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Tag: Electricity Prices

  • Electricity Will Be Much More Expensive Next Winter

    Prepare now and lock in your electric rates!

    Electric rates are expected to spike next winter, reaching their highest point in at least two decades on the back of higher energy demand and market turmoil caused by the war in Ukraine. The electric rate could reach 15.6 cents a kilowatt hour, according to estimates.

    If that happens, the rate for many would be nearly double what was just approved by state regulators for the summer. As a result, the monthly bill for a typical residential customer, after delivery and other fees are factored in, would jump from about $111 to more than $150. The prospects aren’t looking good for ratepayers.

    “These are the highest futures prices that I recall in my 10-plus years doing this,”

    James Ruebenacker, manager of wholesale electric supply for National Grid in New England
    Electricity Prices Going Up

    Electric Prices Rising Nationwide

    Electric rates across the nation were already going up coming into this year as the economy started recovering from the COVID pandemic. The average electric price nationwide last year rose at its fastest pace since 2008, according to the U.S. Energy Information Administration. The surge came as the price of natural gas, a major fuel for electric generation, more than doubled. The trend is expected to continue this year.

    Wholesale electric prices this past January hit their highest point in eight years while real-time and day-ahead power prices more than tripled compared to January 2021. The effects are already being felt by consumers… rates climbed 20-25% in January.

    Next winter the country will feel more of the effects of the overheated energy market.

    Electric Rates Tied to Price of Natural Gas

    The last time electric rates approached what’s being projected was in the winter of 2015. Before that, consumers would have to go back to 2008 to find a similar spike in the price of power. Amid a global surge in oil and natural gas prices, the winter rate hit 12.4 cents a kilowatt hour.

    Both previous price hikes came in large part from an increasing reliance on natural gas for power generation. With more power generators depending on the fuel source to create electricity, power suppliers have been thrown into competition with the heating market to get gas. The result has been a pattern of peaks and valleys in electric prices, with increases in the winter when gas needs are high and decreases in the summer when demand ebbs. The pattern has only grown more dramatic in recent years.

    War in Ukraine also pushing up energy prices

    The war in Ukraine is only adding to the upward pressure. European countries are looking for alternatives to Russia for sources of natural gas, meaning that already-high prices to ship liquefied supplies of the fuel are climbing even more.

    Within the next few years, offshore wind is expected to help fill that load, but some regions continue to get as much as 20% of power from oil-burning plants. The electricity from those plants is expensive and is expected to become more costly with global oil prices nearly double what they were a year ago.

    When compared to data going back to 2000, the projected rates will be the highest on record. Even in an apples-to-apples comparison of winter rates only, it still stands out, at nearly 50% higher than other recent peaks.

    Regulators urge Consumers to Prepare for Rate Increases

    Understanding why price increases happen is helpful for many but it doesn’t help pay the bills. Customers are encouraged to reduce usage through energy efficiency programs. By next winter, the price is projected to reach 14.5 cents pre kWh… It is a reflection of global energy markets.

  • Texas Can Phase Out Coal with Wind & Solar

    Texas has enough wind and solar power to phase out coal entirely to reduce Electric Rates, but there’s a catch!

    According to a study by researchers at Houston’s Rice University, it would take just 1/3 of the solar and wind energy projects that have been proposed to phase out coal in Texas.

    The caveat is that the state’s energy grid is a mess, and it is standing in the way of a faster transition in Texas away from coal and toward renewables.

    “Transmission lines are the leading bottleneck that is slowing down the growth of wind and solar,”

    Daniel Cohan, Rice University
    Wind and Solar to Lower Electricity Rates

    Texas is Energy-rich so why are Electric Rates still high?

    As the top U.S. producer of crude oil and natural gas, Texas is easily one of the most energy-rich states in the country. It also leads the nation in wind power generation, which accounts for around 20% of Texas’s energy usage, while the state’s solar power industry is also growing fast. The potential for renewable energy in the state is massive! Unfortunately, Texas is also the country’s largest coal consumer.

    Dirty Energy & Electricity

    As the nation’s largest coal consumer, and biggest electricity consumer in general, how coal is phased out and replaced with clean energy in Texas would be crucial to meeting any nationwide climate agenda and to lead other states in the inevitable energy transition.

    Since June 2020, dozens of the new renewable energy projects have been approved, and the number of new proposals for solar and wind farms has doubled. But there’s still the huge problem…

    Texas Electrical Grid is Embarrassing  

    Different parts of the state can generate more energy at different times. Winds are strongest at night in west Texas, for instance, but tend to pick up during the afternoon in coastal southern regions of the state. You need a power grid to connect all those areas. Simply put, it’s not always windy and not always sunny, but it’s almost always windy or sunny somewhere in Texas. But without an extensive and up-to-date network of transmission lines to connect the electricity generated at these farms to cities, Texas’s energy transition will have to wait.

