The electricity market in Texas this August has been a tale of two markets. Wholesale electricity rates at times during the month spiked to levels seldom seen before. The electricity market in Texas is designed to drive up wholesale electricity rates substantially during times of extraordinary demand. Electricity producers make much of their annual revenue during such periods. This occurred multiple times throughout the month of August. With temperatures soaring to over 100 degrees in most of the state, grid capacity struggled to keep up with demand. At times the real-time price in the wholesale market hit an astonishing level of $9,000 per MW. This is the price cap set in place by grid authorities.
Despite the historically high wholesale prices, retail electricity rates actually managed to fall during the month of August. This is particularly true for plans targeting the 1000 kWh usage rate. The average electricity rate for electricity plans being offered in the Centerpoint (Houston) delivery area fell from 8.5¢/kWh in July to 7.6¢/kWh in August for 1000 kWh of usage.
The cheapest electricity rates for the 1000 kWh usage level in most parts of the state are currently being offered by Pulse Power. The Texas Saver 12 plan offered by Pulse has a rate of 7.0¢ per kWh in the Houston area. The 24 month version of this plan is even cheaper.
Many electricity providers are currently marketing electricity plans that aggressively seek to have a cheap average rate at the 1000 kWh usage level. As a shopper, however, you need to make sure that this fits your needs. Many of these plans have rates that jump substantially if you use 2000 kWhs of electricity or more for a given month.
Go Griddy Customers Burned
Meanwhile, consumers whose electric bills are tied directly to the wholesale price of electricity have had a very difficult month. Go Griddy is a retail electricity provider based out of California who promised Texas consumers savings by allowing them to buy directly from the wholesale market in exchange for a monthly membership fee. Customers of Griddy found themselves paying more that 100 times the price of a fixed rate electricity plan at times. Many unhappy Griddy customers took to social media to complain that their entire monthly budget was wiped out in a matter of a day or two.
Electricity rates for 2020 and Beyond
Although the turmoil in the wholesale market hasn’t directly hit customers who are on fixed rate electricity plans yet, wholesale prices will eventually impact the price consumers pay on their bills. Electricity rates in Texas have been steadily falling through out 2019. Even in the summer, when electricity rates usually go up, they have continued to decline. Look for rates to bottom out soon, however, and start to clime towards the end of this year and going into 2020.