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Joining a National Grid — Is It Ever in The Cards for Texas?

Texas’ recent large-scale disaster at the hands of Winter Storm Uri stirred up a good deal of curiosity about the state’s future. Will Texas ever rejoin the national grid?

Today, the issue of tying into the national grid is a divisive subject. For some, it runs contrary to the very essence of Texas’ independent spirit and means more federal regulations, less competitive pricing, and a sacrifice of values. To proponents of the idea, it would mean greater reliability in the event of future catastrophic weather events, more advancements in future national environmental initiatives, and other advantages.

For many, the idea of at least being able to draw on outside power more reliably — the state has just five bridges to external power sources, three of which are to Mexico — would mean that future disasters like the one that took place in February 2021 could be avoided. The event led to increased skepticism around the Electric Reliability Council of Texas (ERCOT), which directly oversees nearly all of the state’s electric load.

It wasn’t just the outages that raised the specter of unification. During the crisis, Texas electric companies’ energy rates skyrocketed to preposterous levels, with some customers receiving electric bills for tens of thousands of dollars for a week’s worth of electricity. It turns out that Texas electricity rates were vulnerable to such a disturbance thanks to the presence of an electricity providers who passed wholesale electricity rates directly on to customers, which despite providing cheap electricity during times of low demand, could not prevent astronomical price hikes during the winter storm when demand soared and supply wilted. This provider is no longer in business in the Texas market.

Proponents argue that the future of the U.S. power grid is one of complete interconnection, in which an end-to-end grid powered largely by green energy provides power wherever it is needed. By remaining isolated, these proponents argue that Texas will continue to impede such progress.

To those opposed to joining the national grid, it comes down to money and independence. Texas electricity providers operate on a grid that does not, at least in the eyes of the law, cross state borders. That makes it exempt from the Federal Power Act’s regulations, which exercises oversight over energy that crosses state lines. This could mean higher electricity rates and greater regulatory pressure on Texas electricity providers.

Opponents also argue that there isn’t compelling evidence that being connected to the larger grid could have prevented the blackouts, as other areas were experiencing the same problem.

However, several days with no electricity, heat, or in many cases, potable water has left a deep imprint on many Texans. With the coming $2 trillion infrastructure bill, it will be interesting to see what position Texas takes for the future.

If you are looking for no-deposit electricity, cheap energy rates, or just the ability to compare electricity rates, look no further than Vault Electricity. We make it easy to find the best cheap electricity available anywhere in Texas.

What You Need to Know About The TXU Free Pass Plan (Updated 2020)

TXU is the company that popularized Free Nights and other time of day electricity plans in Texas.  Now the electric company that brought you Free Nights and Solar Days has introduced a plan called the TXU Energy Free Pass 12 Plan.

Note: Texas electricity rates change often.  The rates referenced in this review are as of July 2020.  To compare current TXU rates with other electric companies, enter your zip code at the top of this page.

How does the TXU Free Pass Plan work?

The plan is fairly simple.  For each billing period, TXU takes your 7 highest electricity usage days and subtracts those days from your bill.  For those days you are charged a 0¢/kWh energy charge and the typical pass through fees associated with Oncor or your local distribution utility are waived.

What is the KWh charge on the TXU Free Pass plan?

In the Oncor service area which includes, Dallas and Fort Worth, the energy charge is 15.7¢/kWh.  In addition to that, you will pay the Oncor passthrough fee of 3.577¢/kWh.  This brings the total electricity rate to 19.3¢/kWh for the days you pay for.

If you used exactly the same amount of electricity every day of a 30 day billing cycle, your 7 free days would account for 23.3% of your total electricity usage.

TXU publishes an average electricity rate of 13.9¢/kWh for 1000 kWh of usage in the Oncor delivery area.  To arrive at this number, they assume that 33.1% of your electricity usage occurs during your 7 free days.

electricity rate for TXU Free Pass Plan

Every household is different. Its hard to predict exactly what your final average electricity rate would be.

The table below shows TXU’s published 1000 kWh average electricity rate for each delivery area including the 7 free days.  It also includes the energy charge plus TDU pass through charge for the non-free days of the plan.


TXU Free Pass Electricity Rates

City (TDU) 1000 kWh Average Rate Non-Free Day Rate
Dallas (Oncor) 13.9¢/kWh 19.3¢/kWh
Houston (Centerpoint) 14.9¢/kWh 20.9¢/kWh
Lewisville (TNMP) 14.9¢/kWh 19.9¢/kWh
Abiliene (AEPN) 13.9¢/kWh 19.1¢/kWh
Victoria (AEPC) 14.3¢/kWh 19.8¢/kWh

Is the TXU Free Pass plan a good deal?

The challenge for consumers is to shift their electricity usage habits to take advantage of the free periods.  With Free nights or mornings plans, consumers can change when they do their laundry or wash their dishes.  They can change their pool timers or do other things to plan their daily electricity-intensive chores at the right time.

