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Protect Your Texas Small Business from High Energy Prices

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They say everything is big in Texas, and sometimes that includes electric bills.

On August 13, 2019, power demand in Texas exceeded the available supply, causing prices to skyrocket. Many customers watched their rates shoot up to a whopping $9 per kilowatt hour, the maximum price allowed in the state’s energy market. On a typical day, electricity costs less than one dollar per kilowatt hour; on August 13, a consumer who was exposed to market rates may owe $90 for that same hour – roughly 100 times the usual cost.

This kind of unexpected bill is enough to shutter a small business unprepared for such a blow to their budget. While electric experts in Texas say that this kind of event was bound to happen on a hot summer day when the power grid is strained with air conditioning usage, riding the power market’s real-time rate is risky during any season.

So why did Texas power prices spike to their maximums, and how can small businesses protect their budgets?

Why Texas power prices spiked

Unlike all other U.S. energy markets, the Electric Reliability Council of Texas (ERCOT) does not procure extra electricity as backup during unexpected power shortages. Most of the time, this strategy minimizes consumer costs, but it can also cause price instability. As coal power plants shut down in favor of more efficient and renewable energy sources, Texas is also contending with a supply shortage. So, when power demand is high, like it was on August 13, consumers across the state should expect to see market-based prices climb.

It’s not surprising that prices increased during a summertime heat wave, but consumers aren’t out of the weeds when the season changes. During the winter, in places where consumers rely on electric heating, high heating demand can cause the same effect on prices – delivering budget-busting bills to small businesses.

How small businesses can protect their budgets

In such a potentially volatile energy market, Texas business owners should consider their options carefully. After all, one hot day could break an organization’s yearly budget.

For organizations that use smaller amounts of energy, like small- to medium-sized businesses, a fixed rate can take risk off the table. With a fixed rate plan, the price you pay per kilowatt hour stays the same for the length of your contract, no matter how much energy you use, and even if real-time prices skyrocket. This simple set-it-and-forget-it option creates security, certainty and savings.

“What’s nice about a fixed price is that no matter what the market is doing, you won’t pay more than that fixed rate, even on the most volatile days,” said Sandra Soliz, Manager of Products and Propositions at Direct Energy Business.

Fixed rate plans are based on market pricing, so being aware of when to buy is important. Even customers who are renewing an existing power plan should be prepared that rates may be higher following a volatile summer.

As a result, small business owners that want a secure, set-it-and-forget-it option to energy buying should consider a fixed rate power plan, as well as the best timing to lock in a rate.

Of course, any energy consumer can also take basic steps to create energy efficiencies and save money. If you have the flexibility to reduce the amount of energy you use during times of high demand, you can lower your total energy bill. Consumers on an index plan can save money by reducing usage during the most expensive time of the day, while fixed rate customers can enjoy the cost savings of using less energy overall.

Signing up for a fixed rate power plan is simple – you can do it online in just five minutes and all you need is a current energy bill. We suggest signing up with Direct Energy Business today to get an gift card with a value up to $300.

Create certainty with a fixed rate plan

Posted: August 22, 2019