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Wholesale Electricity Rates Moved Higher in 2021

2021 has come to a close. After another pandemic year combined with severe weather events, energy companies and other experts look at overall electricity trends. One conclusion from the U.S. Energy Information Administration is that wholesale electricity rates skewed higher in 2021 than in previous years. What factors contributed to the increased energy rates, and is this upward trend expected to continue into 2022?

Consumer behavior

Wholesale electricity works like any retail market. Electric companies purchase electricity from wholesale suppliers. The utility then adjusts its consumer rates accordingly in response to changes in the wholesale price. The pandemic played a major factor in 2020 prices, which led to noticeable spikes the following year; while the U.S. recorded low electricity demand during the peak of the pandemic, the economy started to bounce back following the vaccination rollout in 2021. Accordingly, the EIA reported summertime price hikes as Americans returned to the office.

Major weather events

Energy stakeholders witnessed the largest price jumps in February 2021, with energy hubs around the country reporting sharp increases in response to unexpectedly cold weather. The largest jump occurred in the Electric Reliability Council of Texas (ERCOT)’s regional market. Unseasonable winter weather in Texas devastated the Texas electric grid, leaving many without clean drinking water and heat. Unsurprisingly, the limited supply due to failed infrastructure and increased demand from consumers shot wholesale electricity prices through the roof, costing utility companies $1,485/MWh. To offer some perspective, ERCOT’s wholesale price in February 2020 was closer to $20/MWh. This significant event impacted the year’s wholesale electricity average.

Reliance on natural gas

Besides the alarming winter weather events, fuel costs are a major contributor to the increased wholesale electricity price. Since 2020, the United States has overwhelmingly transitioned to natural gas as its main source of electricity generation, making up 40% of the country’s power supply. Natural gas is more environmentally-friendly than other fossil fuels, releasing half as much carbon dioxide as coal. As the U.S. set climate change goals and imposed new environmental regulations in recent years, the country’s reliance on natural gas grew. Natural gas prices began increasing marginally in 2020, and experts noticed a dramatic hike in the latter half of 2021.

Supply and demand

Electricity prices are increasing around the world and the United States is somewhat insulated from the high energy costs (in large part because the U.S. has fossil fuel reserves and generates its own electricity). Even so, supply is decreasing, especially in the natural gas market. As economies return to post-pandemic levels and people adjust to unseasonably cold winters, the power demand is increasing. Basic economics dictates that the wholesale price inevitably increases in response, as seen throughout 2021.

2022 predictions

As the country’s economy recovers from the ongoing consequences of the pandemic, one should expect energy prices to stabilize. However, unpredictable weather and increased demand for fuel around the world are still significant burdens on the wholesale electricity industry. Natural gas prices will likely remain high in 2022, especially with colder-than-average January temperatures across the country and ongoing demand for natural gas around the world. Take time to research and compare electricity rates as they continue to adjust amidst the various factors.

What Is Energy Deregulation?

Are you moving to Texas? Welcome to the Lone Star State, where we take pride in our rugged individualism and independent spirit! Now that you’ve made a move, you’ll to want to learn about another one of the great things about living in Texas — energy deregulation.

There are other states in the U.S. with deregulated energy markets. California, Connecticut, Illinois, New, York, Ohio, Pennsylvania and a few other states are in the same company as Texas. That said, there is no state with a wholly deregulated energy market. Today, approximately 85% of Texans have the choice to choose an electrical service provider, meaning Texas consumers can find an energy package that is best suited to their needs. You can think of it much like how you’re able to select a cell phone provider.

Basic facts about energy deregulation

You’ll want to know some basic facts about energy deregulation. If you’ve already lived in a state with energy deregulation (California, Connecticut, Illinois, New York, Ohio, and Pennsylvania are some of them), you may already know what it’s like. That said, there is no state with a wholly deregulated energy market.

Whether you need a refresher or you’re new to this whole energy deregulation thing, we’ll break it down for you so that it’s easier to understand.

You have the freedom to select a residential or commercial energy provider. Today, approximately 85% of Texans have the choice to choose an electrical service provider, meaning Texas consumers can find an energy package that is best suited to their needs. You can think of it much like how you’re able to select a cell phone provider.

