Texas Electric Rates Falling, but Not in Austin

There is a common perception that municipally-owned utilities (like Austin Energy) have lower electric rates than competitive “For Profit” utilities in Texas.  While that has generally been true in the past, it is not necessarily true today in light of lower fuel costs.

Austin Energy’s rates are based on the TOTAL COST of items such as power plants, workers and fuel.  On the other hand, Texas’ competitive electricty market that serves cities like Dallas & Houston has a fundamentally different price structure where electric rates are linked very strongly to FUEL COSTS and can fluctuate rapidly.

During the past 10 months natural gas prices have dropped dramatically – by as much as 76% from $13.58 (July 3, 2008) to $3.25 (April 27, 2009).

During that time:

• Austin Energy’s conventional electric rates for residential and small business customers have NOT CHANGED.
• Texas’ competitive electric rates are SUBSTANTIALLY LOWER than during 2008.
• As of May 2, 2009, nine “For Profit” companies were selling electricity near Austin for up to 10% cheaper than conventional electricity from Austin Energy.

Lowest Residential Electric Rates in Pflugerville Texas

Comparison on May 2, 2009 for Zip Code = 78691
(based on average price per kWh for 1,000 kWh per month)