Texas electricity rates are expected to go up in 2018 as the state’s electricity grid experiences growing pains. 2018 will see the closing of a number of coal fueled power plants. Coal has been giving way to cheaper electricity fuel sources for a number of years.
The growth in wind power and natural gas fueled power will offset the loss in coal over time but for the summer of 2018, expected record demand for electricity will converge with power plant closures to put a squeeze on wholesale electricity rates. This, in turn, will cause the retail electricity prices paid by most Texas consumers to increase. The rise in wholesale rates could be particularly dangerous for consumers who have electricity plans that are tied directly to the wholesale price of electricity.
The rise in prices could be felt more in areas like Houston. Houston electricity rates tend to be higher that rates in the Dallas / Fort Worth area. Average summer temperatures also tend to be higher in the southern part of the state.
Reserves to fall below comfort level
The state of Texas typically targets a reserve margin of 13.75%. This means that the available supply of electricity should exceed the projected peak demand for electricity by at least that amount. This give a cushion for unforeseen spikes in demand or lose of capacity such as could be experienced during a large storm.
The most recent projections by ERCOT put the reserve margin during the summer of 2018 at 9.3%. This number is expected to climb to 11.7% by the summer of 2019 as newer power plants come on line.