TEXAS, USA — Do you ever lock the door and then check it again because you’re not sure you did? Sometimes, our minds play tricks on us.
But that’s probably not what happened if you locked in a fixed rate for electricity, but then you noticed in recent months that it didn’t stay locked in place. It went up somehow.
What happened there?
This may unlock the mystery: Across much of Texas, you can choose and change your electric provider using sites like powertochoose.org, the electric choice website of the Public Utility Commission of Texas. When you settle on a rate being offered by a plan, that rate is really comprised of two rates.
You’re paying two rates for electricity
For example, you choose a plan that lists as 13 cents per kilowatt hour. Part of that, let’s say 7 cents, is for the actual electricity. That charge comes from the electric company you chose, and it’s usually a fixed rate.
The other 6 cents in this example is for delivery -- to get the power through the electric lines to you. It’s also part of your electric bill, but it goes to the transmission-distribution utility, or TDU (also known as a transmission and distribution service provider or TDSP).
You don’t get to choose that provider. Your delivery utility is based on where you live. In Dallas, it’s Oncor; in Houston, it’s Centerpoint. Click here for a TDU map.
The TDU charge is not a fixed rate. Every March and September it changes, usually falling in the spring and rising in the fall. Those changes must be approved by the Public Utility Commission of Texas.
This September, the jump was much more substantial than in recent years. The headline from electricityplans.com noted that the rates soared to their highest levels in five years.
Why did electricity delivery rates rise so much this year?
We emailed major TDUs to ask why. Most didn’t even bother to reply. Oncor gave the only specific answer, attributing the bigger than usual increases to inflation, noting the higher cost of equipment.
Oncor says it's been seeing, “Historic levels of growth and new customers on our system."
Oncor elaborated, “The September 1 rate change accounted for the over $1.1 billion in new distribution facilities Oncor built during calendar year 2022 to serve new and existing customers in our growing service territory."
All of those new customers must be connected to the grid and that costs all of us. How much? Electrictyplans.com chronicled how much rates rose for each TDU from March to September in 2023.
Here was the change for each:
- Oncor: Up 1.18 cents per kWh, an increase of 30.76%
- Centerpoint: Up 1.74 cents per kWh, an increase of 46.51%
- AEP North: Up 1.21 cents per kWh, an increase of 30.76%
- AEP Central: Up 1.23 cents per kWh, an increase of 28.52%
- TNMP: Up 1.48 cents per kWh, an increase of 32.36%
If you use 1500 kW hours in a month, here’s how much your monthly bill would have gone up depending on your TDU:
- Oncor: $17.70
- Centerpoint: $26.10
- AEP North: $18.15
- AEP Central: $18.45
- TNMP: $22.20
You’ll likely see increases in price when shopping for electricity
This is also part of the reason why you might be disappointed if you are shopping for an electricity plan right now. Firms that track utilities say that historically, electricity demand and rates are higher in the summer and winter. Traditionally, they have said that you might get a better deal on power in the ‘shoulder seasons’ of fall and spring.
Late last spring, we reported that it might be a good time to lock in a rate.
That was then. We just did the same spot check at powertochoose.org and electric rates were more than 20% higher than they were in May. There was no apparent fall shoulder season markdown this time.
Again, some of that is the TDU charge increase per kilowatt hour. But could some of it also be that the Texas grid still isn’t prepared for winter?
Ed Hirs, energy fellow at the University of Houston, blames state leaders for not doing enough to fix the electric grid, which is still vulnerable to winter power shortages.
“You know, once again this is just like a developing country. I don't understand how a state government… the arm of the state agency… can tell its citizens with a straight face, ‘Hey, you know, one of our solutions is going to be to go for rolling blackouts across the state if we're caught short’," said Hirs.
Hirs recently chose a new electricity plan. He’s telling consumers not to expect any good deals.
“The price is going to go up. It's just going to become more and more costly for the retail providers to lock in prices and to hedge to have a financial gain even if we do go into rolling blackouts," said Hirs.
Texas electric grid still vulnerable to supply challenges
We didn’t see that happen during last December’s deep freeze across Texas. But if those same conditions hit this December around the 8 a.m. high electricity demand hour, the state’s electric grid operator, ERCOT, said in a recent report that there’s about a 14% chance Texas would go into controlled electricity outages.
And ERCOT CEO Pablo Vegas acknowledged that risk percentage could potentially triple if we see a (thankfully less likely) repeat of the February 2021 winter storm which led to widespread, deadly, and destructive power outages.
We asked Vegas if that is what keeps him up at night.
"It is. But what I really focus more on is what's in our control. I can't control the weather, but what I can control is how effectively we administer the programs that are available to us," he replied.
Speaking of programs, Vegas is now talking about a potential program to pay residential customers–like the state does with businesses–to cut back on electric usage when conditions are tight. He also talks about the cost of electricity and the challenges this state faces to keep up with demand. Vegas discusses it all in his first ever appearance on a podcast. And he chose to do it on Y’all-itics: