When the price of natural gas goes up, the cost of electricity goes up too because natural gas is used to create much of our power here in Texas. Right now, natural gas prices are falling and you may be able to save money on your power bill because of it.
Over the last few months, the price of natural gas has gone down by about 30% from earlier this year. That's important because in Texas, natural gas powers most electric producing power plants. That means consumers in Texas can save money by finding a lower electricity rate.
"I have been waiting for the right moment to make the switch for the rates to come down, knowing that they are going to come down because of the price of natural gas coming down," said energy customer Chris Colorado.
Colorado says he was happy to see natural gas prices fall because it meant he could cut his power bill by simply switching providers.
"It just recently turned up to 21 cents and that's when I switched," Colorado said.
Because Colorado signed a yearlong contract he will be getting power for a little more than 12 cents per kilowatt hour for the next year. By switching providers he cut 50% off his last bill.
"That's good enough for me for the next 12 months," Colorado said.
According to energy analysts, the cost of natural gas may not fall much more in the coming months, so locking in a yearlong contract now may be a good move.
"I would think it would be a good time to shop around, but you have to be careful because there are a lot of companies in a lot of industries are in financially precarious conditions," said Barbara Shook of the Energy Intelligence Group.
Something else to consider before you start shopping around, if you are already in a 12 month contract with a power provider, you may have to pay an early termination fee to end the contract. Depending on your contract that fee could be up to $200.
Right now the best long term rates for electricity are slightly more than 12 cents per kilowatt hour. If you are paying more than that, switching maybe the best move.
Right now you can find plans at 12 cents a kilowatt hour for both 6 and 12 month contracts. If you want to go month to month, you can find power selling for 11.9 cents a kilowatt hour. If you go month to month, your rates go up and down based on the cost of natural gas.
How can you find the lowest rates? There is a Web site that displays all of the advertised rates in one spot. It's called the Power to Choose and we have link to that site on my blog.