Why Is Electricity So Expensive in Texas?

Aug 12, 2022 | Energy Efficiency for Business, Energy News, Natural Gas

Electricity and natural gas prices in Texas are rising in 2022. Here are the top contributing factors as to why Texas electricity prices are so high right now and some things you can do to lower your electricity bill.

Why Texas energy prices are rising

Energy prices have skyrocketed globally for a number of factors outlined in this article and this obviously has affected energy rates in Texas. However, there are a number of factors unique to Texas that are causing prices to continue to rise and they are

1.Texas relies heavily on natural gas

Since nearly half of all electricity produced in Texas is from natural gas powered plants, natural gas prices affect Texas electricity prices tremendously. The following graphs show how closely they are correlated.

2.Drastically increasing demand

Like any other commodity, supply and demand heavily dictates energy prices. In 1970 Texas’s population was 11 million and as of 2022 it’s about 30 million. This is putting more and more pressure on infrastructure that wasn’t originally designed to support such a large population.

Since demand is increasing, the state needs more electricity, there’s no way around that. As of 2022, more and more scrutiny and regulations have been placed on fossil fuels thereby limiting expanding power generation. Renewables have become more efficient in recent years, but still have a ways to go to be a viable replacement for their fossil fuel counterparts.

3. Aging infrastructure and extreme weather

The majority of the infrastructure in the U.S. was built in the 60’s and 70’s, meaning much of the grid has been in operation for 50+ years. As time goes on the components of the grid will only continue to degrade.

The cost of transmitting energy is also getting more expensive for the utilities and suppliers. One of the main reasons for this is that much more electricity needs to be delivered across the grid.

Much of Texas’s power grid was not built to operate in extreme cold and 2021 exposed that very weakness. More frequent storms also cause damage and as the grid continues to age it becomes more and more expensive to fix.

4. Regulatory changes

Winter storm Uri, in 2021, caused a number of regulatory changes which have impacted how prices move in real time. Real time price spikes are more likely to occur and this leads to higher trading values, especially on short term wholesale contracts.

5. Weather forecasts

2022’s hurricane forecast was published in April and higher than normal storm activity has been detected. Around the same time, forecasts projecting extremely hot weather in the summer came out as well.

Since Texas is on the Gulf Coast, heat and hurricane forecasts cause rates to go higher.

If you want more information about why energy prices are rising this article will help.

What you can do to get the best price when rates are high

Unfortunately, no matter what you do, you are going to be paying a very high rate, maybe even the highest you’ve ever seen in Texas. But the worst thing you can do is nothing.

  • Make sure you don’t let your contract expire and go onto a month to month variable rate plan. I guarantee you will pay an outrageous rate. 
  • Consider longer term contracts. Right now most businesses are getting the best rates on 36 month contracts.  

Work with an energy broker like us here at Consumer Energy Solutions. We’ve been in business over 22 years and represent thousands of businesses in Texas. Getting a quote from us is free and takes only a few minutes.

Looking to get lower energy rates? Get a free quote today!

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About Consumer Energy Solutions

CES was founded in 1999 and over the past 22+ years has serviced everything from small mom and pop shops to fortune 500 companies. We represent the largest and most reputable energy suppliers in North America and have an impeccable track record at securing the lowest rates possible.