Natural Gas Residential Market rates now available. You take on the risk in exchange for lower electric rates.
Sunday, February 4th, 2007Residential Rates are back down to the 10 cent per KWh range.
Consumer Strategist
Texas Electric Company Reporting - Donny Eisenbach
10 - 10.8 cent per KWh electricity rates are showing back up in Texas but are these rates legit?
January marks the beginning for a month with no marked price-to-beat rate. This means incumbent electric providers can charge whatever they want. A few of
the electric retail providers pricing electric energy rates at around 10 cents per kilowatt-hour to 10.8 cents. Reliant Energy still offers a 16 cent per KWh
residential rate even though rates have dramatically climbed down. This would be price gauging by most peoples estimation. What type of people do they charge
this rate to? Someone is buying but exactly who and how did they get you?
The public utility commission estimates about 30% of North Texas have switched from TXU to another Retail Electric Company.
Now that the price-to-beat is no longer active is it a good time to switch retail electric providers?
There are these low electric rates being offerred on a month-to-month basis but these plans are strictly market rates so when natural gas rates go up so does
your rate. The spikes that occur with natural gas can sometimes be 3 times higher then a previous month. Is this really a smart choice for Residential
customers who don’t know any better? Startex Power, Reliant Energy, Commerce Energy, and Amigo Energy currently have these market plans available and they
are good so long as you know what you are getting into.
When the natural gas spot rate goes up on the NYMEX and Henry Hub expect the same to happen to electricity rates. Natural Gas and coal makes up about 75% of
the electricity cost of generation. Expect to see consumers feeling as if they were tricked into something they weren’t educated on.
While Natural gas continues to fall lower this does represent an opportunity to educated consumers who are willing to take on the risk of gas spikes. If a
consumer is concerned about an unexpected rate hike because of the commodity market in Natural Gas rising higher from anything from a hurricane to a mideast
war issue then stay away.
No one wants a higher electric bill but this is what happens when taking on your own risk instead of letting the electric company hedge the electric energy
and offer a fixed rate. Customers make the decision so long as they are informed about the rate, otherwise they get into a low rate they know nothing about.
Reliant Energy is a large enough experienced company to lead the way in providing a truly understandable natural gas electric plan that anyone can
understand. We hope they choose to do this.
Commerce energy is aggressively seeking new customers and have a 10 cent market rate that is competitive when put side-by-side the other Retail Electric
Providers.
Reliant energy, has a new PowerTracker plan that starts at 10.3 cents.
Reliant Energy’s rate is based on a Natural Gas formula using the NYMEX natural gas futures’ contract price and a market conditions multiplier that is
supposed to reflect market changes.
As with any electric rate the rate also has some built in fees related to the customer’s electric utility TDSP service area.
It is veyr important for consumers to stay informed because this plan is absolutely not for everyone and could easily be cause for some irate non paying
customers if Natural Gas Prices spke up.
With a residence you usually pay at the most $500 a month so if the electric rate spikes the Retail Electric Providers assume you will be able to pay the
bill still if the average month bill increases to say $1000. At this time a consumer who was unhappy could convert to a fixed price to avoid any future rate
spikes.
Because these plans have no long term commitment you can convert to fixed price at any time.
The big companies have coined the term “market-tracker” as the type of product that follows the Natural Gas futures market on the NYMEX exchange. The
market-tracker plan follows natural-gas prices. TXU’s plan is a 24-month contract with a $200 cancellation fee at 15 cents a killowatt hour right. This rate
is extraordinarily high and the people locking into this rate are being gouged severily.
The positive aspect of this plan is that it caps its rate and provides protection from short-term spikes. The negative to this plan is that it does so at a
premium that makes no sense for being so high.
Now that the “price to beat” rate is finished because of the government deregulation process, we will see continued lower rates in the form of market rates
for energy and fixed electric rates.
Gas prices were as high as $12 after Hurricanes Katrina and Rita but since this time the natural gas spot price has dropped enough to allow for truly
discounted rates at around 10 cents per KWh.
Natural gas prices are purely a guessing game and are highly speculated as to what they will do next. As of Feb 2007 they are currently quite a nit above
the averages from lat year at this time. This is due largely to colder then expected weather. This week in Texas the weather is warming up again and
natural gas prices will likely drop the week of Feb 4 2007.
Because of the volatility, the lack of a minimum term may help consumers, he said.
“If prices get to the point beyond their tolerance level, they could leave the rate,” he said.
At this time the deregulated electricity market has not seen the low rates promised by the Texas deregulation plan but the more interest energy consumers
show in a true energy market rate the lower the rates will go.
The best residential electric contract option at this time in the market would be a 10 cent fixed priced product for residential customers. Right now the
demand is just not there for electric companies to go there.
Here are a few Retail Electricity Companies offering Market Rate prices following the natural gas market.
10.3 cents
Reliant Energy,
866-222-7100,
www.reliantenergy.com. Plan becomes available Monday.
10.4 cents
Commerce Energy, Costa Mesa, Calif.: 877-226-5425, www.commerceenergy.com. Includes $4.95 monthly service charge.
10.8 cents
StarTex Power,
866-917-8271,
10.8 cents
Amigo Energy,
888-469-2644,
www.amigoenergy.com. $6.95 charge for using less than 500 kWh.
SOURCES: Reliant Energy,
Commerce Energy, StarTex Power, Amigo Energy
FOR MORE INFORMATION
Natural-gas prices can be followed on www.naturalgasprice.net
