Texas Residential Electricity Market Report 2009

What’s happening With Residential Electricity Service This Spring 2009

The summer time is a peak time period where electricity consumers start moving into new homes and apartments as well as begin shopping for a competitive Texas electric company. There are several electric companies to choose from. Many energy consumers have heard of energy providers like TXU Energy, Reliant Energy, and Direct Energy. There are still a lot of people in Texas that do not realize that they could save several hundred dollars a year by shopping for an electric rate with some of the smaller but reputable electric companies in Texas. Loyal followers of Reliant Energy and TXU Energy may be surprised to know that both of these companies sold out to companies based out of the state of Texas. TXU Energy sold their business in the largest leveraged buyout in US corporate history. The company was sold to two private equity companies with about 80% in leveraged capital. This leveraged buyout simply means that it will be a long time before these private equity companies will actually own TXU Energy without the help of the banks financing them.

Loyal Customers with Reliant and TXU Energy

Reliant Energy was also bought in 2009 by a company called NRG Energy which is based in New Jersey. Loyal followers of TXU Energy and Reliant Energy have been switched to a different electric company whether they are aware of it or not. Many times after a buyout there are billing issues and other concerns due to migrating billing systems into one core system. TXU Energy will unlikely be changing their billing system since they are not merging with another electric company. NRG Energy however could potentially be tweaking their billing system in some way to accommodate Reliant Energy or vice versa. When shopping with a smaller but more competitive Texas electric company you can stand to save as much as $600 a year or more than just going with a name brand like Reliant or TXU Energy. TXU Energy rates right now as of May 22 2009 are quite a bit higher than several other energy providers that have accurate billing, cheap rates, and good customer service. Reliant Energy rates are being advertised as being “up to” 10% lower. Why does Reliant Energy just go all the way and say “our electric rates are now 10% lower?” Even if Reliant Energy discounts their electricity rate by 10% you will still find that their energy rates are quite a bit higher than several more competitive electric companies like Champion Energy or Startex Power.

TXU and Reliant are Not The Enemy But Why are Their Rates so High?

We are not saying that TXU Energy rates or Reliant Energy rates are the worst thing you could possibly get on but we are encouraging loyal customers of theirs to shop around. Reliant isn’t the only electric service company on the block in Houston anymore. There are great tools to compare Reliant Energy rates and TXU energy rates in detailed apples to apples electric rate comparisons. By looking through the rates next to other providers you can see all fees and charges and know exactly what the difference in price will be if you go with a more competitive electric provider. Many of these electricity comparison tools even have a number to call to speak with an energy consultant who can help in making sense of exactly how much money a residential electric service customer could save. Most Texas electric providers can sign you up completely online with just a few bits of information and a few clicks. The residential electric service customer has a 3 days right of rescission of they decide that the electric rate that switched to is not what they really wanted to do. Once you have switched to a Texas electric company it is encourage to go ahead and stay with that company until the contract has ended because canceling early could put you in a bad light with that provider. If you ever wanted to go back to the electric company you cancelled early on they may want an unreasonable deposit amount.

Energy Price Manipulation Conspiracies Abound

Houston Texas is now the energy hub and retail electric provider hub of Texas. We have Enron to blame for lobbying the Texas government to deregulate the Texas electricity market in 2002. Enron created a nightmare when deregulation first began as consumers immediately assumed back in 2002 that deregulation was not working because of the natural gas fuel price spike. The fuel price increase happened at the same time deregulation began which made people in the know suspicious of large electric providers and distribution companies who potentially had subsidiary companies assisting in this fuel price increase. The added notion that made people even more angry was that since Enron was the main company lobbying to make deregulation go through in Texas that they must have manipulated prices. That Enron or some subsidiary or loosely tied connections was additionally some how to blame for price manipulation has even made those initially in favor of the success of deregulation to back track. The mayor of Houston in the beginning was very upbeat and touting the success of electricity deregulation on his site and in 2007 he kind of changed his tune and conceded that Texas electricity deregulation was in fact a failure.

The idea was that maybe their was a little price manipulation going on to help in the confusion that deregulation was the reason for the upswing in electricity prices. The real cause of electricity price increases could have been a little nudging by certain subsidiary companies to assist in pushing up the price of natural gas futures which is the controlling fuel price tied to electricity prices in Texas. The ability to track who exactly may have manipulated the prices up is still in debate but there are 60 minute specials and evidence available for those willing to search the internet. There is also the very high likely hood that due to fuel supply issues because of a high demand for electricity that prices increased to unreasonably high levels. Typically prices will go up if their is a shortage in the supply of natural gas. There was a historical low supply of natural gas in 2002 during high peak demand in the summer which is a common sense explanation for why Texas electricity rates went up in 2002. In the summer of 2008 however we saw electricity prices and natural gas prices go up to historically high prices with no correlation to a lack of supply. The year of 2008 confirmed in many expert minds that price manipulators may indeed still be at work in the market but because of the hidden nature of commodity trading it is very hard to verify these conspiracy theories.

