We get questions like this all the time from customers, friends and neighbors. Will electricity prices fall this fall?
Normally we would say, of course! Electricity prices always drop in the fall in Texas. And this year is no exception, based on what we’re seeing with pricing. Prices are dropping… just not as far as we all hoped.
This article was written in Summer 2022. See our Texas Electricity Rate Trends 2023 article for the latest electricity price forecast for 2023.
Two Reasons Why Texas Electricity Prices are High This Fall
Two things are impacting Texas electricity prices and causing higher rates.
First, Winter Storm Uri in February 2021 identified weaknesses in the Texas grid system. January and February were already the “second peak” in usage in Texas, as consumers cranked up the heat. But the 2021 storm, which killed hundreds, led to restructuring and legislation. Those regulatory changes have increased energy costs in Texas. And they’ve left energy markets concerned about winter storms.
Second, electricity prices in Texas remain closely tied to natural gas. The Russian invasion of Ukraine in February 2022 shocked world wide energy markets. The chart here shows how consistent natural gas pricing has been in the past, and how it’s skyrocketed since January 2022. That’s a big factor driving higher electricity prices in Texas and around the world.
Comparing Texas Electricity Rates – 2022 versus 2021
So what do electricity rates look like now versus last year? Are we really seeing higher prices? Absolutely. Electricity prices are currently some of the highest since the beginning of deregulation.
This chart of electricity rates in Texas from 2019 to present shows what consumers have experiences. This is based on data from the Public Utility Commission of Texas and represents their sample of electricity plans.
Fall 2022 Electricity Prices in Texas
All that brings us to fall 2022 electricity prices in Texas.
We are seeing some relief this fall, and Texas electricity prices are dropping.
That’s because wholesale electricity costs in what’s called the “forward months,” April 2023 and beyond, show prices falling.
And the closer we move into Spring 2023 time frame, the more we will see prices for electricity falling in Texas.
Of course, that could just be reflecting market optimism that the conflict in Ukraine will resolve, and that Russia will re-open natural gas exports to Europe.
Even the experts in commodity markets don’t know what will happen in the future.
There are a lot of ifs, ands and buts when talking about power prices. The truth is, no one can predict the future. And none of us in the industry would have guessed prices would go this high.
Look for the following pricing opportunities:
- Odd term plans that include additional fall and winter months to drop your price. For example, a 15 or 18 month plan.
- Long term plans that give you a hedge against inflation.
Shop Texas Electricity Rates
Should I pick a short term plan this fall and see if prices drop?
So what should you do if you are shopping for electricity rates this fall?
Everyone’s tolerance for risk is different.
Some consumers choose to go for the cheapest price, whether that’s a 12 month contract or a 36 month contract (which currently gives you the cheapest rate). Others balk at such a long term commitment.
One option this fall is to look for a short term electricity plan. You can go with a month to month electricity plan or a short term plan and see what happens. Then if we have a mild winter season and rates drop, you can get a better rate for your next long term electricity.
That’s a lot of ifs. That’s why most consumers lock in a fixed rate plan.
Couldn’t leave you without a smile after all this serious global economy talk. It’s fall y’all. Enjoy it!