Higher Electricity Costs in Houston
Houston Texas is coming up on a hot summer and with that hot weather you will see electricity rates rise with it. Why do electricity rates rise so high in the summer compared to other states? The reason is because we use a volatile energy source. Natural gas in storage is hard to keep in storage continuously at the levels we need it to generate our power. When the summer comes and the energy demand spikes we see a loss in natural gas in storage. This affects the natural gas futures which is where Retail Electric Companies go to buy and hedge their power.
Residential Electric Customers can beat the higher rates
This Retail Electric Provider power is then converted into an electric rate at a higher rate and sold to consumers. To fight these type of spikes in energy a residence could insulate their home better or even buy a wind turbine if they live out in the country or in an unrestricted area that allows this. A cheaper solution would be to install an air conditioner oil additive like ICE22 or Permafrost to reduce the energy consumption by about 30%. The second cheapest solution would be to have your attic insulated. There is also a radiant barrier type of film that can be placed over each window that looks like tenting that also works very well to insulate your house. A special type of attic turbine that is powered off of solar can pull out the attic air much faster than a standard wind turbine and can further reduce the overall energy cost in your home.
Commercial business strategy to reduce energy costs
A commercial business could blend a fixed electric rate with an MCPE variable rate in order to take advantage of the energy supplier market where settlements are made. Extra energy needed to be bought and sold are on the MCPE market and over the last 2 1/2 years the MCPE market has provided Texas commercial companies with lower electric rates than a fixed price. By blending the two you can cover your exposure to a variable rate while taking advantage of this lower priced electricity market.
Never let a supposed “energy consultant” tell you that MCPE is wholesale energy giving you the impression that the electricity price is guaranteed to stay at 4 cents per kWh. You will need to add in TDSP charges which will make the price more like 6 to 7 cents per kWh. When the MCPE market spikes your 4 cent per kWh rate could go up double or triple and remain there for some time. That is why it is important to blend an MCPE price with a fixed rate to hedge against a perfect storm situation. A larger Texas business that uses a lot of electricity is usually at more risk to get on an MCPE electricity rate but a smaller company using the equivalent of a homes usage could stand to risk that type of exposure. If you are a small business and can weather the occasional MCPE price spike by paying a couple hundred more dollars for your electricity I would recommend a straight MCPE Texas electricity contract. This allows the small business to wait until fixed electricity rates have come to a bottom in the market and then convert over to a long term fixed electricity rate contract.