It’s supposed to be a great thing for consumers because Retail Electricity Providers (REPs) want to win your business. These providers try to win your business by offering competitive rates, special promotions and loyalty plans. Compare plans and discover a wide range of energy providers, from traditional to green energy plans.

Although you live in a deregulated market, you can still choose to receive your electricity service from a state-appointed utility company.

You will likely have to sign a contract with specific details on the plan you selected. Most providers will have energy plans that range from six months to 24 months. If you terminate the contract early, there may be some fees to pay, too. However, there are options for those that don’t wish to sign a lengthy contract.

Consumers also have a right to select a provider with month-to-month plans! If you choose to go this route, you may find a provider that doesn’t require a credit check or a deposit. The downside if that you won’t be able to lock in a lower rate and the rates may be slightly higher than average.

You get to choose what type of plan. For instance, you can compare options that include fixed rates, variable rate plans, short- and long-term options or a plan with no contract or long-term obligations. Perhaps it’s your first time moving, and you haven’t built up any credit. Or, maybe you have a terrible credit score. It’s all good. You might be able to find an electrical service provider that works with your circumstance.

Are you an eco-conscious consumer? You’re in luck. Even those that rent or lease a place can go green, and do it without having to install solar power. In most markets, you’ll find providers with 100% renewable energy options. You can choose a green energy plan that sources its energy from wind or solar power.

There are two parts to your electricity bill: electric supply and delivery. They may have a different look than the bills you received when you lived in a regulated market. However, each part, supply and distribution, make up about 50% of the bill.

When the power lines go down, there’s no need to panic. A state-appointed utility company will take care of the issue. If there’s an outage or problems with the power lines or poles, call your utility company — do not contact your current retail energy provider. Although private power generators are offering their products for retailers to purchase across Texas, the transmitters are still regulated.

Although most of Texas is a deregulated market, two big cities in our state are not — Austin and San Antonio.

Enjoy a competitive energy marketplace in Texas

When a regulated energy market was the norm, you only had one option for gas and electricity — you were at the mercy of the electrical service provider in your area. You weren’t able to lock in a low fixed rate if you wanted to. Then, on January 1, 2002, the phasing in of electricity deregulation in Texas began. Lawmakers created it in the hopes of creating a more competitive marketplace that could lower prices for customers. Besides having a choice to select a provider, living in an area with a deregulated energy market has other advantages. For one, it motivates energy companies to operate more efficiently. Tired of dealing with lousy customer service? Deregulation has made customer service more of a priority. After all, representatives know that you can switch to another provider when you want. A competitive energy market is encouraging environmental consciousness, too. Texas tops the list of wind power in the U.S. and has the most significant solar potential in the country!

Vault Electricity makes it easy to select the plan you want. Just enter your zip code and shop for the lowest electricity rates from the top providers in your area. You can even enroll on our site so that you can start enjoying your new home in Texas.

TXU Lowers Rate For Electricity Plans in Katy, TX

Rates for some TXU electricity plans have gone down in Katy and other cities within the Centerpoint delivery area.  For the Clear Deal 12 plan, the average electricity rate for a home that uses 1000 kWH has dropped from 13.5¢ per kWh to 12.9¢.

The rate drop is the result of an adjustment to the Centerpoint delivery fee schedule for Katy.  As of March 1st 2022 the pass through delivery fee has dropped from 4.6397¢ per KWH to 3.38523¢ per KWH.

At the same time, TXU raised the plan’s energy charge from 10.4¢ per kWh for 0-1200 kWh to 10.6¢ per kWh.  The net result is a drop of .6¢/kWh.

All of the state’s distribution utilities adjusted their fees on March 1st.  This typically happens twice per year.

Other TXU plans such as the TXU Energy Free Nights & Solar Days plan saw their effective rates stay the same as TXU raised the energy charges to offset the drop in the TDU fee.

Read here for more information about electric company energy charges.

Read here for more information about TDU passthrough delivery fees.

Lubbock Residents Will be Able to Choose Their Electricity Providers

Lubbock is joining the Texas Power to Choose marketplace.  Lubbock Power and Light (LP&L)is set to become the first legacy municipal utility to convert to electric choice since the deregulation of the Texas electricity market.  In December of 2021 LP&L presented a plan to the Lubbock city council to transition the city to an open choice market.  On February 15th, the cities Electric Utility Board voted to approve the transition.  A week later, the decision was ratified by the city council. This means that homes and businesses in Lubbock, TX will be free to shop for the electric company that offers them the best rates.

