulations, and market rules in the State of Texas made by the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT).
Some of these changes increased supply costs in Texas. Recently a portion of these changes were finalized. As a result Texas customers will see increased charges as pass through costs.
Rate increases will vary by your utility and location. Over the past year in Texas, the average CenterPoint rate increased from 10.6¢ to 18.4¢ per kWh a ~70%. In the past month the average rate has increased almost 30%.
If you are renewing a contract from years past you will likely see an significant increase in your rate. For reference, rates from 2020 were generally lower than 10¢ per kWh. Seeing rates above 15¢ may be a bit shocking.
This chart shows the average residential rate per kWh in Centerpoint Utiltity area:
Here is the same chart for the Oncor Utility area:
Yes, the increases in wholesale rates have also caused business electricity plans to increase. Business rates are typically cheaper than residential, and there are more factors that determine commercial electricity rates.
If you are shopping for electricity, unfortunately you will likely have to pay more per kWh than you have in the past. This means comparing energy plans and making the right decision is more important than ever.
When prices are volatile it’s important to think about all of your options before making a decision. No one has the ability to predict future rates, but most market indicators do not expect rates to decline significantly in the short term and it is possible that rates may continue to rise.
Best if you want to wait and see if rates decrease in the future. If market rates continue to increase you could end up paying more in the future.
Best if you want to lock in a rate not and are not worried about rates increasing in the future.
When rates increase 20% or more you are likely to notice the difference when you pay your electric bill. While you don’t have much control over market rates, you can reduce your energy consumption to help lessen the blow.
During the summer months your AC unit will likely make up a huge portion of your energy consumption so adjusting your thermostat up a few degrees along with making sure you turn off/unplug any unnecessary device can help offset an increase in costs. Here are over 100 other ways you can reduce your energy usage.