There is no escape from higher oil prices.They drive up the cost of gasoline, and every time people fill up their tanks, they incur higher charges.
Natural gas prices rose even more than crude oil, but many consumers may not have noticed.They will soon — pay higher electricity bills.
How tall is it?Residential customers in Texas’ competitive market are more than 70 percent higher than they were a year ago, according to the latest rate plan available on the state’s Power to Choice website.
This month, the average residential electricity price listed on the site was 18.48 cents per kilowatt-hour.That was up from 10.5 cents in June 2021, according to data provided by the Texas Electric Utility Association.
It also appears to be the highest average rate since Texas deregulated electricity more than two decades ago.
For a home that uses 1,000 kWh of electricity per month, that translates to an increase of about $80 per month.For a full year, this would cut an additional nearly $1,000 from the household budget.
”We’ve never seen prices this high,” said Tim Morstad, AARP’s Texas deputy director.”There’s going to be some real sticker shock here.”
Consumers will experience this growth at different times, depending on when their current electricity contracts expire.While some cities like Austin and San Antonio regulate utilities, much of the state operates in a competitive market.
Residents choose power plans from dozens of private sector offers, which typically run for one to three years.As the contract ends, they must choose a new one, or be pushed into a higher-rate monthly plan.
”A lot of people locked in low rates, and when they canceled those plans, they were going to be shocked by the market price,” Mostard said.
According to his calculations, the average home price today is about 70% higher than it was a year ago.He is particularly concerned about the impact on retirees living on fixed incomes.
The cost of living for many increased by 5.9% in December.”But it’s not comparable to a 70 percent increase in electricity,” Mostard said.”It’s a bill that has to be paid.”
For much of the past 20 years, Texans have been able to get cheap electricity by actively shopping — in large part because of cheap natural gas.
Currently, natural gas-fueled power plants account for 44 percent of ERCOT’s capacity, and the grid serves much of the state.Equally important, gas-fired power plants set the market price, largely because they can be activated when demand surges, the wind stops, or the sun doesn’t shine.
For much of the 2010s, natural gas sold for $2 to $3 per million British thermal units.On June 2, 2021, natural gas futures contracts sold for $3.08, according to the U.S. Energy Information Administration.A year later, futures for a similar contract were at $8.70, almost three times higher.
In the government’s short-term energy outlook, released a month ago, gas prices were expected to rise sharply from the first half of this year to the second half of 2022.And it could get worse.
”If summer temperatures are warmer than assumed in this forecast, and electricity demand is higher, gas prices could rise significantly above forecast levels,” the report said.
Markets in Texas have been designed to provide low-cost electricity for years, even when the reliability of the grid is in doubt (like during the 2021 winter freeze).Much of the credit goes to the shale revolution, which unleashed vast reserves of natural gas.
From 2003 to 2009, the average home price in Texas was higher than in the United States, but active shoppers can always find offers well below average.From 2009 to 2020, the average electricity bill in Texas was much lower than in the U.S.
Energy inflation here has been climbing even faster recently.Last fall, the Dallas-Fort Worth consumer price index surpassed that of the average U.S. city—and the gap has been widening.
”Texas has this whole myth of cheap gas and prosperity, and those The days are clearly over.”
Production has not increased as it has in the past, and at the end of April, the amount of gas in storage was about 17 percent below the five-year average, she said.Also, more LNG is being exported, especially after Russia’s invasion of Ukraine.The government expects U.S. natural gas consumption to rise 3 percent this year.
”As consumers, we’re in trouble,” Silverstein said.“The most effective thing we can do is to use as little electricity as possible. That means using automatic thermostats, energy efficiency measures, etc.
”Turn on the thermostat on the air conditioner, turn on the fan, and drink plenty of water,” she said.”We don’t have many other options.”
Wind and solar provide a growing share of electricity, together accounting for 38% of ERCOT’s electricity generation this year.This helps Texans reduce electricity consumption from natural gas power plants, which are getting more expensive.
”Wind and solar are saving our wallets,” Silverstein said, with more renewable projects in the pipeline, including batteries.
But Texas has failed to make significant investments in energy efficiency, from incentivizing new heat pumps and insulation to enforcing higher standards for buildings and appliances.
”We’re used to low energy prices and are a little complacent,” said Doug Lewin, an energy and climate consultant in Austin.”But it would be a good time to improve energy efficiency to help people lower their electricity bills.”
Low-income residents can get help with bills and climate change from the state’s Comprehensive Energy Assistance Program.Retail market leader TXU Energy has also provided assistance programs for over 35 years.
Lewin warned of a looming “affordability crisis” and said lawmakers in Austin may have to step up when consumers suffer from higher rates and more electricity usage during the summer.
”It’s a daunting question, and I don’t think our state policymakers are even halfway aware of it,” Lewin said.
The best way to improve the outlook is to increase natural gas production, said Bruce Bullock, director of the Maguire Institute for Energy at Southern Methodist University.
”It’s not like oil — you can drive less,” he said.”Reducing gas consumption is very difficult.
“At this time of year, most of it goes to power generation – to cool homes, offices and manufacturing plants. If we have really hot weather, the demand will be higher.”
Post time: Jun-08-2022
