Last Year at This Time Where Were Electricity Prices?

If anyone was around in Texas last year during this time you probably remember having to pay one of the highest electricity bills you have ever had to pay in history. If you were already locked into a rate with a provider you were one of the smart ones who were protected during this volatile time. I saw a First Choice Power bill over 30 cents per kWh. I saw a few other Texas electric provider bills in the 24 cent per kWh range. Most Texas electricity companies were advertising fixed rates in the 16 cents per kWh range as can be seen in this historical chart:

The summer is the hottest time of the year and people begin cranking on that AC unit around May. Many people use double or triple their electric usage during this time. If you were using 2,500 kWh a month at this time and were paying 24 cents a kWh then you might have had a bill that totaled $600. First Choice Power customers may have had an electricity bill that was quite a bit higher. Several energy providers had sold unhedged power to their customers but were selling it as a fixed electric rate. National Power and Riverway Power were a couple of energy companies that did this and attempted to raise their fixed price on their customers when fuel prices went up. These providers no longer operate in Texas.  Some electric companies that were selling fixed energy prices without hedging eventually sold out to companies that had enough capital to take on the weak providers customers, honor the rate they charged and then hedged the energy they sold at a better time in the market.

Oil Prices from May 2008 to May 2009

Oil Prices from May 2008 to May 2009

Texas electricity rates have been coming down the last few months but have been toying with going back up for the past two weeks. These electric rates are down as of today but if you have read the news lately, a barrel of oil is considering going above $60 a barrel. Last year oil was hitting $100 a barrel and went as high as $140 before it tanked back down close to where it is today. We could be in for another disaster scenario this year considering how volatile energy prices can be. No one can accurately predict what energy prices will do but one thing we can say, electricity rates look pretty cheap right now when you compare them to last years prices at this time. You may wonder why we bring up the price of oil when talking about electricity. Oil and natural gas has a pretty strong correlation with electricity prices in Texas which is why we use the oil chart to compare. For instance last year a 1 year electric rate at this time was around 16 cents a kWh. This year you can lock in a 1 year rate around 10 cents a kWh. Now look at the oil chart to the left to see how oil prices were much higher last year then what prices look like today.

Right now a 1 year fixed electricity rate looks like the best rate. When you go out on a longer term fixed contract you will pay about 10% more but for the risk averse this could be worth it. By locking in for 2 or even 3 years you get in at a decent rate and avoid the volatile swings in electricity and fuel prices. When oil and natural gas commodities go up in price so does electricity. To avoid these volatile commodity price swings you should lock into something even if just for a year. You can compare the cheapest available residential electric rates by looking at the top left of this page in the side bar. We have the cheapest offers available there.

If you need a commercial Texas electric rate then please click on our contact link in the navigation bar at the top of this page and send us your information. A commercial energy consultant will call you right back.

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