Texas electricity prices lower than U.S. average, but the margin is shrinking

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By Arthur Murray September 9th, 2019
For business

Where do Texas electricity rates stand?

Texas rates ranked 14th lowest in June in the U.S., according to the EIA. Prices were just behind Nevada and just ahead of Wyoming for the month.

What accounts for lower rates in Texas? A number of factors, including the following:

  • Natural gas. Nearly 25 percent of the nation’s natural gas comes from Texas. That means it has less distance to travel for refinement.
  • Nearly 28 percent of the nation’s electricity generated by wind is produced in Texas.
  • Texas generates the fifth-highest amount of electricity from solar sources.

The ready availability of these sources and others helps keep costs down.

What sources does Texas use to generate electricity?

The Lone Star State generates by far the most electricity of any state, nearly double the amount of second-place Florida.

What else is different about Texas?

Texas is among about 20 states in which energy is deregulated, meaning that about 85 percent of residents may choose their electricity provider.

Price undoubtedly is a factor in those decisions. Other factors include green energy content, supplier brand recognition, term length, and no deposit options.

What is the future of Texas electricity rates?

Final numbers aren’t available, but Texas energy rates have increased in the months since June. Why? Because these rates always go up as usage increases and the temperatures go up. In addition, for the past two summers, Texas electricity reserves have decreased.

The result: As demand has surged, Texas wholesale electricity prices have increased as well. Some customers felt the results during an August heatwave – those customers prices were tied directly to the wholesale market.

Other customers could feel the results later this year, as the wholesale price increases find their way into retail market.

Arthur Murray directs ChooseEnergy.com’s newsroom, taking advantage of nearly 30 years of newspaper and magazine experience. A native of Virginia, Arthur attended the University of North Carolina at Chapel Hill and graduated with a bachelor’s in journalism.

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