Electricity Rates: Why so low? Should I lock it in?

The above post helped a lot.....

Edit: Deleted my questions....

Figured it out when I saw the missed fine print...

What's the future on the Natural Gas prices? Looking @ the Month to Month (variable) off indexed Nat Gas prices...

WOW...not having looked @ the numbers in a long time....we really don't use much electricity....

(2016) You used a total of 695.2 kWh of electricity this year. Your usage was 75 % less than your neighborhood average
(2015) You used a total of 5920.9 kWh of electricity this year. Your usage was 55 % less than your neighborhood average. [Granted this didn't start till May]

 

Natural gas prices are expected to stay pretty low for the foreseeable future thanks to all the shale production we have now. But, I'm not sure I'd advise an individual to buy a product indexed to gas prices. It's more appropriate to businesses that already have exposure to gas prices (where they hurt when prices are low and benefit when prices are high) and can use an indexed product as a natural hedge against the commodity price.

Yeah, you're usage is pretty low. Is this an apartment? I advice looking at powertochoose's per-500-kwh price indication, and read the fine print specifically to avoid or minimize minimum usage charges or bill credits for high usage.

 

Yeah, I looked at the power to choose with that option.

No, it's a newer small house (~2100 sqft). Just the 2 of us in it, and with work etc (we both work)....

So no TV's on in multiple rooms etc (LED projector in the living room, and gaming PC in the den). No lights left on for long periods of time.

Enjoying it till we move to a bigger place and have kids....

 

Thanks for the info. Seem arbitrary, is there a reason it's not the entire state? Is it a technical issue or political?

 

Both. The electrical grids kind of grew up organically as the country became electrified. You had these coordination groups (ISOs, Independent System Operators) develop to manage grids as they grew. Texas is unique (and some would say lucky) to have one, ERCOT (Electricity Reliability Council of Texas) whose footprint in entirely within Texas and manages the grid for most of (but not all...) of Texas. It has allowed Texas to do things with their electricity markets other states have not been able to do. However, some pieces of Texas are not in ERCOT. Another ISO, MISO, which covers much of the Midwest, serves a piece of East Texas just north of Houston. Because that geography wasn't part of ERCOT it wasn't included in deregulation. That part of Texas is served by the utility Entergy and there is no retail choice there. For Texas to introduce retail choice in Entergy territory, they'd have to work with MISO and with the other states served by MISO, which would have been much more complicated than deregulating ERCOT which lies entirely within Texas' jurisdiction. That's the technical and political side.

More on the political side, there were some (more liberal) areas that didn't believe free market economics would lead to better outcomes and didn't want to deregulate -- Austin and San Antonio being the stars there. So, they were allowed to keep their old utility structure while Houston, Dallas, and the rest of Texas deregulated. Debates still go on about which path was wiser.

 

great post! I too was trying to calculate what my true cost would be. Past year looks like half the time we used under 1000 kwhs and only once did we go above 1500 kwhs.

 

It's all a bunch of bs. Just got to read all the fine print details. Yea...I'm sick of this sh_t, too. It's downright deplorable how they try to screw you. I'm intent on using more electricity just so I can hit my 1000 kwh a month...just so i can get my discount. Come to my house...the A/C is always on and it is turned down way low. I've got the hot tub constantly on and the pool pump is always on. I've got all my guitar amps always on...stereo blasting...all lights on...all the time! Oh...damn...I just went over 2000 kwh...my rate jacked up and my discount went bye bye. "Sorry, folks...park's closed!"

 

Deregulation was a failure until the rules changes that allowed the Retail part of Reliant and TXU to lower their rates to be competitive. For most of the first decade of deregulation, those 2 had to keep their rates artificially high to boost competition. That changed in 2011-2012....it is also the same time AMI (Smart Grid) was rolling out in the Houston and Metroplex areas....which also helped lower rates.

 

Why do I always hear the weirdest complaints about deregulated or non-generating utilities, is it just people with short term contracts with small companies too cash-poor to hedge, that then have to allocate spot price hikes immediately to customers, or is it boiler room sales where they're just over promising rates they can't predict or understand?

 

1. People unfamiliar with the electricity market are reluctant to sign on to term contracts, so they go variable so they have flexibility to leave if they don't like the price and not realizing the price is actually the highest on these products.

2. They are tricked by their desire for the lowest price possible to throw-in with fly-by-night companies that overpromise and underhedge because their only goal is to grow the customer book large enough to sell out to a bigger player before their bad business practices catch up with them.

3. When the commodity markets blows up, these small companies have too much exposure to spot prices and don't have the balance sheet to withstand losses. So they increase prices on their variable customers, consequences be damned.

4. Customers, not discerning the fly-by-night organization from the more reputable companies, declare the whole industry crooked.