It’s a little more difficult, however, to shift electricity usage to specific days of the month.  Summer is approaching in Texas which means A/Cs are about to be running all day every day.  You can’t just shove all of your air conditioning into 7 days of the month.

For most consumers, this plan would act somewhat like a free weekends plan.  If you work during the week, you should be adjusting your thermostat to use less electricity to cool your home during the days when you are working.  On the weekend, when you are more likely to be home, you probably want to keep the thermostat at a more comfortable temperature.  You’re also more likely to do energy intensive household chores like laundry during the weekend.  This adds together to make the weekends likely your highest electricity usage days.

 

What else do I need to know about the Free Pass plan?

  • The plan comes with a 12 month contract commitment
  • The cancelation fee is $150
  • It has a base charge of $9.95 per month plus a pass through base charge from your TDU of between $3.42 and $10.53 depending on where you live.
  • The plan has a renewable energy content of 6%

See Also: TXU AutoSaver Plan

Filed under: TXU Free Pass Plan Review

Texas Senate Passes Electricity Reform Bill

It took nearly five hours of debate, but on Tuesday, March 30, the Texas Senate finally signed off on a slate of legislation known as Senate Bill 3. Drawn up in response to the devastating power outages that left much of the state freezing during the worst winter storm in the state’s recent memory, this sweeping overhaul of the electric grid received unanimous support in the Texas Senate before advancing to the House.

According to top lawmakers in the Senate, SB 3 fixes many of the problems exposed by the storm. Among its mandates is that transmission lines, power generators, pipelines, and natural gas facilities receive weatherization upgrades to handle extreme weather. Many were unable to operate when temperatures reached the single digits.

What Caused This to Happen?

Predictably, the period in which this bill was formed has been rife with finger-pointing. First came a wave of blame against renewables, which many decried as responsible for the calamity. The two culprits were the intensity of the cold — which affected all fuel types equally — and the fact that Texas has its own isolated power grid and cannot receive help from other states during outages.

Those in the natural gas industry have pointed out that the power outages were responsible for the natural gas shortage, which caused more power outages to occur. They argue that weatherization would not correct the root of the issue — a point the Senate Bill addresses by delegating the decision around natural gas to the Texas Railroad Commission (which oversees the oil and natural gas industry in Texas).

What Does the Bill Contain?

The bill lacks any detail on how the required upgrades will be funded. Because of the high expenses involved in retrofitting power plants with weatherization equipment, it remains to be seen how energy providers will incorporate the various types of upgrades into their business models.

One area of improvement is the banning of all indexed retail electric plans. Customers with such plans purchased electricity from Texas electric companies at wholesale prices, a strategy that delivered cheap electricity during normal times but that, during the cold spell, led to astronomical electricity rates. Some bills soared as high as $15,000 or more over a week. One of these electricity providers, Griddy, declared bankruptcy in mid-March.

Another portion of SB 3 mandates the creation of a statewide emergency alert system that would keep Texans abreast of future energy blackouts. It also calls for the formation of the Texas Energy Reliability Council (TERC) to coordinate electric companies, regulators, and natural gas facilities and providers to make sure gas distribution is reliable.

Lawmakers used the opportunity to make operations more expensive for renewable energy providers, which Senator Charles Schwertner of Georgetown called “unreliable” in a recent statement. While he claims that too many government subsidies for renewables have created an unfair market advantage for those energy sources, it should be noted that the government subsidizes fossil fuels to the tune of around $20 billion per year.

Will SB 3 Protect Cheap Texas Electricity Rates?

In summary, SB 3 addresses many of the core problems behind Winter Storm Uri’s devastating effects. Though many of the political maneuverings within it are thinly veiled, such is par for the course in any new legislation. It will be fascinating to follow the rollout of this bill and to see how energy companies react.

To compare electricity rates and energy rates from Texas electricity providers, visit Vault Electricity, where we make it easy to find the best electricity plan available.

The Disaster that Shook the Texas Electricity Market

By now, the whole worlds know about the disaster that struck the Texas electricity grid when winter storm Uri struck the state in February.  There is no sugar coating it.  The debacle in February represented a failure of every level of the Texas electricity structure.  One of the world’s major energy hubs was unable to keep its citizens from freezing in their homes.

The Texas wind energy sector is one of the largest in the world but struggled to operate under the severe and prolonged freezing temperatures.  But wind was not the only or even the major contributor to the failure of the grid to supply enough power to keep the lights on for Texans.  The entire grid infrastructure was caught unprepared and under-winterized.

Texas still gets its largest portion of electricity from natural gas powered plants.  These failed in large numbers too along with coal and even nuclear power.  The winter blast affected all of these sources in different ways.  They all failed when they were needed most, leaving grid operators facing a nightmare scenario.   As the temperatures plummeted and demand for electricity skyrocketed, power plants began failing in rapid succession.  This was setting up a black swan scenario that could have resulted in a catastrophic failure that could have resulted in massive damage to the state’s electricity grid.  Residents could have been without power for months as much of the grid would have to be rebuilt.

