Electricity Industry News

Welcome to our Resources page. Here, you will find coverage of electricity industry news that has a significant impact on the industry and those whom it serves, as well as helpful topics for businesses and consumers, such as how to reduce your electricity bills, eco-friendly electricity usage practices, finding the best electricity rates and plans for your needs, and more.

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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.

Have We Seen The Peak In Carbon Emissions?

The headlines may have you believing that things continue to get worse with respect to CO2 emissions.  But dispute what popular opinion thinks, carbon emissions are not continuing to go up.  History may mark 2007 as the turning point in the fight to control CO2 emissions.   According to projections by the Energy Information Administration, carbon dioxide emissions may never return to 2007 levels; at least not in the next few decades.

The reason for the drop is fairly straightforward.  Generally speaking, economic activity is an accurate predictor of emission levels.  Economic grow means more people on the roads, more manufactures burning fossil fuels, more electricity and more CO2.  The events in the financial markets in 2008 shocked the economy into a near standstill.  CO2 emissions followed the economy down.

Historic patterns would suggest then that as the economy has recovered, so too would CO2 emissions rise again.  But emission levels are not rebounding at a rate in keeping with economic growth.  This is due in large part to the macro trend toward cleaner electricity sources.

Coal has long been the foundation for electricity generation in the U.S.  Nothing else was as cheap and accessible as coal.  But this trend has reversed recently; seeing coal steadily lose its share of the U.S. electricity mix.  This is due in part to stricter environmental regulations and in part due to seemingly overnight boom in natural gas.

The switch off of coal onto cleaner energy sources is happening at a rate sufficient to keep the overall emissions levels lower despite increased energy usage due to economic expansion.

This effect is well illustrated in the state of Texas were the majority of electricity now comes from sources other than coal.  Natural gas is now the predominated source of electricity in Texas.

Texas is the nation’s largest producer of natural gas by a wide margin.  They also use natural gas extensively to generate electricity for the Texas grid which is separate from the other North American grids.  Thanks in large part to prolific new drilling techniques natural gas is the cheapest it has ever been.  The effect all this has on Texas is cheap electricity.

Aside from market competition from natural gas, coal is also being squeezed by tougher EPA regulations at the federal level and renewable energy mandates from the state level.  The combination of regulatory pressure and competition from natural gas is likely enough to make 2007 an historic turning point in the fight against carbon emissions.

 

Are TXU Rates The Most Expensive Electricity Rates In Texas?

TXU Energy appears to be the most expensive electricity provider in Texas – at least we could not find any company with higher rates.  Just a few months ago they said they were not willing to “chase prices” in order to gain/keep customers.  It is that mentality that is pushing TXU’s parent company to the brink of bankruptcyEnergy Futures Holdings (EFH) purchased TXU in 2006, and TXU has lost money every quarter since.  EFH debt now totals over $40 billion.

TXU Rates Compared to Other Electric Providers 

Since the deregulation of our electricity market gave us the power to choose in 2002, Texas consumers have had the luxury of shopping around for their electricity.  Before deregulation you didn’t have a choice of which electricity provider you used. You were assigned a provider based solely on your location.  For example, if you lived in Dallas, you paid TXU for your electricity.  Likewise, Houstonians received their monthly electric bill from Reliant.  You had no choice and no voice in the matter.

Current Lowest Cost Providers in TXU’s Area

Company Term Rate  
Bounce 12 Month Learn More
Trieagle 12 Month 8.1¢ Learn More
Champion 12 Month 8.1¢ Learn More
StarTex 12 Month 8.2¢ Learn More

 

Unfortunately, not everyone in TXU’s area is aware they now have a choice, and TXU takes advantage of that fact.  TXU hopes that they are going to be the only electric company you look towards when needing electricity, so they just throw out a high rate quote and hope you don’t know any better.