Electric Bill
If you live in Lubbock you will soon been comparing electricity rates

The transition won’t take effect until late 2023 after the city’s electricity grid is fully integrated into the ERCOT managed state grid.  Lubbock is mostly integrated with the EROCT grid already.  There remains about 30% of the cities power to be hooked up to the main grid that provides power to the deregulated parts of Texas.  LP&L has been preparing for years to join ERCOT and just last year transitioned 70% of its customers to ERCOT.

Lubbock Power and Light expects the move to the competitive retail markets will save the city over $100 million in power costs annually.  Similarly, the transition of the city’s electricity production facilities to ERCOT control will significantly reduce the cost of production.

What Happens Next

There is a lot of work that must be done to prepare for such a significant change to the way power is sold in Lubbock.  There are several steps required before Lubbock consumers can begin shopping for their new electric company.

LP&L will have to transition into different roll within the market.  When the transition takes place, they will no longer act as a customer facing electric company.  But they will still be responsible for maintaining electric meters, lines, and distribution equipment.  They will still be the entity responsible for delivering power to homes and businesses in Lubbock.  However, they will no longer bill the end user of electricity.  They will act as a distribution utility billing the retail electricity providers who sell electricity to customers.  To facilitate this, they must update their systems, software and operational procedures.

The city must also go through the process of selecting a provider of last resort (POLR) for Lubbock electricity customers.  POLRs are retail electricity providers who agree to take on customers who lose their electricity providers when the providers go out of business or can no longer provide service to their customers.  Once the transition takes place, Lubbock customers will have to shop for a new electricity provider to buy their electricity from.  LP&L will no longer fulfill that role.  Anyone who doesn’t pick a new provider will be switched to the POLR by default.

The transition must also be approved by ERCOT and the Texas PUC. Additionally, the switch will not commence until after the LP&L load has been fully integrated with ERCOT.  This integration is expected to take place in May of 2023. After all other transition criteria have been met the Electric Utility Board and the city can give the go-ahead for the final move after they are satisfied that there are enough retail electric providers who a ready and able to provide service to the customers of Lubbock and that there are a sufficiently diverse number of options for customers to choose from.

Beyond that, there will likely be a plan to educate residents on what the change means to them and what their options are.  There must also be a plan in place to ensure continued service for anyone who hasn’t selected a new provider by the effective date of the transition. Texas electricity rates are among the cheapest in the country. Electric choice is one of the main reasons for this.

2022 Texas Electricity Rate Outlook

The Lone Star State isn’t often associated with winter weather crises—snow days, icy roads, and other cold-weather anecdotes are reserved for the state’s northern neighbors. This all changed in winter February 2021 when over 200 Texans died of hypothermia in the aftereffects of a historic freezing event and subsequent power outage. Winter Storm Uri was the most costly weather event in the state’s history. Electricity providers could not meet the sudden demand for heating. Texas electricity rates soared. The entire state power grid, from wind to coal to natural gas to nuclear, was not appropriately winterized for such a weather event. Winter is on its way once more — only this time, are Texas electricity providers ready?

Electricity Related Legislation and Policy

Because Texas has autonomy over its energy supply, lawmakers could quickly adapt following the crisis. In March 2021, Texas senators passed a bill (Senate Bill 3) that included weatherization mandates, an emergency alert system, and a ban on “indexed retail electric plans.” Indexed retail plans fluctuate with the price of fuel and demand; unsurprisingly, consumers who selected this riskier option suffered unmanageable electricity rates after the storm. The market forced some small electric companies out. ERCOT (the Electric Reliability Council of Texas) has new authority to get generators online at the first sign of energy instability. Furthermore, a new field inspection team came on board to ensure the implementation of the required structural fixes.

