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How Will the Coronavirus Affect My Electricity Bill?
For the first time in several years, the Texas electricity market’s prices are lowering at this time of year, which contrasts the rising temperatures. Why is this happening?
As you may have expected, the fallout from the coronavirus, otherwise known as COVID-19, has affected every major global industry to some extent. Unfortunately for the energy sector, oil and gasoline prices have plummeted.
Meanwhile, plummeting oil prices can drastically lessen the price consumers pay for electricity. This worldwide issue has created a rare occurrence for Texans—new electricity rate prices will seemingly decrease during spring and summer.
To me, that sounds like some much-needed good news.
Despite the projected lower prices, will some consumer’s monthly bills be cheaper as a result? By our estimation, not necessarily.
Seems Confusing, Right?
Seems confusing, right? In short, electricity may be cheaper if you enroll in a new contract in the coming months.
And typically, if electricity is cheaper, your bill will also be cheaper. But since much of the workforce is working from home in response to the coronavirus, and also because temperatures are rising, Texans will soon be using more power.
Therefore, the price is lower, but the usage is greater. So clearly that will result in a higher bill. Sure, commercial usage is decreasing and residential usage is increasing.
However, the shift of power is not proportional. This means the shift of demand on the grid will not remain equivalent to previous estimations. So since the demand will be less, electricity prices will lessen.
To give a more in-depth explanation as to why this is transpiring, we’ve brought in one of our own. David Kinchen, Senior Dir. of Strategy and Pricing, is an expert on this subject. He leads our pricing team who collectively has years of experience analyzing electricity pricing.
“As we see the fallout from the coronavirus unravel, we are noticing some changes in the commodity markets, specifically around crude oil,” David says. “Consequently, the global economy has been weakened. So as the wholesale market adapts, we’re starting to see an overall price reduction for electricity. That means summertime prices are coming down, when they would typically be increasing dramatically over the next couple of months.”
For example, when David and his team analyze the market for Energy Ogre members, they consider 3-12 month projections before enrolling members in a particular plan. This practice ensures our members are put into low-priced, appropriate plans that will save them money.
However, a large portion of the Texan workforce has begun working from home. Therefore, the amount of commercial power that was expected to be used will decline drastically.
So What Does That Mean For Me?
Schools, churches, entertainment venues, many nonessential businesses, and many restaurants have closed to prevent the spread of COVID-19. These closings have lessened the demand for electricity on a commercial level.
This effect is called demand destruction, and it lowers prices throughout Texas’s deregulated areas because the amount of power originally projected for consumption exceeds what will actually be used.
Basically, today’s circumstance is a clear example of supply and demand, and how the two directly influence the price of a good or service. Assuming major industries remain inactive or less active, retail electricity providers (REPs) will have bought too much power in preparation for expected high demand.
REPs traditionally purchase power months or maybe even a year ahead of time. Since all of the power purchased long ago won’t be used or needed, it suddenly isn’t worth as much.
“It’s possible that as we near the hot part of July and August we won’t be as close to that peak as we thought,” David says. “That gives you a little bit of relief on the market and so as of now, prices will trickle down.”
If Power Is Cheaper, Why Am I Paying More?
To put it simply, if you use more, then you will pay more. Electricity is a commodity unlike any other in today’s economy, both the way it is used and purchased.
But with that being said, your electricity bills in the coming months may be comparable to a grocery store trip. Your pork chops may be on sale, but if you buy twice as much as you planned to, then you’re incurring an additional expense.
In this same way, assuming you renew your contract or enroll in a new plan in the coming months, your rate may be lower than it normally would be amidst the heat of summer. Although, if you’re working from home and practicing social distancing, then you’ll be using more power. Thus, your bills are higher despite the lower-priced rate.
What Should I Do Now?
Here are a couple of necessary steps:
- Wash your hands.
- Read your child a book, or go to the store for an elderly parent or neighbor
- Be thankful you’re an Energy Ogre member.
- If you aren’t a member yet, then sign up.
- Relax, because you’ll never overpay for electricity again, regardless of what happens to the market.
Obviously, there’s no crystal ball that we’ve gazed into to answer today’s questions (and to future lottery drawings). But we are confident the demand this spring and summer will not be as high, which has historically meant new rates will be lower than expected.
Speaking of new rates, many electricity plans end around this time each year. This means if you’re an Energy Ogre member, you can expect we will soon put you in the best plan that matches your needs, ensuring you will save hundreds of dollars over the duration of your next contract.
For those reading this who aren’t part of Team Ogre, it is now more important than ever to signup with us. Chances are your current contract will end sometime before late July or early August, which is always the hottest part of the year.
Sure, as we’ve already mentioned, prices may be lower than they typically are. But only those who know how to shop well (the way we do with help from our self-developed technology) will reap the full benefit of the pricing this summer.
Wanna Signup? It’s Not Too Late!
If you’re interested in signing up with us and saving hundreds, maybe thousands, of dollars, please visit our site. Based on the information you give us, we’ll analyze your current situation to determine if it’s worth switching to a new plan immediately.
If it’s not, our team will notify you when your contract is about to end, and we’ll begin the enrollment process for you.
It is also worth mentioning we have a money-back, satisfaction guarantee for all new and current members. We want you to recognize and enjoy the many membership benefits. So we’re confident and determined to demonstrate the value we bring to your home, schedule, and wallet!