Texas electric customers should take advantage of today's low energy prices by shopping for a new electric company, to avoid price increases associated with winter gas use and expected economic recovery.
Last week, executives at NRG Energy, which owns Reliant Energy, said that they expect the costs of fuel and power to increase in 2010. That may translate into higher retail prices for Texas electric customers in the coming months, meaning customers should lock-in a low, fixed rate for electricity at the bottom of the market right now.
Speaking to investors during a conference call, John Ragan, Chief Operating Officer at NRG Energy, reported that Reliant sees a developing trend of industrial expansion throughout the U.S., specifically in Texas. Both the industrial production and ISM indices, which track industrial activity, show a strengthening trend in the past quarter, Ragan said.
Texas electric prices are closely linked with the price of natural gas since so much electricity is generated by gas-fired power plants in Texas. Ragan said that the natural gas rig count, a leading indicator of natural gas price potential, shows that the number of operating rigs has materially dropped during 2009 as producers aggressively responded to lower prices and stopped drilling due to oversupply. Rigs are about 50% down from their total a year ago, at around 730 from a peak of 1,600 in September 2008. Ragan anticipates a gas market rebalance by mid to late 2010 as demand recovers and the impact of reduced rigs and lower supply allows for improved gas fundamentals, which will in turn put increasing pressure on energy prices.
Additionally, Ragan said that forward "heat rates," a measure of anticipated future generation costs and electric prices, remain well supported, primarily driven by expectations regarding economic expansion and recent load growth, the current impact of capital constraints that will affect future generation projects, and the uncertainty around future regulatory and legislative actions.
These factors could lead to an increase in Texas electric rates, which customers can avoid by locking-in today's low rates. By finding the lowest electric rate, Texas customers can be assured of saving money on their electric bill and avoiding any rate hikes.