In order to prevent the grid from succumbing to a cascading catastrophic failure, grid operators had to take the drastic step of off loading demand from the grid immediately early in the morning of February 15th.  And they had just moments in which to do it.  With snow covering virtually the entire state from Dallas to Houston to the border, they began cutting power to homes and businesses.  This action may have saved the grid from long term damage but it began a days long stretch of misery for Texans who would not be able to keep their homes warm.

 

Wholesale Electricity Rates Soar

The Texas electricity market is structured to incentivize private energy producers to build enough capacity to support the states’s electricity needs.  This is done by using the free market as a mechanism to set prices high enough in times of high demand to make it worth while for companies to invest in new power production.

Wholesale electricity rates update in real time to reflect the current demand for electricity within the marketplace.  On a typical mild spring night in Texas, the prices in the wholesale electricity market bottom out – often coming close to zero.   On hot summer afternoons, the spot price for electricity in Texas typically spikes.  The maximum allowable rate in the Texas electricity wholesale market is $9,000 per megawatt hour.  Over time the average price is around $50 per mWh.  This translates to about 5¢ per kWh.

One of the roles of Retail Electricity Providers (REPs) in Texas is to smooth out the prices by taking on the risk of volatility in the wholesale market while offering a more consistent rate to end users of electricity.

 

Shocking Electricity Bills for Some

The most sensational aspect of the misery suffered by Texans that week were the eye popping electricity bills reported on social media and evening news reports.  There were reports of electricity bills of over $16,000 for just a few days of electricity.  This however was not the experience of the typical Texas electricity consumer.  These bills reported in the media were largely, if not exclusively, from customers of the electricity provider Griddy Energy.

Griddy built their business by removing the safeguards provided by traditional electricity providers and exposing their customers directly to the prices of the wholesale electricity market.    Customers paid Griddy a monthly membership fee to gain access to the wholesale rate for electricity.

Most of the time this worked out great for Griddy customers because most of the time wholesale rates are lower than the rates one will find on fixed rate plans from Texas electric companies.  But when things went terribly wrong on the Texas electricity grid these consumers found themselves trapped.  They had no choice but to pay up to $9 kWh for electricity or turn their power off and freeze.

For some perspective, a home that uses 2000 kWh of electricity in a month may expect an electric bill of about $200 if we assume an electricity rate of 10¢ kWh.  If that same consumer had to pay $9 kWh, it would result in an electricity bill of $18,000!

For unsuspecting consumers, gambling on the wholesale electricity market was like canceling your homeowners insurance.  In most months you would save money because most of the time insurance isn’t used.  You could save money every month and could save money for years.  But when disaster strikes you could end up paying a ruinous amount of money.  Note: As of February 26th Griddy has been barred by ERCOT from participating in the Texas electricity market.  Their customers have been transitioned to other electric providers.

The vast majority of residential electricity users in Texas are on fixed rate electricity plans (or at least plans where rates are bound within a certain range).  This means that even as the wholesale electricity market shot to 180 times its typical price, electricity rates on bills stayed within the expected range.  For most Texans their electricity bill might be higher than normal to reflect higher usage during that period but will not be thousands of dollars higher than usual.  Ironically, some consumers may not see their bills go up at all since they were without power much of the time when temperatures were at their worst.

2020 Texas Electricity Rate Update

As the Covid-19 crisis of 2020 enters its 4th month, Texas electricity rates continue to decline. Average available electricity rates in deregulated areas of Texas are down from the prior month and down compared to last year.

In particular, three electric companies are offering aggressive rates targeted toward the 1000 kWh usage Texas customer.  4Change Energy, Gexa, and Frontier are all offering attractive plans featuring the cheapest electricity rates for small homes that use around 1000 kWh of electricity per month on average.

Compare The Cheapest Electricity Rates In Your Area
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This comes as residential electricity usage is near an all time seasonally adjusted high because of stay at home orders, school closures, and other measures that are keeping people in their homes rather than offices and schools.  Industry experts are expecting a record demand for electricity this summer even as rates are expected to hold steady.

In Dallas, the cheapest electricity rate available for a 12 month contract is the Maxx Saver 12 plan by 4change.  This plan features a targeted rate of 6.2¢/kWh for customers that use exactly 1000 kWh.  Due to the nature of the way electricity plans in Texas are structured, your actually average rate per kWh would vary depending on your exact electricity usage in a given month.

For larger homes, the Gexa Superb Saver 12 plan features a rate of 7.8¢/kWh for usages of 2000 kWh in a month.  The plan includes bill credits that kick in at the 1500 and 2000 kwh usage levels making this plan not a good choice for customers that use less than 1500 kWh in a given month.  These rates are for the Oncor service area which serves DFW and other parts of the state.   In Houston and other areas served by Centerpoint the rate is 8.0¢/kWh.  to find rates being offered by electric companies near you, enter your zipcode above to compare rates.

For apartments in most parts of the state, the Eagle 12 by Trieagle Energy offers the best rate at 10.0¢/kWh per kwh at 500 kWh.  This in the DFW area.  In Houston the rate is 10.6¢/kWh.

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.