Texas Electricity Rates 2012: Same As 2002

Texas electricity rates are unchanged in the last decade when adjusted for inflation.  According to numbers provided by the Energy Information Administration (EIA), 2012 Texas electricity rates are almost exactly the same as rates in 2002 in inflation adjusted terms.

According to the EIA, the average electricity rate in Texas in 2012 (for the first quarter) was 8.72 cents per kwh.  This is an average across all sectors including residential, commercial, industrial, and transportation.  The rate in Q1 2002 was 6.81 cents per kwh in 2002 dollars.  When adjusted for inflation using the consumer price index maintained by the Bureau of Labor Statistics this equates to 8.70 cents in today’s dollars.  Over the same period the national average for electricity has risen around 8% even when adjusted for inflation.

A lot has happened in the decade since 2002.  Deregulation has brought consumer choice to the Texas electricity market. This has resulted in conflicting opinions on the success of deregulation in Texas.  This was particularly true in 2008 when high natural gas prices, a booming economy and other factors combined to push rates to an average of 11.83 cents before the subsequent collapse of both the economy and the natural gas market.  Since then, overall rates have dropped over 26% according the EIA’s statistics with some markets like the residential electricity market in Houston experiencing an even bigger drop in rates.

Cheap electricity rates in Texas have brought their own set of problems however.  Lack of investment in generating capacity, brought on as a result of these low rates, has resulted in capacity concerns within the Texas grid.  This has prompted Texas electricity officials to take actions to raise wholesale electricity rates in hopes of stimulating investment in new power plants.

The rise in the wholesale electricity rate cap, along with a rebounding economy, new environmental rules, and a number of other factors, will likely make electricity rates in 2013 higher than Texas electricity rates in 2012.  Many consumers are hedging themselves by choosing longer term electricity plans, such as the 24 month plan offered by Champion Energy. The plan is currently the cheapest electricity in Houston for the 24 month time period. The TriEagle Eagle 24 plan is among the best Dallas electricity rates right now for 2 year contracts.

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