The Average Price You Pay For Electricity Is Increasing – Here’s Why

Rhythm Energy on Monday, October 10, 2022
Blog Hero: The Average Price You Pay For Electricity Is Increasing – Here’s Why

Your electricity bill is probably increasing. Here’s one of the main reasons why.

It’s been a hot summer. In fact, it was record-setting hot. And because of that, there’s a good chance that your electricity bills went up as well, mainly due to the fact that you had to pump your AC nonstop to deal with the grueling heat.

While increased usage may be the main driver for those higher bills, there are other elements in your bills that may change during your contract. Most assume that since they’re on a fixed-rate plan, this shouldn’t happen. And while we’d love that to be true, there are some things out of Rhythm’s hands that could affect those rates.

Your bill is made up of two basic charges: your energy charge (from Rhythm) and your TDU charges (from your local utility).

  • Energy Charge - If you are on a fixed-rate contract with Rhythm, this should match your contract rate and does not change throughout the term of your contract. The amount you’ll be billed is based on the amount of electricity used in kWh multiplied by the energy rate on your contract.

  • TDU Delivery Charges - These charges pay for the maintenance of the poles and wires that deliver electricity to your home and for the meters that measure it. The TDU delivery rates are regulated by the Public Utility Commission of Texas (PUCT).

It’s important to note that while your Energy Charge rate is fixed based on your contract, the TDU charges may vary month to month, because there’s a fixed component and variable component.

  • TDU delivery charge – base (fixed amount): Regardless of how much electricity you consume during your billing period, the same, flat monthly cost will be charged. Usually between $3 and $10 a month.

  • TDU delivery charge – energy (variable based on usage): This is a cents-per-kilowatt-h

    our rate (determined in your contract) that is multiplied by how much energy you use during your billing period. This rate varies, depending on which TDU services your home. Usually between 2c- 5c a month.

On your bill, you see these charges broken out as different line items to show REP (Rhythm) and utility (TDU) charges:

first chart tdu

These utility companies change these rates twice a year—March 1 and September 1 of every year. The good news is that sometimes, they decrease their rates. The bad news is that sometimes, like on September 1, 2023, they increased the rates. This is 100% out of Rhythm’s control.

As of September 1, 2023, all TDUs that serve the Texas deregulated energy markets  increased their variable energy delivery charges. It is standard practice for REPs including Rhythm, to pass through these charges, as well as the TDU fixed monthly base charge, to our customers without markup. This means that the average rates paid by our customers will increase, but not because of anything Rhythm did. Your contract rate (Energy Charge) will remain fixed per your contract with Rhythm. TDU rate changes typically occur twice a year, around March 1 and September 1, so this is not unusual. Unfortunately, this rate increase is more significant than normal.

This year, the new rates are to be applied to all bills issued on or after September 1st, regardless of when the electricity was consumed. So, even if most of your energy usage occurred in August, the new September 1st rate is applied for the entire billing period. Given the state’s record high usage, the timing couldn't have been more challenging for Texans.

third chart tdu

This means that if you lived in Houston and in CenterPoint’s service area, used 2,000 kWh, and your fixed Rhythm Energy rate was 10.0¢, your total bill amount would be $315 in September 2023 (compared to $280 with the old TDU rates). That’s a $35 (or 12.5%) increase, even though you used the exact same amount of energy.

first chart tdu

The five TDSPs in Texas get approval from the Public Utilities Commission of Texas (PUCT) to change their rates. These rates are affected by the costs of running their business. For example, big storms make it more expensive to maintain distribution wires and thus can increase rates.

There are currently five TDUs across the deregulated markets in Texas.

  • CenterPoint Energy – serves the Houston and surrounding area. For more information, or to report a power outage, call 1-800-332-7143. Outage Map

  • Oncor Electric Delivery – serves the Dallas/Ft Worth and surrounding area. For more information, or to report a power outage, call 1-888-313-4747. Outage Map

  • American Eagle Power (AEP) Texas Central – serves markets including Victoria, Corpus Christi, McAllen and Laredo. For more information, or to report a power outage, call 1-866-223-8508. Outage Map

  • American Eagle Power (AEP) Texas North – serves markets including Abilene, Alpine, San Angelo and Vernon. For more information, or to report a power outage, call 1-866-223-8508. Outage Map

  • Texas New Mexico Power (TNMP) – serves markets across all of Texas, from Lewisville in north-central TX to League City south of Houston to Kermit in West Texas. For more information, or to report a power outage, call 1-888-866-7456. Outage Map

In our opinion, the best thing you can do as a customer is take steps to improve your home’s energy efficiency. After all, if you use less power, TDU rate changes will affect you less. Here is what you can do to help reduce bill shock in the future:

  • Reduce usage: Of course, there is no substitute for reducing your electricity use. Small changes can help, without you having to sweat and suffer in your own home. Want some ideas for how to use less? Check out our blog post here.

  • Flatten your bills: To get stability in your monthly bills, we highly recommend our Average Billing program or Level Payment Plan (only applies to some customers). It's like having your own crystal ball for electric bills and that really helps during the summer like this one. It doesn't decrease your usage, or annual electric costs, but by averaging out your usage over the year, it spares you from any seasonal spikes in your bill. To learn more, read here or sign up with a few clicks by logging into your online Rhythm account.

  • Consider rooftop solar and battery solutions: While we've had the privilege of assisting many of you with the installation of solar panels and batteries, I recognize that the cost of these solutions may not be within everyone's reach. It's important to note that solar can be affordable. After hearing about customers paying high prices or being oversold too many panels, we took matters into our own hands. We now conduct solar sizing ourselves and have teamed up with leading installers in Texas to ensure you get the best solar deals. If you're curious or on the fence about solar, we encourage you to reach out. We're here to guide and help. Find out more here.

  • Pay less by shifting when you use your energy: If you have the ability to adjust when you use energy, our new PowerShift time-of-use plans, rolling out in the coming weeks for customers coming up for renewal, can be a game-changer. By aligning energy-intensive activities like running the dishwasher or laundry with these lower-cost hours, you have the potential to make substantial savings. Learn more here.

If you have any questions, feel free to contact us at support@gotrhythm.com.

Categories: Electricity 101
Tagged: tdsp, tdsp pricing, texas energy, energy explained, rhythm news, electric pricing, electricity bills

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