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What Affects Electricity Prices in Different Parts of Texas?

January 5, 2021
by dmirza
chart reflecting What Affects Electricity Prices

Being a Texas energy consumer, you may already be utilizing your power to choose an electricity provider. Those who moved here recently may be confused why energy rates differ from one service area to another.

But electricity prices are not the same across the country. Like many other costs, such as living expenses, travel fare, food, etc., energy is a utility with fluctuating rates in various seasons.

What Affects Electricity Prices in Texas?

Here is why electricity may be expensive in some parts of Texas:

High Temperatures

Per the Texas power grid, ERCOT (Electric Reliability Council of Texas), the scorching summer temperature has increased by almost 15 cents per kWh in residential electricity prices. It occurs due to the changes in supply and demand for electricity, and summer is the peak demand season. Some power plants may see temporary shutdowns, which further increases the burden on the grid.

Fuel Type

In Texas, power generating units use natural gas, coal, petroleum products, nuclear, solar, wind, geothermal, and hydropower. Some sources are locally available in abundance, while the state imports some fuels. Texas tops the charts in wind energy production. Hence, it may also be the reason for the low prices of green energy plans.

Texas Energy Market

The Texas energy market deregulation bill of 2002 allows the residents the power to choose their supplier. However, there are some regulated service territories in the state.

While consumers in a deregulated area can pick which power provider supplies their electricity, those living in a regulated service area don’t have such freedom. They get their power from a sole energy provider.

Deregulated energy consumers can choose from the various affordable plans with competitive pricing from private companies, called retail electricity providers. Local utility companies oversee the power supply process in Texas.

Type of Energy Plan

Two households in the same location and getting service from the same company may still receive different bill amounts. If you wonder what affects electricity prices, the influencing factors may be the contract length, payment mode, or pricing type.

Contract and No-Contract Plans: If you choose a 3-month, 12-month, or 5-year plan, it is a contract plan. Month-to-month plans need no contract, no commitment, and carry no early termination fee.

Postpaid and Prepaid Plans: Postpaid plans are those for which you pay the bills at the month-end. You fund your account before getting the connection and adjust your energy usage with prepaid or pay as you go products.

Fixed and Variable-Rate Plans: Energy plans that offer a flat rate throughout the agreement period are fixed-rate plans. With variable-pricing plans, the electricity rates change every month.

These electricity plan types carry certain unique benefits, and it is vital to pick one that suits your home’s needs. Use your power to choose wisely by comparing energy plans and rates in your Zip code using the Shop Texas Electricity website.

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