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

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By Arthur Murray
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Texas residential electricity prices remain below the U.S. average, but the gap between the two has shrunk substantially over the past two years, according to the latest data from the U.S. Energy Information Administration. During that time, electricity prices have risen by a greater percentage in Texas – 7.6 percent – than in the country as a whole – 1.1 percent.

Here are the raw numbers for June: Residents of the Lone Star State paid 11.87 cents per kilowatt hour in June, while Americans paid 13.34 cents – or 11 percent more.

Rates in Texas traditionally lower than U.S. average

For at least the past two years, residential electricity rates in Texas have come in lower than the U.S. average. The spread has been as large as 16.9 percent lower than prices across the country (in July 2017) and as narrow as 7.7 percent (in December 2018).

Texas electricity prices during the past two years have ranged from a low of 10.83 cents/kWh in January 2018 to a high of 12.06/kWh in May 2019.

Texas business electricity rates also below U.S. average

What do the rates mean?

Rates are only part of the equation when evaluating electricity costs. A customer’s monthly usage plays at least as large a role in determining monthly bills. Average monthly usage in Texas, according to the EIA, is 1,112 kWh.

Using that average usage, the rate variation mentioned above – only 1.23 cents – would translate to nearly $14 on an electricity bill for the month.

Following are monthly Texas electricity rates for the past two years, the corresponding national average, and the average monthly Texas electricity bill.

Month Texas rate (in cents/kWh) U.S. rate (in cents/kWh) Tx Avg. Bill
June 2019 11.87 13.34 $131.99
May 2019 12.06 13.32 $134.11
April 2019 12.01 13.26 $133.55
March 2019 11.67 12.83 $129.77
February 2019 11.68 12.7 $129.88
January 2019 11.51 12.47 $127.99
December 2018 11.22 12.47 $124.77
November 2018 11.81 12.95 $131.33
October 2018 11.69 12.87 $129.99
September 2018 11.59 13.01 $128.88
August 2018 11.44 13.28 $127.21
July 2018 11.26 13.13 $125.21
June 2018 11.36 13.04 $126.32
May 2018 11.6 13.15 $128.99
April 2018 11.59 12.88 $128.88
March 2018 11.56 12.99 $128.55
February 2018 11.07 12.66 $123.10
January 2018 10.83 12.25 $120.43
December 2017 10.89 12.45 $121.10
November 2017 11.23 12.94 $124.88
October 2017 11.09 12.8 $123.32
September 2017 11.12 13.28 $123.65
August 2017 10.95 13.15 $121.76
July 2017 10.87 13.08 $120.87
June 2017 11.03 13.2 $122.65

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.

Source % of TX electricity Source % of TX electricity
Coal 19.6 Solar 1.1
Hydroelectric 0.2 Wind 15.1
Natural gas and petroleum 54.8 Wood and other biomass 0.2
Nuclear 8.4 Other 0.6

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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