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Texas Electricity Prices for 2024
Understanding electricity rate trends is essential for managing your household budget in Texas. This analysis examines the key factors influencing electricity prices in 2024, helping you make informed decisions to optimize your energy costs.
Key Takeaways
- Electricity rates in Texas are projected to increase modestly in 2024.
- Texas electricity rates 2024 hinge on natural gas prices and renewable energy growth.
- Increased renewable energy and market shifts may stabilize or reduce electricity rates.
Will Texas Electricity Rates Rise or Fall in 2024?
Electricity rates for Texans are expected to rise modestly in 2024, according to projections in the U.S. Energy Information Administration’s latest Short-Term Energy Outlook report.
While lower projected natural gas prices could provide some relief, increased energy demand from a warmer summer forecast, higher transportation costs from elevated oil prices, and continued growth in renewable generation are expected to put upward pressure on rates in 2024.
Texans can mitigate potential rate increases by locking in competitive fixed rates when natural gas prices dip, managing usage through energy efficiency, and taking advantage of the deregulated electricity market.
Natural Gas Price Trajectory
Texas relies heavily on natural gas for electricity generation, making projected prices a leading indicator of rates. The U.S. Energy Information Administration (EIA) forecasts Henry Hub natural gas spot prices to decrease from $2.50 per million British thermal units (MMBtu) in 2023 to $2.20/MMBtu in 2024 before rising again to $3.10/MMBtu in 2025. Lower natural gas costs in 2024 could relieve upward pressure on electricity rates.
Electricity Generation Mix
The EIA expects the national electricity generation mix to shift towards renewable sources and gradually move away from coal. Renewables like wind and solar are projected to increase from 21% of generation in 2023 to 23% in 2024 and 25% in 2025. While this transition promotes long-term rate stability, the higher capital costs of renewables could contribute to modest rate increases in the short term.
Residential Electricity Price Forecast
Considering all factors, the EIA forecasts a 1.8% increase in average U.S. residential electricity prices in 2024 after a 0.9% decline in 2023. This suggests modestly rising electricity rates nationally.
Oil and Transportation Costs
Oil prices are expected to be higher in 2024, with Brent crude averaging $88 per barrel compared to $82 per barrel in 2023. This could increase transportation and heating costs, impacting overall energy expenditures.
Summer Weather Outlook
The EIA’s forecast assumes a warmer summer in 2024 than in 2023. Hotter temperatures typically increase electricity demand for cooling, which could increase rates during the peak summer months.
Deregulated Market Advantages
Texas’ deregulated energy market allows electricity providers to mitigate rate increases if they can secure lower-priced natural gas supply contracts when prices dip. This flexibility can benefit consumers seeking competitive rates.
Renewable Energy Growth
The growth in renewable generation could put downward pressure on rates given wind and solar’s zero marginal costs. However, the higher capital expenses associated with renewable infrastructure may offset this.
Energy Efficiency and Demand Response Programs
Energy efficiency improvements and demand response programs can help curb electricity demand growth, potentially mitigating rate increases.
The 2024 Outlook
Based on the EIA’s data, Texans are likely facing modest upward pressure on electricity rates in 2024, particularly during summer peak demand periods. However, the projected dip in natural gas prices could counteract some rising costs.
Take Action
Texans can potentially mitigate rate increases by:
- Locking in competitive fixed rates when natural gas prices dip.
- Taking advantage of competitors in the deregulated market.
- Controlling usage through energy efficiency and demand response.
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In summary, Texas electricity rates in 2024 are expected to face modest upward pressure due to increased renewable energy generation and higher oil prices.
However, the projected decrease in natural gas prices offers some relief. Texans can proactively mitigate potential rate increases by locking in fixed rates, optimizing energy usage, and leveraging the competitive, deregulated market.
By staying informed and making strategic decisions, you can manage your electricity costs effectively and take advantage of opportunities to save on your energy bills.
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Texas Electricity Prices FAQs
Here are the most common questions we are asked about Texas Electricity Prices:
What is the average residential electricity price in Texas?
The average residential electricity price in Texas is 14.51 ¢/kWh, or 15% less than the United States average.
Updated September 2024
Source: U.S. Energy Information Administration (EIA)
Will Texas electricity prices go down in 2024?
