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How Natural Gas Costs Affect Electricity Prices

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In the past year, consumers have felt the effects of price increases at gas pumps, grocery stores and with most goods. Unfortunately, these increases have affected wholesale power prices as well. Bandera Electric Cooperative has worked diligently to keep our controllable costs as low as possible, but the price of natural gas continues to rise, affecting the price of power through your cooperative.

To help members understand why, here are some frequently asked questions about the situation.

Who controls the power market in Texas?
The Public Utility Commission of Texas and the Electric Reliability Council of Texas collectively manage the power market for most of the state. The PUCT is the regulating authority, and ERCOT ensures there’s enough power being generated to meet the demand of consumers.

Why is the cost of natural gas so high?
There are several factors recently influencing natural gas prices:
1. The Texas power market began operating much more conservatively after the electricity shortage during the severe winter storm in February 2021. ERCOT plans to hold more electricity in reserve to aid during times of disaster. Holding onto this extra power has a cost associated with it; however, the hope is the reserve will make the grid more stable for all of us in the future.

2. The war in Ukraine has disrupted energy markets across the world, particularly as Russia reduced the amount natural gas it supplies to Europe, which has historically been very reliant on Russian gas. As the largest natural gas-producing state in the U.S., Texas has been exporting natural gas to other countries at a higher price than it would sell for here. This contributes to the tightened supply.

3. Due to federal regulations, drilling for natural gas has slowed down, driving the price higher.

Is BEC the only electric utility that is being affected?
No, electric utilities across Texas are experiencing impacts from higher natural gas prices. Still, Texas co-ops’ electric rates remain comparable to or lower than the national average.

How is BEC helping members during this time?
We have programs in place to help manage your usage. We encourage all members to use the SmartHub app, which allows you to set notifications if your daily usage strays beyond your high threshold. Other options include average monthly payment and prepaid billing.

What can I do to lower my electricity bill?
Changing your habits is the easiest way to lower your electricity usage. Simple changes like adjusting your thermostat to a comfortable level, swapping incandescent bulbs out for LEDs, opening blinds to bring in the sunlight and unplugging electronics when not in use help conserve electricity. Please feel free to reach out to me or one of our member service representatives if you have any questions about your electric bill or need suggestions on ways to save energy. 

Posted: 10/21/2022 4:35:33 PM
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