Texans are seeing skyrocketing home electric bills this spring and summer, with many customers paying at least 50% more than they did for electric bills at this time last year.
And nobody seems to know when costs will go down.
鈥淚 am worried people are going to be shocked,鈥� said John Ballenger, vice president at Texas retail electric provider Champion Energy. 鈥淩ealizing this is 50 or 60 or 70% higher than what they had paid before, I鈥檓 just not sure it鈥檚 real to people yet. If it鈥檚 not, it will be very, very soon when the bills hit this summer.鈥�
Here鈥檚 what Texans need to know about why utility bills are getting more expensive:
What鈥檚 driving electricity and gas bills higher?
The elevated utility bills have primarily been driven by the price of natural gas, which has shot up more than 200% since late February when Russia, a top gas-producing country, invaded Ukraine and upended the world鈥檚 energy market.
Since then, Texas, the leading natural gas-producing state in the U.S., has not been able to keep offering its own residents cheap energy.
Since the war in Ukraine began, Texas has been exporting more natural gas than ever before, sending much of it to Europe as many countries try to wean themselves off Russian gas. Congress lifted a longtime ban on in 2015, which opened world markets to Texas oil and gas producers.
鈥淧eople are lining up around the world to get our product,鈥� said Todd Staples, president of the Texas Oil and Gas Association.
But demand for natural gas has also been growing at home as more people and businesses continue to flock to Texas. A hotter-than-normal spring and early summer also have driven demand for power to record-high levels. Most Texas power plants run on natural gas.
鈥淲e鈥檝e seen Texas gas go over to Europe, which has then created a supply issue locally in the state of Texas,鈥� said Cory Kuchinsky, chief financial officer and treasurer for CPS Energy, San Antonio鈥檚 municipal utility that provides energy to more than 1 million customers. 鈥淥ur customers feel the real-time impact of changing fuel costs.鈥�
The hike in utility bills comes during difficult financial times for many Texans, who have also been facing high prices at grocery stores and the fuel pump due to growing inflation.
How long will Texans see higher utility bills?
With the war in Ukraine dragging on and upending the world energy market, Texas electricity providers are cautioning customers that the high rates could linger for months or longer.
The higher prices will, however, benefit some Texans. As a major gas producer, the state typically benefits from high oil and gas prices in the form of jobs and state taxes on oil and gas production. Cities located in the state鈥檚 oil fields usually benefit even more.
鈥淚 grew up in Odessa in the middle of oil and gas, and there鈥檚 always been this inverse relationship,鈥� said Carrie Collier-Brown, lawyer for the Alliance for Retail Markets, a trade group for Texas electric providers. 鈥淔or folks out there, it鈥檚 better for their economy when gas prices are high.鈥�
But despite the spike in demand, the oil and gas industry isn鈥檛 seeing major production growth because of a backlog of orders for vital equipment due to supply chain issues stemming from the pandemic, said Garrett Golding, energy economist with the Federal Reserve Bank of Dallas.
鈥淭here鈥檚 also a shortage of labor across most of the oilfield services,鈥� Golding said, noting that companies are trying to hire aggressively. 鈥淏ut we鈥檝e seen it for several quarters now: It is a struggle to get qualified people into the positions (companies) want right now.鈥�
Is the price of natural gas the only cause?
While they agree the price of natural gas is the primary driver behind Texas utility bills, energy experts say there are other factors at play.
The state鈥檚 main power grid operator, the Electric Reliability Council of Texas, has been managing the grid more cautiously since last February, when millions of people were without power for days in subfreezing temperatures after a combination of cold weather across the state and skyrocketing demand for energy shut down power plants as well as the that supply them with fuel. Hundreds of died.
Public Utility Commission chair Peter Lake, appointed by Gov. after the winter storm to lead , has said the grid operator is no longer prioritizing providing Texans cheap power. Instead, Lake said, its main focus is the grid鈥檚 reliability, especially during extreme hot or cold weather. But that has a price.
鈥淐onservative operations add costs,鈥� said Cathy Webking, a longtime Texas energy lawyer.
ERCOT鈥檚 new approach to operating the grid means asking power plants to be online and available in case they鈥檙e needed, and that means paying generators a prescribed price to operate no matter what happens. Before the 2021 winter storm, power plants ramped up or went offline based on market demand.
Golding, with the Federal Reserve Bank of Dallas, said Texans are paying for last year鈥檚 grid disaster 鈥� and will for years. Texas lawmakers last year approved roughly $7 billion in ratepayer-backed bonds to deal with the financial fallout from the storm. Some electricity utilities were strapped with billions in new debt after paying exorbitant prices for electricity set by ERCOT during the storm 鈥� the high prices were an incentive for power plants to provide more electricity 鈥� and the debt drove some utilities into bankruptcy.
鈥淥n everybody鈥檚 bill, there are also these surcharges for paying for what happened in 2021,鈥� Golding said.
