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Blog Jul 5, 2022

Surprising Causes of Rising Electricity Rates & Ways to Save

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What do hot summer days, the Russian invasion of Ukraine, and a growing Texas population have in common? Each has a substantial impact on the price of electricity in your home. 

A 70% increase over last year, Texas is experiencing record-high electricity costs this summer. In June 2021, the average cost of electricity for Texas homes was 7.98¢ per kilowatt hour (kWh) versus 18.48¢ in June 2022. Much of the country is feeling a similar shock with their electric bills this year.

After exploring some of the major players in rising power costs, continue reading for some long- and short-term solutions to help you save on electricity. 

 

Why Higher Electricity Rates?

Rising electricity costs in Texas come from every level, including global, national, regional, and hyper-local sources.

First, the cost of natural gas, which is the largest source of power generation across the U.S. and oil-rich Texas, has increased substantially, almost doubling since the Russian invasion of Ukraine in February 2022. As a result, the U.S. government banned energy imports from Russia. Though the U.S. isn’t heavily reliant on Russian energy products (less than 8%), the global market consequences reverberate.

Crude oil, which contributes half the cost of gasoline, spiked from $80 a barrel in January to almost $120 a barrel in March. Other contributors to higher energy prices include halted U.S. oil production on the Gulf Coast due to Hurricane Ida in 2021, supply issues, and extreme weather.

Second, rising demand on the Texas power grid is impacted by two major factors: hot summer temperatures and the state’s growing population. Texas, the fastest-growing state in the country, grew 1.1% over the past year as it nears 30 million residents. As the fastest-growing metro area in the country, Dallas-Fort Worth alone is poised to surpass Chicago as the third-largest metro sometime in the 2030s if the trend continues.

The state’s booming economic opportunities and quality of life attract new residents, as well as companies like Caterpillar, Hewlett Packard, and Oracle. Due to the influx of people relocating, both residential and commercial power demand is growing. Addressing rising energy generation on the Texas power grid will be essential.

 

Save on Electricity Now & in the Future

Higher electric bills during Texas summers isn’t unusual, but this year the numbers may be alarming if you’re comparing your bill to last year or shopping for a new electricity provider. Energy experts agree that prices are likely to go down over the next year or two, but probably not in the immediate future.

Those intently watching the energy market recommend locking in to a short-term energy contract so if rates drop, you aren’t locked into a long-term contract. Payless Power offers a no-deposit prepaid energy plan, Premier 12 with a 12-month guaranteed rate that’s competitive in today’s market. Other companies offer their lowest rates on longer plans that lock you in for 24, 26, or 60 months at today’s high prices, plus require pricey termination fees to end your contract early.

If your current plan is expiring or you’re moving to a new home, a flexible month-to-month prepaid plan like Payless Power’s Easy Choice or one-year Premier 12 means you can take advantage of dropping energy prices when they finally settle. Only a minimum connection fee is required, that goes directly toward the cost of electricity, not some expensive administration fee. Simply enter your zip code to find a Payless Power plan that fits your needs and your budget.

For ways to save today, read Payless Power’s 10 Summer Saving Energy Tips and 5 More Ways to Save Energy as Summer Temps Heat Up. These tips include setting your A/C at 76 degrees or higher, utilizing ceiling fans, using high-energy appliances less frequently, and adjusting your hot water heater.

 

Sources:

Fort Worth Star-Telegram
Forbes

WFAA ABC-8

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