But let’s look at the facts.  Currently, TXU’s 12-month residential rates are 19.75% higher than the competition.  And what about their 12-month Free Nights Plan?  The Free Nights Plan is priced a staggering 43.20% higher than competing 12-month electricity plans.  TXU’s month-to-month rate is 47.62% higher than competing introductory monthly rates.

It is no wonder TXU has 800,000 fewer customers than they did just a few years ago.  With rates that are almost 50% higher than those of the completion, TXU is shedding customers at an increasing speed.

Month-To-Month Electricity Plans Are The Right Way To Go Under Certain Circumstances

Deciding whether to lock in a rate for an extended time or opting for a month to month plan is an important consideration, but one that should be quite simple.

First and foremost, the general rule is that when rates are low, you want to lock in a rate for as long as possible, just as you would lock in a long-term fixed rate mortgage when interest rates are low.  As it stands right now, electricity rates (and coincidently, interest rates) are currently at historically low levels.

That being said, even in this low rate environment it is appropriate under certain instances to select a short-term plan instead of the long-term plan. 

Let’s take a look at several situations when month to month plans make sense:

  • Your lease is up in the next few months and you are unsure if you are going to renew it.
  • Your house is on the market and it may sell within the next several months.
  • Electricity rates are at or near long-term highs and you expect them to turn lower.
  • You have bad/no credit, yet you want to avoid paying a deposit.

The first two situations are similar in that both instances have residents who will be potentially moving out of their current location and into a new residence.  With any electricity plan other than a month-to-month plan, there will be an early termination fee (ETF) charged to the customer if electric service is terminated before reaching the end of the contact.  Getting stuck paying this fee should be avoided at all costs, and with a little planning, it’s easy to do.  For example, if you may move out of your residence in 8 months, opt for a 6-month term instead of a 9-month.

The third situation listed above takes into account the electricity rate cycle.  All-time high electricity rates were reached in the Summer of 2008, and we are currently (Summer of 2012) at historic lows.  Back when rates were high, we were recommending month-to-month and 3-month plans to our clients, instead of longer terms.  This worked out nicely for them, as electricity rates fell substantially beginning in the Fall of 2008.  We are now recommending locking in these historic low rates for as long as you plan on staying in your current residence.

The final situation is one that we see at least a dozen times every day.  When you have a bad credit score, electricity providers will, under normal circumstance, make you pay an up-front deposit (up to $400) before they will issue you electricity.  The way around this is to go with a pre-paid electricity (also known as no-deposit or pay-as-you-go) plan.  While these usually have higher rates than regular plans, pre-paid plans have the benefit of getting electricity to your residence without having to worry about a credit check.  Although you do need to put money into your no-deposit electricity account right at the start, you can get the lights turned on by putting in as little as $50.  That’s a lot better than posting a $400 deposit!

Please feel free to call us with any questions concerning your electricity needs.  We are eager to help, and we can be reached at 214-550-0844.

Texas To Offer $5.7M In Grants For The Use Of Alternative Fuel Vehicles

The Texas Commission on Environmental Quality is set to offer $5.7 million in grants to businesses that are replacing diesel vehicles with ones that use an alternative fuel source.

The grants are are being offered because many Texas cities are in violation of federal clean air standards.  By retiring older diesel-burning fleet vehicles, these cities hope to avoid crossing the fine line that has been put in place by the federal Environmental Protection Agency.

The grants, available under the Texas Clean Fleet Program, will be awarded to businesses and organizations that are using more than 75 cars and trucks, and intend to replace at least 20 diesel vehicles with ones that use either electricity, natural gas, propane, hydrogen or methanol.

Up to this point, the lack of alternative fueling stations has been the major roadblock to getting vehicles that use the cleaner burning fuels into mainstream use.  Texas is hopeful that this grant, coupled with recently-passed laws encouraging natural gas fueling stations, will help push at least some businesses into taking that critical step.

Texas Electricity Rate Increase – How Much Will Your Bill Go Up?

