Electric rates in Houston, Texas, are about 30 percent below the national average. There are probably multiple factors that directly impact the cost of electricity in Houston, but it is also a deregulated industry. Industry deregulation allows electric companies in Houston to compete for retail business and keeps rates down. In most other geographic locations, your electric company is dictated by your address and zip code. In Houston, consumers can choose which company they want to purchase electricity from.
The Texas electricity industry has been deregulated since then Governor George Bush signed the deregulation bill in 1999. Many media outlets claim that deregulation increases energy prices, but Texas electricity prices have been well below the national average for at least 8 years under deregulation. The price volatility of natural gas, the availability of hydropower sources, and even the number of coal plants can directly impact the cost of electricity for the end user.
Deregulated Market Players
In a deregulated market such as Texas, consumers can choose which retail electric companies in Houston they want to do business with. Instead of purchasing from an electric company that services a specific address, consumers can choose to purchase their power from over 100 different retail electric companies. This market competition helps keep prices low as companies compete for consumer market share.
Transmission and Distribution Utilities (TDUs) are responsible for delivering power to the consumers. TDUs are still regulated in Texas. If there is a power outage, the Transmission and Distribution Utility is responsible for correcting the problem and restoring power. Retail electric companies purchase power at wholesale prices and then sell it to consumers for retail. TDUs deliver and maintain the power that is sold.
Keeping Rates Low
The market competition in Houston helps keep rates lower for consumers who live there. Electric companies often offer discounted rates and introductory offers to entice consumers. While the rates and offers differ between electric companies in Houston, there are 4 main types of plans that remain popular among consumers.
- Fixed Rate Serve – A fixed rate plan locks in your per kilowatt hour price of electricity for the duration of your contract. This makes it easier to budget because the price of your service does not change with market fluctuations.
- Variable Rate Service – A variable rate plan is also known as an Indexed Plan. It means that the price you pay for your electricity will change with market conditions. It may be higher some months and lower in others.
- Green Energy Plans – These plans are for those consumers who prioritize environmentally friendly energy sources. They do typically cost a little more, but providers offset consumers’ kilowatt-hour usage by purchasing solar or wind renewable energy credits.
- Promotional Plans – Promotional plans entice consumers with low introductory rates or unique billing structures. Some popular offers include free weekends or bill credits for staying under a certain threshold for the month.
Electric Rates in Houston
Consumers in Houston, Texas, pay about 30 percent below the national average for electricity, thanks to a deregulated market. There are multiple plans and offers consumers can choose to fit their specific budget and lifestyle choices. Residents can choose to purchase their power from over 100 different electric retail companies but must often sign a contract. It is important to carefully research electric companies in Houston before choosing one to do business with. This will help ensure you get top-notch service at a reasonable price.
