Texas Extreme Winter Weather: Explaining the Unprecedentedly High Invoices

Our hearts go out to all Texans who were affected by the extreme winter events in mid-February.  The following post is intended to explain the unprecedentedly high invoices customers may have received while providing solutions to help manage the cost increases.

I know what you’re asking yourself, how in the world did my electric bill get so high when I went days without power!?

You’ve probably read by now that the PUCT (Public Utility Commission of Texas) set prices to $9,000/Megawatt-hour (MWh) which is equivalent to $9 per kilowatt-hour (kWh).  Those prices were in place from about Saturday, February 13th through the morning of Friday, February 19th.

While you may have experienced prolonged outages, in most cases it wasn’t all day and night, every day, during that time period.  You likely had power for at least a few hours and even though your consumption for the week was only a small fraction of what it normally is, those few hours and astronomical prices still have a huge impact on your overall bill.

Perhaps an illustrative example using an analogy may help – let’s use gasoline.

For the sake of simplicity, let’s say gas costs $3/gallon. And let’s says that $3/gallon price has been consistent (or fixed) for the last 3 years.  Let’s also assume the amount of gas your car holds is 20 gallons.  Therefore, it typically costs $60.00 to completely fill up your gas tank each week.  Overall, the cost is predictable but can fluctuate based on how much you drive.

Typical Pricing (Fixed Rate):  $3 per gallon * 20 gallons of gas purchased = $60 Total Cost

Now, let’s say an unforeseen event caused the price of gas at the pump to abruptly increase by 225 times!  The supply is down, demand is high and prices are high – astronomically high!  Unprecedentedly high!

Gasoline now costs a whopping $900 per gallon!  Since prices are so high, you only purchase 2 gallons of gas – just enough to get by – but it still cost you $1,800!

Scarcity Pricing (Market-Based Rate)$900 per gallon * 2 gallons of gas purchased = $1,800 Total Cost

Now, let’s tie this back into how your electric bill got so high when you went days without power.

The majority of our Liberty Power customers (approximately 97%) are on a fixed rate that does not change for the term of their contract, protecting them from price spikes.

Some customers, however, are on an Index (Market-Based) Rate – sometimes referred to as a “variable” rate.  An Index Rate means their rate changes monthly in relation to wholesale power prices in ERCOT.

Therefore, if you are on an Index Rate and you only had intermittent power during the extreme winter weather events in Texas, the cost of power when you did have electricity – was astronomical (since the PUCT set power prices to $9/kWh).  When prices are that high, even consuming only a tiny amount of electricity can add up to a big bill very fast.

We Are Here to Help

If you are a Liberty Power customer on a Market-Based or Index Rate, please call our team of specialists at 866-980-0144 and ask about our deferred payment plans where a portion of your bill can be forgiven.

If you are not a Liberty Power customer, but are interested in hearing more about our fixed-rate offers, please call one of our energy consultants at 866-POWER-99.

From all of us at Liberty Power, we hope that you and your family are safe and we encourage you to take advantage of this offer.

 

 

Liberty Power Corp
The Editorial Team at Liberty Power is a swashbuckling group of passionate and creative Energy experts bringing you the hottest topics on exciting market trends, booming products and services, and the latest news in the industry.