Cheaper natural gas can lower your electricity bills

November 17, 2009 12:43:43 PM PST
Houstonians need to check their power bills because they may be spending more than necessary for electricity. The reason can be found in the price of natural gas.Most people only think about power bills during the summer months, but if consumers act now while prices are low, they might be able to keep cool all year long.

People who have a month-to-month electricity plan are probably enjoying low bills right now.

"Our electricity dropped," month-to-month customer Jessica Barker said. "It was like $70 last month."

Barker is cashing in on the month-to-month rate because the price of natural gas is near all-time lows, and natural gas is used to produce the bulk of electricity in Texas. While the rates are low now, that may not be the case in another month.

"Natural gas prices rally into the winter -- they rise in the winter time," Alan Lammey, with Energy Intelligence Group, said. "This is a very significant opportunity right now. Not even a month from now, now is the time to lock in an electricity rate."

Lammey tracks natural gas prices for the Energy Intelligence Group. He said locking into a long-term contract now may save money later.

"Particularly if you use a lot of electricity," he said.

Most power customers switch in the summer when rates start spiking, he said. Right now, consumers can find year long power plans for about $0.11 per kilowatt hour. Those people who are in a long-term contract and paying more than that may want to break the contract.

People paying $0.17 a kilowatt hour that use 3000 kilowatts of power in one month will spend about $510 for electricity. Paying $0.11 per kilowatt hour for the same amount of power gives you a monthly bill of $330.

"If it cost you $200-$300 to break a contract, the jump back in your savings may be several hundred or a $1,000 over the course of the next year," Lammey said.

There are several power companies offering 12-month contracts and most have them priced at about the same amount.

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