No, Texas, your electricity bills are not going to triple despite what you may have seen in a number of recent headlines.  That’s the good news.  The bad news is that it seems unavoidable that your electricity rates will go up some. 

The misleading headlines of late have been alluding to the PUC plan to raise (triple) the cap on wholesale rates from the current $3,000 per megawatt hour to $4,500 in the summer of 2012 and to $9,000 per megawatt hour by 2015. This wholesale rate cap is not the rate paid directly by consumers.  If it were, the average electricity bill in Texas would be a few thousand dollars a month.

As the name implies, the wholesale rate cap is the legal maximum rate that electricity producers can charge for electricity in the real-time wholesale market for electricity in Texas.  The cap is only reached under rare circumstances where there is either a huge spike in the demand for electricity, a supply disruption, or both.  The wholesale price cap is only reached a tiny fraction of the time.  That’s a fortunate thing because this rate is many times more than what consumers typically pay for electricity in Texas. For example: the cheapest electricity rates in Houston are around 8 cents per kwh.  That equates to $80 per megawatt.

Texas electricity officials hope the increased price cap will incentivize producers to build new power plants to help fill the need in Texas for more power.   Lack of incentive is a serious problem for the Texas power grid.  Deregulated electricity in Texas means the state relies on private investment to ensure that power plants are built.  Like any other free market, producers produce their product (in this case electricity) in hopes of reselling it at a profit to consumers.

But recent market conditions have spooked would-be electricity producers.  The large drop in natural gas prices in recent years has squeezed the margins out of the electricity production business.  Private capital that might otherwise have been used to build new power plants is being put to use in other ventures that promise higher returns, lower risk, or both.

This leaves operators of the Texas grid in a difficult situation.  The Texas economy continues to stubbornly grow.  This creates more and more demand on the grid.  However, at the current rate of investment supply is not going to keep up.

So what does all this mean?  Are my rates going up?

Unfortunately, it’s almost a certainty that retail electric rates will go up; though they won’t triple.  One study put the potential consumer impact of a raise in the wholesale rate cap at about $15 per month once the cap goes to $4,500 this summer and $40 per month once the cap hits $9,000 in 2015.

So what can I do to keep from seeing my bills go up?

One thing consumers can do is conserve during peak hours for electricity demand.  These are the times when capacity shortages are felt and wholesale prices spike.  The other thing you can do is make sure you have compared rates and that you are on the cheapest electricity plan available.  With dozens of electric providers in Texas rates can sometimes vary dramatically from one company to another.

What You Need To Know About The OGE SmartHours Plan And Other Plans Like It

Another electricity company is trying the old “carrot and stick” approach to the pricing of electricity rate plans. An Oklahoma electricity provider, OGE, has introduced the OGE SmartHours electricity plan with hopes of changing consumer habits and shifting electricity usage away from peak demand time frames. The “carrot” in the plan is the 4.5¢ per kwh rate that is effective 19 hours per day during the weekdays and all day during weekends and national holidays. That works out to just over 97% of the time that the low base rate is in effect.

The “stick” is the variable rate charged during peak hours. Peak hours in the plan are defined as weekdays from 2 p.m. to 7 p.m. The rate during these periods can spike to more than 10 times the base rate, going all the way up to 46¢ per kwh, depending on the demand on the electricity grid.

The OGE plan is one of many new smart meter enabled electricity pricing plans being offered by electricity companies across the country. The pricing plans are meant to address a very real problem with all modern electricity grids. Grid capacity must be enough to meet demand during peak usage periods, such as 2 to 7 p.m. in Oklahoma. The vast majority of the time this means that excess grid capacity sits idle. This is a very inefficient way of managing electricity needs, but until recently has been an unavoidable reality.

