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A year of electric pricing at a glance
A summary of 2012, a look ahead

Posted by Bobby Dornbos on 02/04/2013 at 8:56 PM

As the statewide CenterPoint Energy Electric Price Index completes its second full year of analysis, we take a look at 2011 versus 2012. Which trends proved true over the last two years and what changed? And what might happen in 2013? 
  • 2011 - With the extremely hot conditions faced by Texans throughout the summer, all plan lengths stayed at higher price levels for most of 2011. However, due to the seasonal curve of six-month fixed rate plans, their price stayed well below that of the longer one- and two-year fixed-rate plans for nearly nine months of the year. This helped establish six-month plans as a low-price leader in 2011. See below for a look at 2011's fixed rate prices for the Houston/CenterPoint Energy service area.  
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  • 2012 - As you'll notice by comparing 2011 to 2012, although the timing of price spikes and dips varied slightly, the same overall trends held true over the last two years. Six-month plans proved once again to be the average low-price leader while also hitting an all-time low of $90 (since the start of the Index). Also of note, with the consistent drop in natural gas prices into May 2012, even one- and two-year plans saw a more significant price decrease in the first half of the year before regaining their price-stability.
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  • 2013 - The similarities between the last two years are undeniable, even with slight variations in timing. While we can't pinpoint the exact date when the average monthly cost will jump or drop for any plan, customers could expect to see a seasonal curve in six-month plans in 2013 that makes them cheaper in the cooler months. Additionally, the more stable one- and two- year plans are likely to stay somewhat parallel in price, but will most likely be priced at higher levels than shorter-term plans for most of the year.  
Historically, retail electric prices in Texas have closely tracked the price of natural gas. But with natural gas prices and electricity prices both near their 10-year lows, it’s difficult say whether electric prices will continue to fall from here. The U.S. Energy Information Administration’s Short-Term Energy Outlook report for January, 2013  forecasts a slight rise in the gas prices through 2014.

Just as important, the price of natural gas may not be the only factor that affects power prices this year. Changes in regulations and available power supply can also have a significant impact on prices.  Last October, the Public Utility Commission of Texas voted to double the price cap on wholesale electricity prices in an effort to encourage companies to build more power plants. Experts disagree on the effect this change will have on power prices, but if we have a very hot summer or power supplies run short, higher wholesale prices may result in higher retail prices. At the very least, it does raise the possibility that prices summer may be more volatile this summer than in prior years.

There are no guarantees when it comes to electricity prices, but knowledge is definitely power when it comes to searching out the right electric plan for your household.

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