The simple answer is that the demand for the natural gas commodity is directly impacting Texas electric rates.
As you can see it is sitting at $7.28 per million btu. For the last several years it has remained under $5 for the most part. It appears to be in an upward trend.
It is anybody’s guess if it will continue and go over $10. 47 % of Texas electricity generation comes from natural gas. Natural gas has been our go to electric generation fuel for cheap reliable energy.
If the price of natural gas continues to go higher our Texas electric rates will be too high for most people’s taste including mine.
The reason Texas electric rates are so high and natural gas is so high is related to European countries desperately needing Liquid Natural Gas exported from Texas and the rest of the U.S. to their countries.
The war with Russia and the Ukraine has caused this LNG demand and made our cheap fuel much more expensive. There is also the hidden cost of inflation that likely adds to the cost but that is harder to determine just how much.
If you locked into a fixed rate contract over the last few months, you unfortunately signed up at one of the most expensive times you could do so.
There is no way to tell if a few months from now if contract rates will be even more expensive. Guaranteeing your rate for the next year at these high prices may feel like a bad decision but it may be even worse if you wait. Hopefully prices will come down but it’s a wait and see situation as of now.
Donny Eisenbach
Donny has been writing about the deregulated energy markets since early 2007. His knowledge has helped consumers lower their electricity cost.
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