Significant Decrease in Electricity Rates Since Last Year (2008)

This May 2009 we are looking at electric rates that are 6 – 10 cents per kWh lower than what residential electric rates looked like at this same time last year. Companies like Dynowatt, National Power, Amigo Energy, Riverway Power, and a few other electricity companies were hit very heavily with a large amount of customer complaints due to electricity rate increases. Many of these electric service customers were on a variable market rate that by nature was subject to go up and down with the natural gas commodities market and the MCPE index. Some of these energy providers like National Power and Riverway Power attempted to raise what was initially advertised as a “fixed electric rate” to be more inline with the market. Because National Power Company and Riverway Power had signed people up on a fixed energy price the PUCT of Texas did not allow them to not honor the rates they signed their customers at. These two companies are no longer operating in Texas. Amigo Energy had to pay some fines and is currently being sued by their previous CEO of the company in a related issue around the time Amigo had these high price fluctuations on their variable Texas electric rate. Dynowatt is under no litigation in relation to the variable electric rate price swing in the summer of 2008 because their product was a variable rate the customers had agreed to. Since the price swing Dynowatt electric rates have come back down and look attractive again.

For a detailed comparison of electric rates we recommend looking at a price comparison of several reputable Texas electric companies and picking the price and term that suits your situation best. Not all electric providers advertise their electricity prices in an ethical manner. Because not all energy companies play fair we only select electric companies that have clearly stated charges and fees and a total bundled electric rate. You will find that our price comparison displays all fees and charges in a very clear apples to apples comparison that leaves nothing to guessing. Spark Energy rates used to be listed on our energy comparison site although Spark is currently not pursuing expansion in the Texas market at this time as they are focusing their strategy on natural gas sales in the North East. Right now Champion Energy rates and Startex Power rates remain the cheapest available offers in our comparison chart. You can find our comparison in the middle of this electricity market report. If you have more questions that were not answered here please feel free to give us a call at 1-800-971-4020

Startex Electric

Note: We no longer offer Startex Power on our comparison chart. This is an old blog post written back in January of 2008.

You may still compare multiple electricity companies and their rate plans using our zip code tool at the right. If Startex has quoted you a price you may look at what they quoted you side by side with the detailed residential electricity quotes on this site.

Startex Energy offers several electric rate terms such as the 3 month plan, 6 month, 12 month, 24 month and 36 month. The rate goes up as you sign up for a longer monthly term. The reason the electric rate goes up on longer terms is due to the correlation electric rates have with natural gas in Texas. Did you know that most of our electricity in Texas is generated by Natural Gas power generation plants? Because of the reliance upon natural gas most providers buy a portion of the electric rate they sell to you on the natural gas futures market. These futures contracts go up in price as you go out on a longer term. If you have questions about the rate comparisons in the box to the left just give us a call at 1-800-971-4020. We pride ourselves in going above and beyond to make sure all fees and charges are disclosed with every electric provider in our comparison chart. You will know exactly what your rate is after viewing the list of electric rates and energy companies in the zip code tool to the left.

Electric Contracts Nothing Like Cell Phone Contracts

You may have determined by now that electric rate pricing is nothing like how a cell phone company determines to charge you for air time. Rewarding you for signing a longer term contract just isn’t a possibility as the electric company would be losing money to charge you less for a rate on a long term contract. Because of the confusion of monthly term electric contracts many people choose to get on a month to month plan. The problem with the month to month plans is you never have a guarantee for what the electric rate will be the following month. Startex Power is good in that the month to month plan they offer actually shows the last 2 consecutive months of where the variable rate has been at historically. Because Startex does not hide this fact you can feel safe to say that you would be getting on a rate built for the person who just doesn’t want to sign a contract. Some people don’t want to lock in for any length of time and this type of product allows that person to ride the wave of the market. The only issue with the month to month electric rate contracts is the premium you pay. You generally are offered a great 1st month rate and then the rate goes up to a premium that is quite a bit higher then the first month. For instance, Startex may give you a rate the first month for 9.1 cents kWh but then the 2nd and 3rd month rates would be 12.3 and 12.6 cents kWh.

This energy product is good for those only needing electricity for a short time because they will be moving soon or something of that nature. If you were to break a fixed term contract most providers will charge you some type of early termination penalty that is usually somewhere in the ballpark of $100. The month to month contract allows you to escape the contract with no fees. Of course, once your fixed term contract is up you are free to shop elsewhere but don’t cancel earlier or most providers will make you pay their termination fee.

If you would like to sign up with Startex Power’s month to month promotional electric rate or one of their many fixed rate energy products you can sign up via the promotional link below and receive their discounted electric rate.

Startex Power’s Discount Promotional Rate – Sign up here Note: We no longer offer Startex as a provider on our site

If you are just needing the best 12 month term fixed electric rate we recommend you sign up with Champion Energy’s promotional 12 month energy rate here – Sign up now

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