Time of day” pricing plans, also called Variable Peak Pricing, represent the future of consumer electricity pricing. Smart meters enable electricity companies and consumers to see electricity usage by time of day in fifteen minute increments, allowing for better real-time pricing of electricity all the way down to the retail level. Demand-based pricing can help alleviate the peak demand problem for electricity grids.

TXU Energy, a Texas-based electricity provider, recently introduced a time of day pricing plan called TXU Free Nights. The OGE and TXU plans have some significant differences, however. As the name would imply, the TXU plan offers free nighttime electricity. The plan defines night as 10 p.m. to 6 p.m. The OGE plan asks consumers to shift electricity intensive activities earlier or later by just a few hours to avoid a five hour window. The TXU plan, by contrast, asks consumers to avoid a 16 hour chunk of the day and defer activities to a time when most people are sleeping (10 p.m. to 6 p.m.).

Both plans will likely suffer from a phenomenon known as adverse selection. Adverse selection is a term common in the insurance industry. Roughly stated, it means that an insurance policy is more likely to be sought out by people who may be at higher risk of getting sick or who may know they are already sick. The TXU plan, for example, would be particularly attractive to night owls who already use a large portion of their electricity at night or people who plug in their electric cars at night. In these cases, the plan doesn’t change the electricity usage pattern of the consumer at all, but rather just gives them a better pricing for what they already do. That’s certainly a good outcome for the individual consumer, but it doesn’t much change the overall demand profile on the grid.

The TXU plan has another major drawback for the electricity grid as a whole: it invites waste. As is human nature, we tend to not value something that is free. Since you are not being charged for electricity during the overnight hours, why turn off any lights before you go to bed? Heck, turn the thermostat down to 60° overnight! Why not — it’s free!

UTEP Now Has 10 EV Charging Stations In Operation, More To Follow

The University of Texas at El Paso just announced it has turned on 10 electric vehicle charging stations on compus, and more will be in operation by the end of the year.

The 220-volt stations are located at the Sun Bowl and Schuster parking garages, as well as at the Mike Loya Academic Services Building.

The existing stations were made possible thanks to a $256,000 Texas State Energy Conservation Office grant awarded in 2009.  An additional state grant of $98,000 will fund more charging stations that will come on line the latter half of 2012.

What You Need To Know About The TXU Free Nights Plan

txu2TXU was the first major electric provider in Texas to offer time of day pricing to the public with their introduction of the TXU Free Nights program in Texas.  The plan was an immediate hit with consumers.  The company later created a Free Weekends plan under the banner of TXU Energy Right Time Pricing.  By the summer of 2013 the company had enrolled nearly 100,000 customers in free electricity plans.

TXU’s latest time-of-day pricing plan is TXU Energy Free Mornings and Evenings.  Under this plan customers get free electricity from 7 to 10a.m and 7 to 10p.m.  The idea with the Free Mornings and Evenings plan and its predecessor, Free Nights program is to shift consumption away from the 3pm to 7pm window that sees the most stress put on the state’s electric grid.

Other providers have since introduced similar plans.  They all attempt to address a major challenge that the Texas electric grid deals with. Capacity within a grid must be sufficient to cover peak demand periods.  In Texas, peak demand is typically during the heat of the day when air-conditioners in homes and businesses are at maximum usage.  Other times, particularly at night, most of that power generation capacity sits unused. This is why wholesale electricity prices plummet at night.  Anything that spreads electricity usage out more reduces strain on the grid.

How much does the plan charge for electricity during peak hours?

During the non-free hours, as defined by the plan, there is a charge of 14.8 cents per kWh* if you live in the ONCOR service area which includes most of Dallas / Fort Worth and other parts of the state.

Predicting what your actual all-in rate will be can be tricky since much depends on not only how much electricity you use but what times of day you use it.

