You might not know about it, but the current cost of natural gas could have an effect on how much you pay for your electricity, even if you don't burn gas. That's because fuel costs make up around a third of the price of electicity generation. In the state of Texas, that price is mostly related to how much it costs to create power by burning natural gas. So, when natural gas prices go up, your power bill does, too. This could cause some real confusion if you don't know how it works.
The 1999 Texas Electric Choice Act says that suppliers of retail electricity can change prices twice each year at predetermined times, basing their changes on what natural gas costs at the moment. That way, you'll alwyays know that your power price is closely related to the current conditions on the market. If you don't like the service you're getting or the price you're paying, the Act also allows you to look for a new supplier who will offer the kind of pricing, terms, and service contracts that you like. If you prefer a supplier with more environmentally friendly generation methods, you can also take the time to choose someone who does this.
So, how is that price arrived at? First, a composite natural gas price will be calculated, using what's called the NYMEX Henry-Hub natural gas index. The closing forward twelve month prices are averaged for every business day over a ten day period. Then, the price that's been arrived at will be examined. If it's over four percent higher than the price that was used to set the current fuel factor, the provider might file for an increase in their prices. It's unlikely that the prices will be reduced from the current levels, but they may increase.
The percentage by which the price of natural gas has increased is applied to the current fuel factor to make a new fuel factor, which will affect your bill in either twenty days or in forty-five days, depending on whether or not the supplier decides to request a hearing. The longer period will apply if a hearing is requested, and prices go up if the provider is successful in the hearing.
Increases might seem like they're really complicated, but the truth is that they're not. When natural gas gets more expensive, all electricity in Texas does, even if it's not produced by burning natural gas. So, next time your utility bill confuses you, make sure you consider this fact.
About the Author:
Author: Jerry Dyess has been a manager in Texas Electricity for the past 7 years. Get more information on Texas Electric rates.
Get all the information and photos:: http://coringa.info/education/the-impact-natural-gas-prices-have-on-electricity-costs
0 comments:
Post a Comment