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The Year in Electric Prices
A summary of 2013 and a look ahead

Posted by Bobby Dornbos on 01/06/2014 at 7:41 PM

It goes without saying that predicting electric prices is not an exact science.  Prices at any given moment are dependent on various factors that we discuss regularly throughout the year, namely, weather and the price of nautral gas.  Now that the statewide CenterPoint Energy Electric Price Index has been running for three full years, we can review the trends that continued in 2013, and see what was different.

Peaks and Valleys 

Below is a three-year look at prices in Houston.  There are a few things that are noticeably different in 2013 from 2011-2012, but overall, what do we see?  
  • Prices for shorter contracts, like six or three-month plans, are closest to their annual lows when cooler weather is present (around January), and prices are highest during the summer's heat.  Basically, as we have observed that, the shorter the contract, the more dependent electric plan prices are on the weather.
  • The cost of longer contracts, like one- and two-year plans, are much more steady, and tend to change very gradually.  Additionally, with the price of natural gas increasing slowly since May of 2012, you can see a similar growth in these longer-term electric plan prices from mid 2012 to now.  The red arrow below shows the comparable increase of one-and two-year plans with the price of natural gas.  And although there are periodic dips and spikes, overall, the growth in both is undeniable since mid-2012.
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Seasonal Sixes - the most frequently mentioned topic on our Index blog has been the seasonal variation of six-month fixed rate plans.  For the last three years, prices have been at their lowest at the beginning of the year, and at their highest at the beginning of summer.  The only real difference we see is that 2013 was close to $10 more expensive per month for these plans, but 2013 was more expensive for the longer plan types as well.  It remains true that Customers who paid the average price for two, consecutive six-month plans would have saved money compared to someone who paid the average price for a one-year plan.

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2014? - The similarities between the last three years are undeniable, even with slight variations in timing. We will never be able to pinpoint the exact date when the average monthly cost will jump or drop for any plan, but the fact that we see the same trends repeat time and time again shouldn't be overlooked.  Residential customers might expect to see year-over-year electric prices to be higher in 2014, based on the The U.S. Energy Information Administration’s Short-Term Energy Outlook report for January, 2014 again predicting a slight rise in gas prices through this year.

There are no guarantees when it comes to electricity prices, but better information leads to better buying decisions when selecting your home's next electric plan.  Tune in this year for frequent updates and insights.

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