TXU EFL 6.2015

As a guideline, TXU’s Electricity Fact Label (EFL) dated June 3rd 2015 establishes an average price per kWh of 13.9 cents.  This number makes the assumption that you use a total of 2,000 kWh hours and that 27.7 percentage of that usage falls within the morning and evening hours of free electricity as defined by the plan.  Of course, your results may vary.  If you can shift more of your usage into the morning and evening hours, you could lower your effective rate.  With a greater percentage of usage during the non-free hours would result in a higher effective rate.

Is this plan right for you?

TXU’s time-of-day plans are best suited for consumers who don’t use a lot of their electricity during hours of peak demand or consumers who are willing to change their habits by shifting power intensive activities such as laundry and dishwashing to the hours designated in the plan as free.

Some recommendations TXU makes for getting the most out of the plan’s free hours:

  • Using timers to control the start time of major appliances such as washing machines and dishwashers
  • Making use of programmable thermostats
  • Charging portable devices during free hours
  • Running pool pumps during free hours

TXU also offers tools using your smart meter to help you analyze your electricity usage and identify ways to lower your electric bill by shifting some of your usage to the free electricity times of day.

* Note: The rates mentioned in this piece are as of June 4th 2015.

 

 

Texas Set To Store Energy In Underground Salt Caverns

If Texas were a country, it would have the sixth largest wind energy capacity among any nation on earth just behind India and just ahead of France.  But there are some major issues with relying too heavily on wind to power the state’s electricity grid. 

Getting electricity out of wind is like coaxing a stubborn mule down a trail. It moves at its own pace and stops and starts when it wants to.  The challenge for grid operators is to integrate electricity produced by wind at irregular and unpredictable intervals into the grid which requires a close balance between electricity in and electricity out.

Basically the capacity of the Texas electricity grid is built around July and August; the peak months for electricity demand.   Inconveniently, this is also the time when West Texas winds tend to calm down.   At night time the wind does pick up but by then electricity demand has gone down along with the temperature.  

A cheap and efficient way to store that off-peak electricity is the missing piece of the puzzle needed to make wind electricity reach its full potential. One energy company has a plan to turn underground salt caverns into giant electricity storage devices.  The idea is to buy the electricity wind turbines produce at night and use that electricity to fill the caverns with compressed air. 

In doing this they will have, in essence, created giant batteries full of stored energy.   In this way the energy is available for use during the day when it is needed more.  The compressed air will be released and used to fuel electricity generators. This electricity is then sold to the grid at higher prices creating a profit for the company and increasing the daytime capacity of the grid.  

While there have been a handful of other energy storage projects brought online in Texas, this one will be by far the largest. It certainly won’t be the last either.  Investment in energy storage capacity has significant benefits not just for investors but for grid operators and electricity consumers.   For investors energy storage projects are becoming an attractive opportunity. As the efficiency of energy storage techniques including large-scale batteries, compressed air energy storage systems, and other mechanical storage systems goes up and the cost of such technologies goes down it is inevitable that smart operators are going to step in and seize the opportunity.  

In Texas the rules have recently been changed to allow energy storage operators to pay the wholesale rate for electricity taken from the grid.  This should clear the way for more storage projects by making it possible for such facilities to buy cheap when demand is low and make a profit by releasing power into the grid when prices go up.  

All of this is good news for electricity rates in Texas. Energy storage capability added to an electricity grid multiplies the capacity of the group without need to add new power plants. This will reduce the amount of new power generation capacity that will need to be built in the future.   If enough energy storage is built, it will ultimately help to reduce the occurrence of wholesale price spikes.  

This reduction in wholesale rate volatility would benefit retail providers in Texas who typically absorb the risk of short-term wholesale rates while selling fixed-rate plans to consumers.   The spread between retail and wholesale electricity rates is going to price in that risk – meaning that ultimately retail consumers will pay the price for wholesale rate volatility.  

ERCOT, for its part, is happy to see more energy storage capacity in the grid because it makes their job easier.  Electricity supply that can be brought online fast whether it is newly generated power or stored power makes it easier for them to maintain the balance on the grid and react to events.