Commercial Electricity Rates in Houston Could See High Price Pressure this Summer

Hot Texas SummerTexas electricity suppliers have been issuing numerous warning to their commercial customers concerning likely higher prices this summer in the wholesale electricity market. These prices will trickle down to the retail sector hitting the electric bills of many business customers who are not on a secure fixed electricity rate contract. The Houston grid zone is already experiencing upward pressure on electricity prices as temperatures have been higher than normal in May. Houston zonal pricing for the 12 month strip, which determines the 12 month fixed rate, jumped up 7% in May.

The cause for concern over Texas electricity prices for the summer of 2018 is a result of recent coal fired electricity generation plants being closed over the last year. In an effort to move to a more green energy future, the closure of coal generation plants is likely going to put Texas is a electricity supply shortage that the state has not experienced in decades. If the shortage in electricity gets to close to a break even point to the demand, wholesale electricity prices will skyrocket as retail electricity suppliers bid of prices to meet the demand of their individual customers, many of whom are on variable rate products and won’t be protected by aggressive market increases.

Small and medium commercial electricity customers often let their fixed rate contracts expire without renewing for another fixed contract. When this occurs, electricity providers in Texas will likely place the customer on a monthly variable rate that is tied directly to the wholesale market with a retail adder for the provider. These variable products are the most accessible to the likely price spikes expected this summer in Houston and other parts of Texas. Texas electricity prices have been fairly stable over the last seven years, so keeping up with the electricity contract hasn’t been an issue for many small business owners. The stability in the market has created a moral hazard issue that could hit businesses hard this summer for commercial electricity consumers who are paying a variable rate with their provider. The variable rates have been quite low over the past few years that many customers have come to believe that low variable prices are normal; they are not and can jump up quickly and aggressively.

It is crucially important for all commercial electricity customers in the Houston area to lock in a low fixed electricity rate contract. Luckily in Texas, as opposed to other states who have electricity choice markets, the time it takes to switch providers and rate structures can be as early as the next business day. In some states in can take up to two months, which would leave customers on a variable rate in a bad situation if wholesale prices spiked.

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Compare Houston Electric Companies

Electricity prices in Houston and its surrounding cities have dropped to low levels.  When Houston residences compare electric companies they can find fixed electric rates under 10 cents per kilowatt hour for up to twelve months or even lower electric rates for shorter terms.

Houston commercial electric rates are in the six cent per kilowatt hour range for one year terms.  Just two years ago many commercial electricity customers were signing fixed electric rate contracts above 10 cents.  Though current longer term contracts (24 and above) are a little higher than short term (12 months and under) rates, many businesses are signing longer term electricity contracts in order to protect themselves from the potential of rising electricity costs in the coming years.

The electricity market is unpredictable causing many commercial electricity customers to want to limit their risks by locking in the lowest electric rate they can for the longest period of time.  The alternative can be seeing their electric bills double in a very short time period.

Residential electric customers in Houston are taking the same strategy signing fixed electric rates for as long as electricity companies will allow, which is usually 24 months.

Here are the lowest electric rate offers that we found in the Houston area:

Centerpoint area –


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