Are Texas Electricity Rates Going Up?
Texas has historically been one of the lowest-priced states when it comes to electricity and natural gas rates. In fact, electricity rates in Texas have been rated some of the lowest in the United States. Texas was voted the 46th cheapest state for electricity out of all 50 U.S. states, with Wyoming coming in at number one. The average monthly electricity bill in Texas is about 43% cheaper than that same bill in Wyoming. ERCOT, the electric grid operator in Texas, regulates Texas electricity prices and has created a very efficient market where prices are nationally very low.
Recent Spike In Prices
In 2022, however, Texas has seen a spike in the price of electricity, just like the rest of the United States. Since most electric power in Texas is generated by using natural gas, power prices closely follow natural gas rates. And in 2022, natural gas prices are higher than they have been since 2009. This spike in energy prices is due to many factors:
- Less supply in the U.S. market and increased demand after Covid
- More exportation of U.S. liquid natural gas to Europe
- The Russia-Ukraine War has increased U.S. natural gas exports to Europe driving prices even higher
Recently, the Texas Tribune reported that Texans are paying nearly 50% more for electricity this year than they did last year. These facts and more have many Texas scrambling to find cheaper power options.
What Does The Future Hold?
While no one has a crystal ball to predict the exact prices of electricity in Texas in the future, there are some indications that can lend a guide as to where the price of power is headed. In Texas, nearly 50% of all electricity comes from natural gas. So, if you follow the price of gas, then you can predict the price of electricity.
Support For An Increase In Rates
Some experts are calling for a very harsh Winter in 2022 through 2023. Colder than normal temperatures will certainly drive up demand for natural gas, and when demand increases, prices usually follow. If the Winter is cold, then expect high electricity rates until the Spring.
Support For A Decrease In Rates
If the Winter is milder and tensions in Europe ease up, then there will be less demand for U.S. natural gas. With new supply hopefully coming into the market, this could lead to a drop in gas prices, and electricity rates would then follow.
Need An Expert Opinion?
If you are looking for an energy expert who can lend some guidance as to the future price of electricity in Texas, then contact us today. Our team of energy advisors has been following the trend of power prices for the last decade, and we have the data to back up our advice.
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