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Holiday Electricity Demand

Public Health Officials Encouraged Americans to Stay Home for Thanksgiving and Keep Things Small. How Did These Holiday Changes Affect Utility Rates?

On Nov. 26, 2020, Americans consumed roughly 46 million turkeys across the country. Most of these poor birds tip the scales at around 15 pounds, requiring at least three hours of cooking time, and nearly 8 kWh of electricity. Consider the additional sides and pies, and Thanksgiving electricity rates can shock consumers.

Holidays in 2020 looked a little different. Thanksgiving especially experienced significant changes this year, mainly due to fewer Americans traveling in response to spiking pandemic numbers across the country. Public health officials recommended smaller gatherings with immediate family members only; accordingly, the classic turkey dinner got adjusted, prompting many consumers to seek less hefty birds and cook smaller meals. Considering this, how did electricity rates pan out for Thanksgiving 2020?

The United States Energy Information Administration (EIA) reports on consumer patterns in energy usage. Surprisingly, the electricity demand for Thanksgiving this year presented similar to, if not lower than that of previous years. On a typical day, American electricity demand spikes twice. In the morning, coffee pots brew, water heaters kick on for showers, and hairdryers get plugged in for a perfect blowout. At night, Netflix streams, dinners simmer, and dishwashers run. On Thanksgiving, this pattern flips — most of the electricity demand occurs in the morning when the bulk of the cooking occurs. Conversely, demand diminishes in the evening, as folks settle in for a quiet night with the family.

Social distancing and smaller meals did not affect this overall holiday pattern. Americans still woke early to cook their turkeys and settled down to digest and watch football later in the day. It seems as if COVID could not topple tradition — even if celebrations remained smaller than usual.

But, consider more. Heating and cooling systems represent the most energy-expensive utility in the household. With children home for the holidays and cold winter temperatures, many Americans splurge for extra comfort during Thanksgiving. The EIA reports that the period from Nov. 23 through Nov. 29, 2020, remained much warmer than usual; in fact, heating degree days stayed 13% lower than in 2019. Due to this unusual weather, Thanksgiving 2020 in New York City recorded the least electricity demand in five years. Milder than usual temperatures across the country spurred lower utility bills for most regions.

Floridians didn’t fare so well. During the week of Thanksgiving 2020 — Orlando, Florida, experienced temperatures over 80 degrees Fahrenheit. Southern states rely on electric cooking (compared to higher natural gas use in the North). Due to these factors, electricity rates for Thanksgiving Day 2020 in Florida shot up to their highest in five years.

Weather patterns aside, Thanksgiving remained somewhat normal in 2020. Americans refuse to go cold turkey on their holidays, finding new and creative ways to celebrate even amidst the pandemic.

Americans Are Using Less Electricity

EIA Finds Monthly Electricity Rates Lower Across Most of the United States

The majority of states (38 to be exact) reported a decrease in electricity bills for 2019 (the last year for which data is available). Kansas bills dropped a whopping 9.2%, with New York, Missouri, and Ohio exceeding a 5% reduction.

Many factors contribute to utility costs for homeowners. Consequently, those variables cause electric bills to fluctuate year to year. The United States Energy Information Administration (EIA) gathers data on U.S. energy use and prices and then analyzes those statistics each year to inform policy and the public. Their findings apply not only to those who love a detailed bar graph — anyone who has had a surprising utility bill can appreciate a comprehensive understanding of what influences the cost for power and what costs land on the individual consumer’s wallet.

Interestingly, the EIA reports that residential electric bills decreased in 2019.  Electric costs last year dipped almost 2% lower than in 2018 —  about $2 saved each month, from an average of a monthly bill of $117 to $115. Notably, this decrease results from consumer behavior, not an overwhelming reduction in the cost of electricity. The utility increased in price from 12.87 cents per kWh in 2018 to 13.01 cents per kWh in 2019. The EIA concludes that Americans have been using less electricity.

So what may have influenced consumer behavior? Consider the weather as a significant variable. Cooling degree days (days when air conditioning required) decreased by nearly 6%. Heating degree days increased, but only by 0.6%. Heating and cooling represent the most energy-hungry systems in the home, so relying on them for fewer days can dramatically affect average electricity consumption.

Appliances represent another major contributor to electricity in the home. However, long-term purchasing trends show the American consumer buys more energy-efficient household appliances, such as dishwashers, refrigerators, and washing machines. This pattern does not remain specific to 2019 but does explain last year’s lower electricity consumption. These “greener” devices report energy savings between 10% to 50% compared to similar models — and those savings optimize when replacing older appliances. Other purchases, such as LED bulbs, power strips, and smart thermostats, have also grown in popularity among consumers.

