Does the Summer Heat Have Anything to Do With It?

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Houston Texas is coming up on a hot summer and with that hot weather you will see electricity rates rise with it. Why do electricity rates rise so high in the summer compared to other states? The reason is because we use a volatile energy source. Natural gas in storage is hard to keep in storage continuously at the levels we need it to generate our power. When the summer comes and the energy demand spikes we see a loss in natural gas in storage. This affects the natural gas futures which is where Retail Electric Companies go to buy and hedge their power. After hedging the natural gas price at a locked in price the Retail Electric Provider power is converted into an electric rate with margins built in and sold to consumers.

To fight these type of spikes in energy a residence could buy a wind turbine if they live out in the country or in an unrestricted area that allows this. A cheaper solution would be to add insulation to the attic and possibly double pane your windows and add curtains. Storm windows screwed in on top of your existing windows is one way to double pane them without buying all new windows. There is also a radiant barrier type of film that can be placed over each window that looks like tenting that also works very well to insulate your house. A special type of attic turbine that is powered off of solar can pull out the attic air much faster than a standard wind turbine and can further reduce the overall energy cost in your home.

What can a commercial business do to help with electricity costs?

Commercial business strategy to reduce energy costs mainly consist of a similar strategy as a residential home as well as utilizing an energy consulting company. Using an energy consulting company that has access to 100 or more providers some of whom are national companies that offer more advanced products is what many successful businesses take advantage of.

A commercial business could blend a fixed electric rate with a variable rate in order to take advantage of the energy supplier market where settlements are made. Extra energy needed to be bought and sold are on the settlement market separate from the fixed prices you can utilize. These advanced products that take advantage of low times in the settlement market must be safeguarded much like setting up a stop loss on a stock trade. A business never wants to let their electric rate run away in price as it can make a big dent in your cash flow on a bad month. A solid electric provider can blend two products so you can cover your exposure to a variable rate while taking advantage of this lower priced settlement market. A blended product can be converted into a straight fixed product at a strategic time as well to limit any amount of exposure to a variable price in a mixed energy product.

Taking advantage of some advanced electricity products is a way to out maneuver your competitors in having more cash flow that would normally be used to cover your electric bill. If an advanced energy product sounds interesting to you please reach out so one of our energy consultants can discuss this more with you.

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