Winterization Standards For Power Infrastructure

When the temperature dipped into single digits last winter, the energy grid infrastructure stopped functioning. Texas electric companies dealt with failed transmission lines, pipelines, and generators. If energy companies don’t implement winterization recommendations by December 1st, 2021, they could be penalized upwards of $1 million per month. Winterizing can be tricky in Texas because most facilities are designed to withstand extreme heat rather than cold. Nonetheless, facilities are hard at work implementing techniques to keep pipes from freezing, building shelters and windbreaks around exposed machinery, and even adding portable heaters in those shelters.

Communication

Communication breakdowns contributed to the February storm’s devastation. Even with a fair warning from the National Weather Service, citizens were not appropriately advised to prepare for possible power outages that would affect their access to heat and clean drinking water. While state officials advised of resources available following the storm, people had lost the means to connect with those resources, like the internet, cellphone service, or television. Texas citizens must be better communicated to in emergencies. ERCOT is working hard to be more transparent and improve its outreach resources. The Texas Division of Emergency Management is establishing a better emergency alert system. Communication plans have also been improved between energy stakeholders across the grid, allowing companies to respond quickly to issues. Should the infrastructure fail and Texans lose power, they will at least be better informed this winter.

So is Texas ready?

While it’s impossible to predict what Winter 2022 brings, Texas electric companies have no doubt made substantial improvements to their physical infrastructure and communication plans. There is some concern as to whether the Railroad Commission of Texas — the state entity in charge of regulating the natural gas supply — has met its facility inspection goals and winterization recommendations. Nonetheless, ERCOT officials are working closely with the Railroad Commission to be better prepared for the oncoming season.

The disastrous power outage in 2021 exposed some of the limitations of the state-specific electricity grid. However, there are important benefits to an independently-controlled power supply. If one were to compare electricity rates, Texas residents typically enjoy lower energy rates than elsewhere in the nation. Several major companies even offer no-deposit electricity plans. Beyond cheap electricity, state-specific control allowed Texas leadership to enact legislation and mandate facility weatherizations within a month of the epic storm. Major weather events are on the rise around the world, and Texas is working to demonstrate how to quickly respond to failures and make tangible improvements. Emergency preparedness plans take time, however, and Texas hasn’t even had a year to recover.

Are Our Devices Wasting Too Much Electricity?

Vampire electricity — the energy wasted while devices are plugged in, yet not turned on — is a very real drain on the power bill. From televisions to internet routers to phone chargers, there are several devices constantly adding extra dollars onto the monthly electricity rate. The U.S. Department of Energy estimates nearly 50 electronics in the standard American household continue to use power even when switched off. The accumulated electricity wasted annually in the U.S. is more than some developing nations actually use. Data suggests that Americans waste billions of dollars annually on wasted electricity — that’s billions with a “B.” It’s not only a financial consequence either; electricity production is a major contributor to climate change, not to mention the millions of tons of e-waste created when consumers toss their old devices.

What About Smart Devices?

Investing in smarter devices improves efficiency in the home and often adds convenience. For example, many electric companies encourage consumers to install a smart thermostat, a wifi-enabled tool that leads to savings and a more comfortable living environment. But what about the Alexa in the corner, lurking for commands? Or the MacBook left charging near the desk, always in standby mode? While appliances and devices have undoubtedly grown more energy efficient, Americans also have way more of them. Smart devices are convenient and often use less power, but Americans are adding more and more devices to the home and using them constantly.

Electricity Use on the Rise

Energy companies have witnessed increased power use over the decades — the average individual kilowatt use per hour, or kWh usage, has more than doubled since the 1960s. The U.S has some of the most affordable energy rates among affluent countries and boy, do Americans enjoy it. In Texas, the market allows homeowners to look at different energy providers, compare electricity rates and seek cheap electricity, which has exacerbated overall consumption. While Texas has some of the cheapest electricity rates, residents pay some of the highest energy bills because they use a larger amount of power relative to other states.

Tips That Work To Reduce Energy Bills

Household devices are wasting too much energy, but with the vast majority of Americans owning a smartphone and a laptop, it’s not the simplest issue to fix. Garlic won’t help with these vampires. One of the easiest ways to prevent wasted energy and reduce your energy bill is to unplug devices when they’re not in use. However, this often disconnects smart devices from the internet connection, requires extra minutes to reboot, or restarts the clocks on appliances. Choose the battles to fight. A computer uses more electricity when left plugged in than a coffee pot, so unplug laptops whenever they’re fully charged. To be honest, leaving a phone charger plugged in all the time doesn’t drain too much energy, but a whole bunch of passively plugged-in devices could add up. Employ smart power strips as much as possible; it’s easier to turn off one switch at once. When feasible, replace older appliances with new, more energy-efficient ones.