Predicting a decrease in Texas electricity prices for 2024 is challenging due to factors like natural gas prices, renewable energy integration, and grid improvements, which create a complex and dynamic pricing environment.
What factors influence electricity prices in Texas?
Electricity prices in Texas are influenced by several factors, including the cost of generating electricity, transmission, and distribution infrastructure expenses, weather conditions, fuel prices (such as natural gas), and regulatory policies.
Additionally, the Texas electricity market is deregulated, allowing consumers to choose their electricity providers, which leads to competitive pricing among retail electricity providers.
Seasonal fluctuations, such as high demand during hot summer months, can cause electricity prices to rise.
What is the average business / commercial electricity price in Texas?
The average commercial electricity price in Texas is 9.22 ¢/kWh, 47% lower than the United States average.
Updated September 2024
Source: U.S. Energy Information Administration (EIA)
What electricity company has the best prices in Texas?
In the state of Texas, there are over 60 retail electric companies, each with dozens of energy plans available to consumers. However, the best electricity price for your home depends on your kWh usage, not the company.
Using Compare Power, you can explore energy plans that align with your home’s usage history to quickly find the one that best fits your kWh usage profile, regardless of the provider.
How do utilities and energy providers differ?
Utility companies are responsible for maintaining and operating the energy grid.
In a power outage, you can depend on them to restore and maintain the power lines and other equipment that delivers energy to your home or business.
Utility companies serving Texas include Oncor Electric Delivery, Centerpoint Energy, AEP Texas, and Texas-New Mexico Power.
What is ERCOT in Texas?
ERCOT manages most of Texas’ grid, providing power to over 26 million Texans, and is a nonprofit organization. The Texas Legislature and the Public Utility Commission have regulatory oversight over ERCOT’s operations.
Why is my electricity bill so high all of a sudden?
Texas heavily relies on natural gas for generating electricity, with over half of the state’s power being sourced from natural gas.
Unfortunately, economic uncertainty has caused natural gas prices to soar to all-time highs, leading to a steady increase in electricity prices throughout the year.
Retail electricity providers (REPs) purchase electricity in advance based on their demand predictions. As electricity becomes more expensive, REPs raise prices to ensure that they can maintain their profit margins.
If your electricity contract has expired, you may be paying a holdover rate that varies each month and is significantly more expensive than a fixed-rate contract.
Take control of your electricity costs by using Compare Power. Shop with your zip code to discover the best plans for your home and avoid high energy bills.
What is considered a good electricity rate in Texas?
A good electricity rate in Texas typically ranges from 10¢ to 13¢ per kWh for residential customers. However, rates can vary based on your location, usage patterns, and current market conditions.
The best way to determine a good rate for your specific situation is to compare offers from multiple providers using a tool like Compare Power.
Why do electricity rates vary in Texas?
Electricity rates in Texas vary due to fuel costs, seasonal changes in demand, transmission and distribution charges, and the provider’s operational costs.
Additionally, Texas has a deregulated energy market, meaning consumers can choose from numerous providers and plans, leading to a wide range of rates.
Are electricity rates going up or down in Texas?
Electricity rates in Texas can fluctuate based on market conditions, fuel costs, and other factors.
However, as per the U.S. Energy Information Administration’s forecast for 2024, wholesale power prices are expected to decrease due to factors such as lower natural gas costs and increased renewable energy generation.
Can I choose my electricity provider in Texas?
Yes, Texas has a deregulated energy market, meaning consumers can choose their electricity provider from several options.
You can compare different providers and plans to find the best one for your needs.
When is the best time to lock in electricity rates in Texas?
The best time to lock in electricity rates depends on market conditions and individual preferences. Generally, locking in a rate when prices are low can protect you from future price increases.
Seasonal fluctuations and market trends can impact electricity prices, so monitoring the market and making an informed decision based on your energy usage habits and budget is advisable.
How do Texas electricity prices compare to other states?
Texas electricity prices are generally lower than the national average.
As of September 2024, the average residential rate in Texas was 14.51 ¢/kWh, or 15% less than the United States average.
This is largely due to Texas’ deregulated electricity market, which promotes competition among providers, and the state’s diverse energy mix, including significant wind power generation.
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