Comparing state to state gets a little tricky since one must consider the cost of fuel used to generate electricity. Certain regions around the country experience shifting prices due to the fuel type used to power their homes. New England, for example, depends on natural gas. New England — not near natural gas storage locations — relies on a pipeline. Hawaii depends on oil transported thousands of miles to its shores in the Pacific. Texas produces the most abundant crude oil, natural gas, and wind energy in the U.S. The type and access to fuel can heavily influence a region’s electric rates. And beyond the fuel itself, states and private utility companies may also add fees and taxes.

Overall, Americans have become more energy-savvy as they employ plenty of DIY tricks to reduce energy use at home. As 2020 comes to a close — luckily, it seems as if electricity trends may stay about the same. Americans can hopefully breathe a sigh of relief when holiday energy bills arrive.

How are Electricity Rates in Texas Determined?

Electricity Bills Change from Month to Month, State to State. What Factors Influence the Fluctuating Costs of Electricity Rates?

Like death and taxes, electric bills represent an unavoidable part of life for most Americans. Calculated simply, customers pay for the wattage used multiplied by the kWh cost. In the United States, one kWh costs on average $0.13. But, the electricity rates vary dramatically by state. The average consumer in Louisiana pays $0.09 per kWh, while the average Hawaiian customer doles out nearly $0.30 per kWh. In Texas, folks pay $0.12 on average. But even within the state of Texas, electricity rates can very wildly.  For example, in the Dallas/ Fort Worth area, Gexa Energy offers a plan for 5.6¢ per kWh.  In Houston the best rate available is 6.8¢ per kWh.

So, what gives? Who calculates the electricity rate? And what causes the price for power to change? In part, state regulations can dictate additional fees. But several variables have a role in determining the inevitable cost on the consumer.

Fuel

Electricity can be generated using different forms of energy, including fossil fuels such as gas and coal, or renewable fuels such as wind or solar power. All of these sources may contribute electricity to the overall regional grid — yet each corresponds to a different cost. One source reported renewable power at $0.04 to $0.06 per kWh and fossil fuels between $0.05 and $0.17 per kWh. But these costs change each year due to more efficient technologies.

Facilities

Beyond the fuel source itself, one must consider the cost of operating and maintaining the facilities to store fuel and generate power. These factors include construction costs, employee salaries, and safety mechanisms. These prices can range dramatically depending on the energy source. Wind turbines need specialty maintenance and continued care. Nuclear facilities undergo frequent inspections and part replacement and must ensure the safe shipping and storing of waste.

Distribution

After generating power, it must be distributed throughout the consumer network. Beyond the general construction of power lines and maintenance of this transmission system, companies must consider security and safety. Certain fuels must be transported throughout the country as well, including train networks for coal and pipelines for natural gas.

Regional Weather

Weather symbolizes one of the most influential factors in determining electricity cost. Extreme cold or heat leads to subsequent heating or air conditioning demands — the number one culprit in electricity consumption. Increased demand leads to higher utility rates. Conversely, weather events such as frequent high winds can make wind turbines more effective and lower electric costs. Regions with more extreme weather events might lose power more frequently and require additional investment for damages.

So, after adding the regulatory fees, the facility construction, the cost of fuel and its transport, consumer demand, and the price for repairs to the system, one can tally the bottom line on that electric bill.

Competition

Competition is another important factor in the pricing of electricity.  Electric companies in Texas and other deregulated markets must compete with each other to offer the cheapest electricity rates in order to win customers.  The puts the responsibility on consumers to keep their bills lower by shopping for electricity and comparing rates to find the best deal for your situation.  Vaultelectricity.com was created in the early days of deregulated electricity in Texas to put all the best options in one place to make comparing and selecting an electricity plan easier.

 

Energy Rates This Holiday Season Should Be Similar to Last Year’s

With winter comes higher energy bills. Several factors contribute to this trend. Typically, from November to March, Americans perform a delicate dance between saving money and keeping pipes from freezing. For most homeowners, the main culprits of energy use in winter constitute furnaces and water heaters, especially for regions that experience colder seasonal temperatures. But the line-up doesn’t end there — one cannot ignore refrigerators, freezers, and ovens. These appliances work overtime during the season, especially with family in town and large meals to prepare. Then, throw in the power required for Christmas lights and Rudolph’s nose. Hopefully, homeowners can avoid surprising utility bills this holiday season. While unpredictability has defined the year 2020, experts project that — energy bills at least — will remain like those of 2019.

