Texas retail electricity rates are on the rise.
If you haven’t been watching the Texas retail electricity market recently, you might be surprised to find out that electricity rates have been increasing since last fall.
Over the last few years, we have all become accustomed to a competitive electricity marketplace and the availability of low-rate electricity plans. Fast forward to 2019 and retail electricity rates have been steadily increasing with almost weekly increases in the last month as we get closer to summer.
Gone for now are the days of sub 8 cents per kWh rate plans. Depending on where you live in Texas, the current market is now averaging 9.0-14.0+ cents per kWh.
One of the main benefits of Evergreen is that we work to keep our members on the lowest rate plans as the market fluctuates. Through our relationships with electricity providers, and use of market timing and other strategies, we are able to get our members great low-rate plans.
So what is causing rates to increase in Texas?
Increasing demand combined with decreased supply.
This year is another in a long succession of years where ERCOT has predicted peak demand in the summer months and sees an increased chance for emergency capacity with record demand forecast this summer.
Wholesale electricity prices are expected to jump this summer in the wake of shutdowns of several of the state’s largest coal-fired generating plants combined with a forecasted long and hot summer.
Electricity reserves are still running below state targets.
ERCOT’s current planning reserve margin for the summer is at 7.4%, nearly half of the state’s target of 13.75%. The low reserve margin dropped to this expected level after the 470 MW Gibbons Creek coal plant was taken offline.
The preliminary version of ERCOT’s summer 2019 Seasonal Assessment of Resource Adequacy (SARA) does not indicate the need for brownouts, or rotating outages — the grid operator’s last resort under the energy emergency alert program.
“Although, having reserves at this level does increase the likelihood that [rotating outages] could be needed if we have extreme weather or above-normal forced outages of generators, or very low wind output or very high demand on a particular day.”
Summer 2019 Temperature Outlook
The summer 2019 outlook is for near-normal temperatures and weather patterns will largely be shaped by the El Niño that is still in place. Based on the most recent 10- to 15-year period of weather, this summer could be slightly more mild than average, taking into account that there have been a lot of hot summers this decade. Based on a longer-term period to define normal, this summer will likely end up slightly on the hot side of normal; however, it will not be a repeat of 2011.
Summer 2019 Precipitation Outlook
As with the temperature outlook, the rainfall forecast for the summer season is not expected to be extreme in either direction, wet or dry. There is potential for a wet spring to turn into a dry summer. But drought concerns will still likely be minimal, as most reservoirs are full or close to full. If there are some regional drought concerns, parts of West and northwestern South Texas are the areas of most concern.
2019 Hurricane Outlook
El Niño is not typically conducive to an active hurricane season. However, there are exceptions. It is possible the current El Niño will weaken significantly or be non-existent by mid-summer, having little impact on the hurricane season. Historical comparisons suggest this coming Atlantic hurricane season will range from slightly below normal to very active. The current forecast for the 2019 hurricane season is 15 named storms, 7 hurricanes, and 4 major hurricanes, which is more active than normal. It will require a shorter-range forecast window to determine paths, but similar historical patterns lean slightly in the less-active direction for Texas.
We’ve got your back!
So if your electricity current contract is coming up for renewal soon and you are wondering why the rates of the new plans seem higher than in the past, this is the reason. Rest assured, we are working hard to keep our members on good low-rate plans and handle all of the issues that arise. The electricity market might not be as low as it was a year ago, but we are still getting good deals and bottom of the market rate plans for Evergreen members.
Reference:
ERCOT Seasonal Updates (published 5/8/19)
Utility Dive: ERCOT sees increased chance for emergency capacity with record demand forecast this summer
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