What Determines Your Price for Texas Electricity?

When you look at your power bill, you probably see a confusing list of costs. Many of us have trouble figuring out why we’ve been charged what we have, so we just pay our bills and ignore it. However, you don’t have to go through life without understanding why you pay what you do for electricity. Let’s take a look at how this price is determined. It’s really relatively simple. Plus, once you know how your bill is put together, you can take steps to pay less.

The price of your Texas electricity is going to vary not just according to your electric usage, but according to where you live, how the power was generated, and how it was delivered. Other factors may include whether or not new plants have recently been constructed in your area, plus the cost of maintaining and operating your local power plants. The utility will spread its costs out among its customers, and if its costs go up, so do your rates.

Supply and demand and season can also have an effect on electricity and related items, with gas and oil prices often rising in the winter and summer and dropping in the fall and spring. Electricity usually follows these same patterns. In areas with high demand (like here in Texas), time of day can even have an effect. After all, the power company can offer only so much electricity. If demand exceeds supply, brownouts can occur like they have in years past. The utility has an investment in not letting that happen.

Since the Texas electric companies can only supply so much at a time, they’ll encourage people to enrolly in programs to help manage demand. If you’re in one of these, in the afternoon and the early evening, you may pay more, since this is the time when most people need power, but at other times, especially over night, you’ll get a discount. Many people do their laundry or other electricity intensive chores at off peak hours to take advantage of this lower rate.
While your power may seem expensive, it’s cheaper today than it was in 1960. In real terms, adjusted for inflation, we pay an average of four cents less per kilowatt hour than we did then. Of course, prices have fluctuated over the years, due to economic situations, supply of fuel, and new methods of generating power. In general, your residential rate is going to reflect how much it costs the utility to produce or buy the power you receive.

Before taxes and other services, your total bill for a given month is simply the price of your electricity per kilowatt hour, times the number of kilowatt hours you’ve consumed that month. Since most residences have a lot of appliances that use electricity, some even when they’re off, your bill could climb when you’re not paying attention.

So, how can you reduce the amount you’re paying? Your rate per kilowatt hour is one important factor. You can shop Texas electric rates by going to ChooseEnergy.com and signing up for a lower electric rate. Then - you will need to lower you usage, about nine percent each of the average bill is paying for heating water and lighting. Ten percent is space heating and sixteen percent is air conditioning. Computers, electronics, freezers, dryers and other devices make up the remaining forty percent.

That means that there are a few things you can do to cut down on your bill. Improving efficiency and conserving energy are the best ones. Turn off or unplug appliances and lights when they’re not being used. Insulate doors and windows, and when the time comes to replace an appliance, choose the most efficient one you can. Older refrigerators are particularly bad culprits when it comes to energy use, as are older air conditioning systems.

Think about using your major appliances at off peak times, and see if you can average your annual bill, splitting your monthly payments out to an equal amount if seasonal demand is a problem for your home. Most Texas electricity providers now offer some kind of program to help you save electricity and money. Take advantage of it to see a real improvement in your bills.