    In February 2021, Texas was hit by a historic deep freeze that led to prolonged power outages across the state. Although lawmakers blamed wind power and renewable energy for failing during the storm, the major culprit was the electrical grid’s dated infrastructure and aging transmission lines. After the storm, ERCOT, the private company that manages Texas’s electrical grid, came under fire for reportedly cutting corners and loosening regulations, leading to outdated and ill-equipped infrastructure.

    Progress Will Help Electric Rates

    Nationwide, aging electrical transmission infrastructure could soon be updated. In the recently approved infrastructure bill, the federal government laid out a financing plan worth over $15 billion to construct thousands of miles of new lines and upgrade existing ones.

    While Texas’s ERCOT has historically remained inflexible with regard to integrating with the national grids, it is beginning to intertwine itself more with neighboring power systems, such as through the ongoing $2 billion Southern Cross Transmission project.

    Researcher Daniel Cohan at Rice University believes that even though the infrastructure bill is a good start. More attention and investment is needed to sufficiently update the country’s power system. It’s nowhere near the scale of what’s needed nationwide to expand our transmission infrastructure.

  • Bitcoin Mining for Energy Independence?

    Texas Congressman Endorses Bitcoin Mining for ‘Energy Independence’ to Lower Electric Rates

    Bitcoin mining is exploding in Texas. That’s partly because prominent politicians such as Rep. Pete Sessions are courting mining firms.

    The Public Utility Commission of Texas has approved a base rate increase for Southwestern Electric Power Company (American Electric Power). Southwestern Electric Power Company serves 187,500 customers in Northeast Texas and the Texas Panhandle.

    Southwestern Electric Power Company orginally filed its request at the Public Utility Commission of Texas on October 13, 2020. The Public Utility Commission of Texas decision authorized an annual increase of $41.6 million in its order.

    Rep. Pete Sessions, a 12-term Republican congressman from Waco, Texas, is the latest Washington, D.C. politician to publicly embrace Bitcoin.

    He tweeted, “Bitcoin mining will play a critical role in rebuilding energy independence in the USA.” His mini-missive comes three days after Sessions tweeted, in language that mirrors Senator Cynthia Lummis (R-WY), “Bitcoin is aligned with American values and will strengthen the dollar.”

    Texas, once synonymous with oil, is the epicenter of a Bitcoin mining boom. According to data from fall 2021, Texas provides the fourth-highest hashrate of any state, with 14%. But Texas’ influence is likely even higher than that figure, given the large mining facilities that have either begun popping up in the past year or are in the works. For example, Argo purchased 300+ acres in West Texas last spring, while Foundry is partnering with or gobbling up solar and hydroelectric firms in the state.

    Why the Lone Star State?

    “Texas is such a goldilocks zone for bitcoin mining it’s unreal,” tweeted Coin Metrics co-founder Nic Carter over the weekend, citing “supportive policymakers” and the state’s energy infrastructure.

    Sessions is far from the only Texas politician to hail Bitcoin. Senator Ted Cruz has been increasingly aligning himself with cryptocurrency, while Governor Greg Abbott sees Bitcoin mining as a way to stabilize the state’s largely deregulated power grid while taking advantage of its large stores of untapped energy, including natural gas that can be burned but not transported. Texas also has plenty of wind and solar power to go around.

    Texas is such a goldilocks zone for bitcoin mining it’s unreal.

    – Supportive policymakers
    – Energy DNA
    – Most deregulated market, cheap power
    – Islanded grid, has to buy lots of ancillaries
    – Most renewable grid, most negative pricing events

    Texas has the largest net (summer) capacity of any state with 65% more than #2 California, according to the U.S. Energy Information Administration. And its lawmakers want to use that capacity to bring in money from crypto firms.

    “It’s a wonder that there’s mining anywhere else,” tweeted Carter. “Texas is just unreal in terms of mining suitability.”

    Texas now has the perfect opportunity to hone its sales pitch beyond the Bitcoin mining firms it’s been courting to a larger public that is still forming an opinion on cryptocurrency. After Russia invaded Ukraine, the U.S. and allied Western countries levied crippling sanctions against the country. Slight problem, though: Russia supplies an estimated 8% of the world’s oil.

    Therefore, those sanctions, plus voluntary pullouts from companies looking to decrease their exposure to public blowback or inadvertent sanctions violations, has helped push energy prices upward while re-igniting Republican calls for the U.S. to become energy independent.

    In this line of thinking, there’s no need to worry about the consequences of sanctioning Russia if the U.S. doesn’t need the energy it provides (though it can still be hit with higher prices on imports from countries that do).

    Sessions clearly aligns with this view. And he, along with a growing group of Texas pols, is pushing his state to get it done.