Did you get shocked by Houston wholesale electricity this summer?
If you purchased Houston electricity at wholesale prices through Griddy this summer, chances are you felt the pain of some astronomical electricity costs in August. For just the first two weeks of that month, some Griddy customers paid in excess of $600.
Services like Griddy attempt to let customers cut out the middleman in the deregulated Texas electricity market. Meanwhile, retail electricity companies offer fixed rate plans to customers but assume the risks of competing in the wholesale electricity market. To some Texas electricity customers, bypassing retail electricity providers may have seemed like a way to beat the system. Unfortunately, it cost some these folks big time.
Why did Houston wholesale electricity prices spike?
Griddy customers pay a $10 monthly fee. In exchange for that fee, Griddy finds the best wholesale rate available at any given time and passes the savings to the customer. In August when ERCOT electricity reserves were low, outdoor temperatures were hot, winds were down, and demand surged. wholesale electricity shot up to the $9,000 per megawatt-hour price cap in Texas. That caused a spike in electricity prices for Griddy customers. According to their contract terms, Griddy customers had to pay the best rate available. However, that rate wasn’t exactly palatable. It was downright hard to swallow!
In response to the high prices, Griddy has refunded their $10 fee for August. The company has stated it cannot refund the electricity costs so customers are stuck paying their high bills. Griddy requires prepayment, so a significant number of customers saw their accumulated deposits wiped out. This is a clear case study of what happens when customers ride out the wholesale electricity market rather than secure a fixed rate electricity plan.
Griddy customers can sign up for alerts to tell them when prices are spiking. Ideally, customers can take immediate action such as shutting off their air conditioners and other large appliances. But for many customers, aggressive and instant action is impossible to undertake. The result is paying through the nose for electricity consumed during peak hours.
Price Protection with Fixed Rate Electricity
Houston electricity customers on a fixed rate electricity plan didn’t have surprise $600 bills in August. Yes, their bills were higher. But, the need to cool down homes on 100-degree days increased everyone’s electricity usage. So, sheer demand drove wholesale prices higher. Retail electricity companies protect themselves in advance by hedging their costs to some degree with prearranged contracts for energy. This allows them to meet their fixed rate customers needs without huge price spikes. That enables customers with fixed electricity plans to relax when wholesale prices spike. They know how much their electric rate will be before they even use a kilowatt.
CenterPoint TDU Charges Increased
Unfortunately, all Houston electricity customers will see another sticker shock on their coming bills. That’s because CenterPoint Energy raised its transmission and distribution charges. These charges fund the maintenance work CenterPoint performs on transmission lines, power poles, and other electricity infrastructure. The average customer will see a $6.34 increase per month.
Shop Fixed Rate Houston Electricity
For those Houston electricity customers who chose to ride the ups and downs of the wholesale market, they can easily avoid shockingly high electricity prices in the future. Just sign up for a fixed rate electricity plan at http://www.texaselectricityratings.com to avoid that wholesale rate fiasco next summer. You can lock in a fixed price that will be friendly to your monthly budget all year.