Off-peak plans entice people to kick summer premiums down the road to their next plan but unless you move you will pay them eventually. But if projected costs of the other 6 months raise the 12-month average to 6.1 ¢/kWh, that 6-month plan isn’t such a good deal. without them.Īs an example: If 12-month rates are 5.1 ¢/kWh, a 6-month plan at 4.0 ¢/kWh may seem cheap. You can’t directly compare rates with vs. If you bought NFL season tickets, would you prefer $100/game for the regular season, or $120/game including the Super Bowl? Texas summers are the Super Bowl of electricity. (Texas Power Guide is the only site that does this automatically for DIY shoppers, based on the user-selectable ‘Max Term’ input.) non-peak periods - you must include projected costs for any months they don’t have in common. To compare plans of different lengths - especially peak vs. But “lower” off-peak rates aren’t a better deal if they’re not low enough. Any of these tend to offer lower nominal rates than a 12-month plan, because they cover mostly off-peak months. These include 3-, 6-, 9-, or 18-month plans beginning in September. Part-Year Plans: Deal or No Deal?Ĭonversely, many Retailers seasonally trot out plans that avoid or underweight summers to appear cheaper. So in April a 6-month plan would generally carry a higher rate than a 12-month plan. And the shorter the plan, the more summer impacts the average rate. The tighter the expected summer supply - due to weather, new residents, plant retirements, etc. Based on cost forecasts for each month, they compute a volume-weighted average price for each plan. In turn, retailers pass on those costs as higher rates for plans that span summer. Retail electric rates are usually an average of the individual months they cover. For retailers, the July and August peak months mean buying twice as much electricity at two to five times the average cost – a double whammy. On the hottest afternoons, this can temporarily drive wholesale prices as high as 500 ¢/kWh. As the total load exceeds the output of cheap wind, solar, and natural gas plants, grid operators must tap increasingly expensive sources like coal to meet the demand and prevent blackouts. In summer, however, millions of air conditioners ramp up electricity demand and prices significantly. Barring extended cold weather in Northeastern states, gas-fired electricity typically costs less than 3 ¢/kWh. Natural gas is abundant and consistently cheap. Most of the time, electricity pricing follows the cost of natural gas, which is used to generate nearly half of all Texas electricity. In Texas, what they pay is mostly about natural gas and summertime. Retail Electricity Providers (REPs) extend retail offers based on the wholesale prices they pay for electricity. More than a particular season, that depends on market trends and contract length, so read on to learn more. If you diligently shop and renew your contract, the answer is “when rates are low”. If you’re out-of-contract and paying hefty month-to-month electricity rates, the answer is “right now”, because a contract rate will almost certainly cost less. When is the Best Time to Shop for Cheap Electricity? Electricity Shopping Timing Tips For the lowest electric rates, leverage TPG’s Rate Trends chart and free RateAlerts.
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