Factors That Affect Electricity Rates in Houston
CenterPoint Energy is the only local TDU for the Houston metro area. Hence, the transmission and utility distribution systems have no impact on your electricity rates.
However, the real-time cost of electricity depends on some factors, such as:
Type of Fuel: The type of fuel (natural gas, coal, wind, etc.) used to generate electricity is different in various power plants. If the fuel cost is more than the generated electricity rates, companies may make adjustments so that the system can support itself.
Weather: Heating and cooling demands in the summer and winter are more in Houston, and hence you see an increase in electricity demand. As consumers use more electricity, this leads to increased energy rates.
Cost of Power Generation: Cost of the fuel used, transportation, and import and exports of fuel can cause electricity price fluctuations. Global rates for oil and gas can impact electric suppliers’ profits, leading to a price hike. Plant shutdowns, conversions, or re-licensing are some localized factors that affect energy rates.
Financial Speculation and Global Markets: Significant changes in the supply of oil across the world can lead to increased demand for fuel. Financial speculation is one of the least transparent factors that can cause unexpected movements.
Time of Use: Like seasonal highs and lows in power consumption, peak usage hours differ during a day. Afternoons and early evenings see a demand for electricity, which means the energy costs may be higher at those times.
Energy Deregulation Basics
Texas energy deregulation laws, which took effect in 2002, allow the right to choose your electricity supplier.
Earlier, local utilities alone could generate and distribute power to consumers. They worked with the state government, were the sole energy providers. The Public Utilities Commission (PUCT) was responsible for determining the electricity rates.
But since 2002, Texas residents have the power to choose the best energy-efficient programs that will help lower your monthly bills dramatically. Almost 85% of the state’s energy market is deregulated.
When you pay your Houston electricity monthly bill, the power that comes to your home or business is supplied by two companies: utility companies and energy providers.
Utility companies are also known as the Transmission and Distribution Service Providers – which is CenterPoint Energy for Houston and surrounding areas.
Energy providers are those retail electric companies that buy power from the utilities at competitive prices. They distribute it to you with the best electricity rates and pass along the savings.
Energy market deregulation allows the electric providers in Houston to better manage price fluctuations and tailor their products suitable to the buyers’ needs.
There is no change in service quality, but you choose the right price for your needs.
Green Energy Options in Houston
Human activity is putting enormous pressure on the environment. Carbon dioxide and other greenhouse gases overload the atmosphere, forming a blanket and trapping heat within.
The harmful result is significant climate change where we witness global warming, more frequent storms, drought, and sea levels rise. The planet may be gearing towards extinction shortly.
In the United States, around 30% of CO2 emissions come from the energy sector. The main culprit is the usage of coal and natural gas in electricity production. Rather than utilizing such fossil fuels, if more power plants focus on generating sustainable energy, this situation may change.
Renewable sources like wind, solar, hydroelectric, geothermal, and biomass are inexhaustible. Meaning, they keep replenishing, unlike fossil fuel sources, which are limited. Renewables also produce minimal global warming emissions, ensuring a greener planet.
Houston is leading in the production and usage of renewable energy, with 92% of its power coming from wind and solar energy. Anywhere you look, you may find solar panels and wind turbines that convert sunlight and wind energy into direct current.
Houston’s clean technology initiatives have encouraged many eco-conscious energy suppliers. Customers can reduce their fossil footprint and save the planet from destruction by choosing green energy plans. By checking the Electricity Facts Label of a plan, you can learn how much energy comes from renewables.
Plan Length: Month-to-Month, 6-Month & More
There is no “one size fits all” approach for choosing your energy plan and prices. A residential customer may pay more cost per kilowatt-hour (kWh) as compared to commercial customers. Understand the different home energy plans for various sizes of residences and living situations.
The primary thing to consider is the contract length.
If you have a large family or a permanent living situation, you can choose a locked-in, contract plan for six months or more. Some providers also offer residential energy plans with an extended contract period of up to five years.
Contract plans usually come with fixed prices that provide security and predictability. However, there will be an early cancellation fee if you switch to a new low-cost plan before the contract time is up.
Month-to-Month Energy Plans
For a small family with a more temporary living situation, a month-to-month electricity plan or no-contract plan will be ideal.
Most of the time, they require no deposit, and you don’t have to pay penalties for early termination of service. Month-to-month plans may be of fixed-rate or variable pricing.
Both contract and no contract type plans can be postpaid.
Fixed-Rate vs. Variable-Rate Plans
A fixed-rate plan comes with the same kWh energy rates for each month during the contract’s length. You pay for the electricity you use.
A variable-rate plan has energy prices changing every month, based on the market fluctuations. You cannot accurately predict your end-of-the-month bills for the same amount of energy used.
If you are not careful about your energy spending, you may receive unusually high bills on your postpaid plan. One way to avoid nasty billing surprises is to choose prepaid electricity plans.
Also called pay as you go electricity plans, prepaid plans allow you to monitor how much electricity you consume. These plans do not ask for a long-term commitment and can be fixed or variable-rate electricity plans.
They are excellent options for college students, landlords, apartment renters, or families that move often. If you are someone that wants a hassle-free connection without an electricity contract, choose a prepaid plan.
The best part about enrolling for a prepaid electricity plan is no credit check or security deposit. You pay the bill in advance and get the electric supply the same day. Use the service until there are enough credits in your account. Upon expiry of funds, you may reload the balance or terminate the service without penalty.
Top Houston electric providers like Direct Energy, Payless Power, and Chariot Energy provide prepaid energy plans at affordable rates. Get reliable electricity for as low as 14.5 ¢ per kWh.
You can also conserve energy and save money by choosing time-of-day pricing plans like free nights and weekends electricity plans.