Texas may be the nation’s energy capital, but Texans aren’t getting a break on their energy bills — and many are feeling the pressure.
Nearly 45% of residents said they had to give up basic necessities, such as food and medicine, in order to pay their energy bills, according to a Census Bureau Household Pulse Survey.
That was 11 percentage points higher than the national average of 34%, and Texas ranked worst among all states, LendingTree reported in a study of energy bills.
As temperatures cool and people start turning up the heat again, the cost of electricity is likely to rise, along with financial pressure.
“I don’t see any relief in sight,” said Tim Morstad, senior associate state director for AARP Texas. “Not in the short term, not in the medium term, not in the future.”
Many AARP members have faced high electricity bills this year because prices have soared and high summer temperatures have driven up demand for electricity. At the same time, people faced higher costs for virtually everything else, from fruits and vegetables to used cars and gasoline.
“It really was a double,” said Morstad.
The census survey, collected from July 27 to August 27. 8, received 46,801 responses nationwide. As well as asking about giving up the essentials, the survey asked whether households were unable to pay an energy bill and whether they kept their home at an unsafe or unhealthy temperature.
On each question, a higher proportion of Texans reported difficulty than the US average. It’s telling, Morstad said, that nearly half of Texans are cutting back on drug and food purchases to pay their energy bills.
“We’re not talking about ditching steak for ground beef,” Morstad said. “We’re addressing the knot here, we’re addressing people’s ability to stay safe and take care of themselves.”
One reason so many Texans are stressed about energy costs: The state has a high number of low- and middle-income families — more than 40 percent — who don’t have the financial resources to absorb large price increases easily, said Margo Weisz. , executive director of the Texas Energy Poverty Research Institute.
“The less money you have, the more energy stressed you will be,” said Weisz, whose group works for affordable and sustainable energy solutions for underserved communities.
Low-income families, including many blacks and Hispanics, are much more likely to be “energy-laden,” meaning a significant portion of income is spent on household energy expenditures, he said. she stated.
When energy costs exceed 10% of income, this is considered an extreme burden. Texas had many low-income families in this category before electricity inflation took off about a year ago. Since then, she said, some low-income Texans have been forced to spend up to 28% of their income on energy if their electric bills rise by an average of $1,000 a year.
“That’s why so many people are struggling now,” Weisz said.
Electricity inflation is particularly high in Dallas-Fort Worth, rising nearly 31% in the 12 months ending September. That increase was twice the nation’s, according to the U.S. Bureau of Labor Statistics.
For many years, electricity was cheaper here, largely because natural gas prices were low. This base fuel sets prices in the deregulated Texas electric market, and the pandemic and Russia’s invasion of Ukraine have sent natural gas prices skyrocketing.
In February 2020, just before the pandemic, natural gas futures were selling for less than $2 per million BTUs, according to the US Energy Information Administration.
In August 2021, the price reached around $4. In August 2022, the price reached $9.68. This month, natural gas futures were trading around $6-$7.
High prices are expected to persist, given sanctions on Russia – and European and Asian countries buying natural gas from the United States and others.
“I don’t see the price of natural gas dropping much,” said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University. “I think it might get worse before it gets better.”
Other factors also drive up the cost of electricity in Texas. The February 2021 winter storm, which shut down much of the grid for days and killed more than 200 people, generated billions in energy-related expenses. Many of these costs will be added to consumer bills, likely for years.
ERCOT, which runs the grid that serves most of the state, has also adopted “a conservative operating posture” to ensure there is enough power to avoid power outages. Although the approach improved reliability, it also drove up costs.
Transmission bottlenecks are another problem with the Texas grid, and they also contribute to high electric bills.
“Some drivers that have pushed prices higher should stay,” Morstad said. “My concern is that further costs are yet to come.”
He was referring to design changes in the deregulated Texas electric market. Regulators are working to improve reliability and increase the amount of generation that can be dispatched when solar and wind power is insufficient. These moves are likely to add upward pressure on prices.
One way to offset rising bills is to create more renewable energy, which produces electricity for far less money than traditional natural gas and coal-fired power plants.
Texas has more wind generation than any state, and solar installations are growing rapidly. The batteries also take hold.
From January to August, when electric bills were rising, solar and wind power saved Texans nearly $1 billion a month in electricity prices, according to a recent energy study. owned by IdeaSmiths LLC.
But renewable energy poses reliability problems because bad weather can cripple production. That’s why regulators want to increase dispatchable generation — led by more natural gas plants — and that will likely lead to higher electricity bills.
“Whether it’s wind, solar or natural gas, we need to attract more energy to the state,” said SMU’s Bullock. “It’s going to require higher operating margins, and that means higher prices.”
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