This year’s El Niño has been heralded as one the most powerful on record. It has already dramatically reduced this year’s Texas hurricane season and will very likely bring cooler and wetter weather to the US southwest and southern plains, as well as snow and ice in North Texas and drizzle and gray skies over Corpus Christi. In short, Texans can look forward to a dank, dreary winter.
Consequently, Texans may use a little more heat this winter, but the price for their electricity bill may not be as high, thanks to our northern neighbors who will likely see warmer than average temperatures this winter. Mid-November average temperatures were up by at least 4° F in the Northeast, upper Midwest, and the Southeast. This is significant because these regions rely the most on natural gas for heat.
Like other states, Texas burns natural gas to generate electricity. In 2014, Texas burned 1,427,565 Million cubic feet (MCFF) for electric power. Over half of the electricity Texas uses is generated with natural gas.
Last winter’s natural gas supplies started off worrying investors, as prices were generally higher due to the cold winter. But during Spring 2015, producers worked to cash in on the low supply and began breaking production records — especially in anticipation of hurricanes disrupting gas production in the Gulf of Mexico.
By the end of Summer 2015, gas production set new records, and no hurricanes visited the Gulf. August 2015 monthly production hit a record high of 76.5 Bcf/day. By the end of the Ocotber 2015, natural gas in storage rose to a record 4,000 Bcf.
Going into Winter 2015, lots and lots of natural gas is available. And with El Niño about to peak sometime in December 2015, not as much natural gas will likely be burned this winter for heat. Consequently, supply should remain high enough to keep natural gas prices low and relatively stable until late spring.
Meanwhile, even with Texas consumers having a somewhat higher-ish demand for heat, Texas utilities will very likely pay less to generate electricity. But because of the competition in the deregulated Texas market, those utilities agile enough to undercut their competition with lower pricing will be the winners.
Since successful Texas energy companies are already shopping for the best deals, you should too! This means keeping an eye peeled for more competitive pricing on Texas electricity rates. Remember that rates may settle down sooner in advance of the annual early spring “price trough,” letting you take advantage of locking in a lower rate at a fixed price.