If you're a diligent steward of your money, there's a good chance that you pay attention to your monthly utility bills. If so, you may have noticed that electricity seems to cost more during certain times of the year than at other times. While it's possible that there was a change in the economy, it's more likely that the electricity prices were affected by the weather.
Electricity prices in Texas are highly volatile and constantly changing. A big reason for this is because of weather patterns and changes. If you're curious and want to know more about how and why the weather has an impact on your electricity rates, you've come to the right place.
- How Does Cold Weather Affect Electric Prices?
- How Does Warm Weather Affect Electric Prices?
- Power Plant Efficiency
- Makes For Slower Production
- Other Things That Affect Electric Prices
- Who to Contact For Steady, Unchanging Electric Rates
How Does Cold Weather Affect Electric Prices?
If you think that only one type of weather affects electricity prices, you couldn't be more wrong. Hot and cold weather each affect electricity rates in Texas but in different ways.
For instance, when the weather is overly cold, you'll likely be running your heater or furnace more frequently. And, because most people in Texas have electric-powered heat pumps and heaters, it will increase your electric bill.
However, in addition to forcing you to use more electricity, cold weather could also drive up the actual electric rates. This happens because of the law of supply and demand. The more electricity people use, the harder energy production facilities must work to keep up. As a result, they're more likely to raise their rates, which means that your electricity will cost more.
How Does Warm Weather Affect Electric Prices?
While cold weather can affect electric rates in some instances, it's much more common for rates to rise when it's hot and humid outside. This is because most, if not all, air conditioners in Texas operate using some form of electricity. Therefore, when it's hot and humid, people will run their ACs nearly around the clock to condition and cool their homes and businesses.
In addition to resulting in a higher electric bill because of extra use, power plants will raise their rates for the same reasons as when it's frigid outside.
Power Plant Efficiency
Part of why power plants raise their electric rates during extreme weather is because they can. Texas has a deregulated electricity market, which means that if a power plant can justify temporarily raising its rates, there's nothing to prevent them from doing so.
However, in addition to raising rates because they can, power plants also sometimes raise their rates because they have to. During extremely hot weather, for instance, it takes more energy and power to convert natural gas and coal into electricity. As a result, power plants raise their rates to make up for this decrease in efficiency.
Makes For Slower Production
In addition to reducing efficiency, extreme weather slows the electricity production process. As a result, power plants have to sell stored electricity, which is often more expensive than newly created electricity.
This isn't because the stored electricity is different in any way but because selling stored electricity means that the power plant is going to experience an energy shortage. It also means that workers at the plant will be working overtime, and generators will run longer than normal to keep up with production.
Times of Drought, Cloudiness, or No Wind
Texas is a national leader in terms of electricity that gets produced through renewable resources. This includes solar power, hydroelectricity, and wind power. While it's great that we use so many renewable resources, it can also increase electricity prices when those resources aren't readily available.
If a drought occurs, water is less readily available to create hydroelectricity. Without wind, turbines will require more energy to generate electricity. If the sun isn't shining, then solar power isn't an option. While each of these issues has a different cause and effect, they all result in higher electricity prices.
Weather Can Completely Eliminate One Source of Electricity
If you've lived in Texas for any amount of time, you likely lived through or have at least heard of the Great Texas Freeze. During the Freeze of 2021, Texans saw unprecedented rises in electricity prices. This happened because of how scarce electricity was and how difficult it was to deliver it to homes and businesses.
Entire wind farms and gas lines were temporarily put out of commission, eliminating a large chunk of stored electricity. Additionally, frozen gas and power lines made it impossible to generate new electricity for a short time.
Luckily, these types of instances are extremely rare, and measures have been taken to keep electricity rates under control if they should happen again.
Other Things That Affect Electric Prices
While the weather has one of the most significant effects on electricity prices in Texas, it's far from the only thing.
- The cost of natural gas, coal, and other types of fuel could increase.
- The economy could cause inflation to increase.
- A power plant or electricity delivery service might raise their rates.
- You may have used more or less electricity than usual, putting you in a different pricing tier on your electricity plan.
Contact us at GoodCharlie Energy to learn more about how these factors and others can increase electric rates in Texas.
Who to Contact For Steady, Unchanging Electric Rates
As you can see, the weather and many other factors have a dramatic effect on your electricity rates and bill. While unexpected electric hikes are sometimes unavoidable, you can keep them to a minimum when you sign up for a reliable, fixed-rate electricity plan from GoodCharlie Energy.
Fixed-rate electricity plans are much more steady and long-term than other types of plans. This means there's less of a chance that you'll experience an unexpected price hike just because it gets a little cold or hot outside. It's only in times of truly inclement and extreme weather that your rates will rise, but we'll do everything in our power to make the increase as minor and temporary as possible. Contact us to learn more or to enroll in an electricity plan today!
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