Texas produces more crude oil than most countries. But Texans also consume more energy than most states. The average Texan spends $128 which is equivalent to 1,171 kWh per month. This translates to an annual electricity bill of roughly $ 1,542. It’s not the price per kilowatt hour that’s expensive, but the need to consume more energy that increases the costs for consumers. Despite all the oil and gas produced in Texas, plus the energy companies based there, Texans don’t have the privilege of a hometown discount for power.
Components of an Electric Bill
An electric bill consists of two main components: the price per kilowatt of power delivered and total power use. Both factors vary throughout the country for different reasons. Some of the factors that influence rates include proximity to fuels such as coal or natural gas, transmission capacity amount, local labor rates, competition level and bureaucracy and taxes. In general, the areas where electricity is more expensive are not necessarily the places where people consume lots of power.
Factors such as the size of the house and the temperature outside also play a big role in electricity use. The biggest power consumers in the US live in what could be referred to as the nation’s air conditioning belt which stretches from Georgia to Texas
While calculating the average electricity bill in Texas, three major factors make it difficult to predict your bill. They are natural gas costs, company operating costs and consumer usage.
Natural Gas Costs
The majority of power generators own plants that run on natural gas. They have to buy the gas to generate electricity and this directly affects the rates you are charged for the service. Different companies also have different leverage methods of implementing fuel costs into your total bill.
The individual provider and national market fluctuations influence the operating costs. Despite a company strategizing to operate as efficiently as possible, equipment investments, line losses, meter readings and labor costs add up affecting the final bill.
Electricity providers offer various types of plans and services, depending on the size of your business or home. Some of these plans include:
- Fixed rate plan – Keeps rate at one price regardless of the market price. This plan is ideal for customers searching a long-term option.
- Variable-rate plan – With this plan, the decrease or increase of rates depends on the market price. A price drop means the rate also drops and vice versa.
- Indexed plan – This plan starts with an introductory rate which changes to the market price rate once the introductory rate expires.
- Green Plan – A Green Plan allows you to buy the supply of electricity generated by clean resources such as the sun or wind. It’s common to find Electricity Providers who offer this type of plan in Texas.
One of the solutions to high bills would be to increase the supply of electricity. But building brick and mortar power plants is costly. Besides, acquiring land and permits can be challenging and time-consuming. They’re also a financial risk as they take years to build, and the payoff relies on volatile energy prices. A cheaper solution is energy-efficiency programs being rolled out throughout the US.