Take a minute to walk around the house and count how many little lights are on and active digital displays. It’s likely more than expected and the wasted power is adding up.

What is the Cheapest TXU Electricity Plan

TXU Electricity Rates

Let’s look at some of the electricity plans available from TXU Energy and see which plan might be the best for your specific circumstances.

There are 3 basic questions you need to ask yourself before you select an electricity plan:

  • How much electricity do I use

  • Am I willing to adjust my habits around when I use my electricity

  • Is renewable energy an important consideration for me in choosing my next electricity plan

Best TXU Energy Plan for an Apartment

If you live in an apartment you probably don’t use a ton of electricity.  A good estimate for how much electricity the average apartment in Texas uses each much is around 500 kWh per month.  With that in mind, you need to look at the average rate for TXU electricity plans at the 500 kWh usage level.

Select 500kWh home size
Vaultelectricty.com allows you to select your home size to compare rates

Using the Vaultelectricity.com electricity rate comparison tool, select Apartment from the Home Size drop down box.  For our purposes today, we will look at electricity rates in the Houston area.  It is important, however, that you enter your own zip code in the search box to find the best rates on TXU plans in your area.

We see that the Clear Deal 12 is the cheapest electricity plan listed by TXU in Houston. Again, the rate listed in the image below is probably not current depending on when you are reading this.  Make sure that you do a fresh search for the most current rates.

Cheapest TXU Energy Plan for 500kWh usage level

The Clear Deal 12 plan includes a bill credit that kicks in when your usage in a billing cycle hits 800 kWhs.  So, if you use a little more electricity than the average apartment, you will have a cheaper rate on your bill once you go over 800 kWh.

Electricity Facts Label for TXU Clear Deal 12 Plan
Check our current listings for the up to date EFL and rates

Notice on the Electricity Fact Label associated with the plan above , that the base energy charge goes up when your usage exceeds 1200 kWh.  This is more proof that you must pay attention to how much electricity you use when selecting an energy plan.

Best TXU Plan if you live in a Home

To find the best electricity rates for a home, select either the Large Home (2000 kWh per month) or Small Home (1000 kWh per month) options from the Home size dropdown.  Most electricity providers in Texas tailor specific electric plans to meet the needs of either small, medium, or large consumers of residential electricity.

In the case of TXU, the Clear Deal 12 plan also comes up as the cheapest option for large and small homes.  Although, the rate at 1000 kWh is cheaper than the average rate at 2000 kWh.  This is because, as mentioned before, the Clear Deal 12 plan is really targeted at the 800 – 1200 kWh per month usage range.

Shift You Habits and Save on Electricity

TXU energy has a couple of plans aimed at consumers who are willing to adjust when they use their power in order to reduce their electric bills.  These plans fall into the broad category of Time of Use plans.  Whether or not you can save on these plans is highly dependent on how you choose to use your power.

We have a more complete description of the TXU Free Nights and Solar Days plan here.  But, in brief, the plan offers free electricity at night and relies on solar energy for your daytime power.  Don’t worry.  This doesn’t mean you have to put solar panels on your roof.  TXU is buying solar generated electricity from the grid.

You have to make sure that, if you choose this plan, you are able to use a lot of your electricity during the free nighttime period.  The electricity rate for day time usage is much higher than the Clear Deal 12 plan.

If you would prefer to cram as much of your power use as possible into specific days of the month, rather than at night time, you may prefer the Season Pass 12 plan from TXU.   This plan looks at the 7 highest usage days on your monthly bill and removes that cost from your bill.

More About TXU Energy

Texas residents who are looking to save on their electricity bill might be considering changing their power plan. TXU energy creates plans for individual homes and businesses in Texas, so it can provide competitive rates for you depending on what you need. When you shop for electricity plans with TXU, they have plans that are exclusive to your usage habits.  TXU Energy is one of the largest and oldest electric companies in Texas.  In certain parts of the state such as the Dallas/Fort Worth area, it is easily one of the most recognizable brands.