Costs explained

Oil, electricity, and natural gas predominantly heat American homes. Most of the Northern states rely on natural gas, while residents in the South (including Texas) depend on electricity. Only a few New England states employ heating oil. Worldwide, fuel costs have remained roughly the same the past few years; heating oil has dropped over fifty cents per gallon since 2018. As supply increases, demand decreases — or so states a basic tenet of Economics 101. Natural gas production has increased steadily over the last fifteen years, and prices have declined accordingly. Electricity rates have increased a touch, nationwide displaying a small nine cents per kWh increase from 2019.  Electricity rates in Texas have declined over that time. Overall, prices should remain relatively stable for winter 2020. Weather can dramatically alter these projections, however, especially if temperatures drop lower than expected and demand for heating increases.

Some extenuating circumstances should be considered. Due to the Coronavirus pandemic, many Americans spend more time at home, especially for work and school. This suggests higher use of lighting, heating, and power — an unavoidable consequence of the times. Nonetheless, fuel costs have been stunted by low demand from major industries as companies have curtailed traveling and typical functioning within the traditional office environment. Many schools have closed. These big energy users do not currently rely on the grid. As mentioned above — less demand dictates more supply available — leading to cheap energy prices. All in all, Americans have struggled to pay rent and utility bills throughout 2020, and the stability in projected energy rates this winter provides some welcomed relief.

Tips for saving

Furthermore, individuals can implement some energy-saving habits and capitalize on static energy bills. For example, consider cooking larger meals or several meals at once. When the oven is turned off, leave the door open to maximize heating in the kitchen. Only run the dishwasher or laundry machine when fully loaded. Also, remember to unplug holiday lighting before going to sleep. Televisions, laptops, and entertainment systems continue using power even when turned off. Energy-conscious individuals may want to unplug these items when not in use. For those with extra means, purchasing new, more efficient appliances can make a major dent in energy spending long-term — especially for household amenities older than twenty years. A wise consumer should also consider insulation strategies for older homes to help mitigate heating costs.

Saving opportunities don’t have to be difficult or expensive. Individuals can reach out to local electricity companies and discuss strategies and programs they offer. Consumers can leverage services to help compare electricity rates in their region as well. While 2020 has not been easy, customers will gladly receive some good news in the form of energy costs.

Summer Electricity Usage to be Lower in The U.S. but Higher in Texas

Nationwide electricity usage is expected to dip this summer even as electricity in Texas is expected to hit record highs.

The U.S. Energy Information Administration is projecting the lowest summer electricity usage in over 10 years across the country.  As with most things in 2020, these numbers are impacted by the Covid-19 pandemic.  Specifically, a decline in usage in the commercial and industrial sectors is expected to decrease overall electricity demand for the country.   Even with states easing stay at home orders, the type of economic activity that drives electricity usage will be slow to ramp up.  The EIA forecast calls for a decline of 12% in commercial electricity usage.  Residential electricity usage is expected to increase 3% as people stay home during the pandemic.

Ordinarily, long term weather forecasts account for the largest part of the government’s forecast of electricity usage.  This year, however, weather is a secondary driver to the unprecedented shifts in lifestyle, manufacturing, and retail activity brought about by the pandemic.

This reduction in electricity demand will also result in a lower utilization of coal.  Coal power plants are often the last sources to come online when demand on electricity grids peak.  This will accelerate the already multiyear trend of natural gas and renewable energy sources taking power market share away from coal.  Coal is expected to account for only 17% of electricity production across the US this summer.  This is compared to 24% in the summer of 2019.

Despite the expected national decline in electricity usage over the summer, Texas officials are predicting record high demand for electricity in Texas. According to ERCOT President and CEO Bill Magness:

“There is a lot of uncertainty in today’s world, but we are confident that Texas will still be hot this summer, Texans will need electric power as they do every summer, and ERCOT is prepared to do our part to keep it flowing reliably.”

Residential electricity usage represents a larger share of Texas energy usage than other parts of the country.  This is because of hot summers and larger houses.  Even though there is no statewide stay at home order in place, many people are still working from home and going out less.

As of June, summer 2020 electricity rates in deregulated parts of Texas are much cheaper compared to last year.   In both the Dallas and Houston areas the average electricity rate listed on Vaultelectricity.com is more than 1¢/kWh cheaper than this time last year for the 1000 kWh usage level.  This translates in to a $10 per month lower electricity bill at 1,000 kWhs per month.

 

 

Texas Electric Companies Respond to Coronavirus Impact

*** Updated 3/25/2020*****************

The Texas PUC Chairman DeAnn Walker has put forth a proposal to assist Texans who are having trouble paying their electricity bills during the Covid-19shut down.  The plan also has provisions for cushioning the impact on retail electricity providers and helping to keep them solvent during a moratorium on disconnects.

 

The proposal would replace the patchwork approach by the local utilities (TDUS) who have separately committed to suspend disconnects already.  If adopted in it’s proposed form, the plan will prevent all retail electricity providersin electric choice areas in the state of Texas from disconnecting residential customer for non-payment for the duration of the state of emergency declared by Governor Abbott.

 

The plan would reimburse electricity providers at a fixed rate for electricity they provide to residential customers who are not able to pay their bills.  This will be funded by a new pass through fee charged by the TDUs.  This would ultimately flow through to all electricity customers including residential and business electricity users.

 

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Most of the largest electricity providers in the state of Texas have announced that they are suspending disconnects due to non-payment at this time.

 

  • The Texas PUC this week encouraged all Texas electric companies to suspend disconnects.

 

  • TXU is extending payment due dates and waiving fees. They are also reducing down payments and offering to spread balances over multiple installments.

 

  • Reliant Energy and its sister brands including Cirro, and Green Mountain energy have announced similar efforts.

 

  • The distribution utilities responsible for delivering electricity to Texans have suspended disconnects for non-payment until further notice during the coronavirus outbreak. These include Oncor, which maintains he powerlines and is responsible for electricity delivery for the Dallas Fort Worth area and other parts of the state.

 

  • Centerpoint in the Houston area has suspended disconnects.

 

  • AEP Texas and Texas-New Mexico Power has also suspended disconnects at this time.

 

Impact on Electricity Providers in Texas

The decision to suspend disconnects, however, could have a large impact on the Texas electricity market.  Retail electricity providers in Texas must pay for the electricity they provide end users by purchasing it on the wholesale market.  If a substantial percentage of customers fail to pay their electricity bills, the electric providers could run out of money and fail.   This could lead to higher electricity rates for all Texans.

What to Expect From Wholesale Electricity Rates in 2020 and Beyond 

Using data from 2018 on the wholesale electricity market, we can view the somewhat consistent pricing of wholesale electricity from the ERCOT North hub – from the months of January to June. Yet this consistency is just a lesson in perceived stability, as wholesale electricity, after all,  is rife with volatility. 

Wholesale prices this year alone were a wild ride as graphs spiked and danced to reflect the surging prices of extreme heat. But that’s just the nature of the market; as all commodities go, things fluctuate and you can only ride out the waves until a baseline homeostasis replaces the chaos.

Given that we accept this volatility, what if even more erratic behavior is in the books for wholesale electricity in the near future? 

Let’s explore that question in a little more detail

More Volatility on the Horizon?

Let’s pursue an answer to the following question: if wholesale electricity prices fluctuate in tandem with renewable sources like wind and solar, will an increased reliance on renewables simply necessitate a more volatile market?

There has always been a reliability problem for renewables in the sense that wind can stall for days on end, leading to an electricity demand that outweighs electricity generation. 

But when the wind is really rolling, this often means negative wholesale electricity prices. These wholesale prices don’t necessarily mean cheaper retail electricity for consumers, but only those who are trading on the wholesale power market and who can utilize the cheap electricity. Often though, negative wholesale electricity prices simply mean a surplus of electricity generation + a decreased demand, meaning that many companies pay factories to take excess energy off their hands. After all, it’s often cheaper to burn up excess energy than power down an entire factory. 

With this being said though, if renewables continue to grow, and we get closer and closer to an all-renewable grid, will this reliance on wind and solar simply mean more violent fluctuations of negative or exorbitant prices? Unless battery storage continues its positive trajectory, it just may.

Google (And Company) Will Hold a Huge Share of Electricity

According to Green Tech Media, Google has laid claim to even more renewable energy investments, meaning that they will hold the power to sway wholesale markets in the future. And tech giants continue a similar trajectory and push for renewables, the markets might rise and fall in conjunction even more with more green-minded stakeholders. 

But alas, Google isn’t only looking to decarbonize the grid but also to up the ante on energy storage technology, meaning that when the wind blows strongest, and the sun shines its brightest, there will be plenty of energy for the cloudy, windless days.