Rethinking Variable Electric Rate Plans in Texas The case to get out of any fixed rate contract over.16 per kwh

Transcription

1 Rethinking Variable Electric Rate Plans in Texas The case to get out of any fixed rate contract over.16 per kwh a White Paper from Bounce Energy Bounce Energy 2802 Albany Houston, TX web@bounceenergy.com Bounce Energy Inc. All Rights Reserved.

2 Last June or July, it seemed like a good idea. Texas electricity consumers thought they'd save money by locking in a fixed 24 month rate with their electricity provider. All across the country, gasoline prices were skyrocketing; natural gas prices were trailing right behind it. Because Texas uses natural gas to generate electricity, power rates were climbing, too. Experts quoted in the media said to expect high energy costs to continue for the future. Locking in that rate then was a pretty shrewd move. But since then, electricity production rate costs have sunk. Consumers now find they are paying way too much for their electricity. Since July, a lot of consumers have cut back on their travel. This helped drive down the price of oil, gasoline and natural gas. In some parts of the country facing tough times, businesses have laid off workers or shut down and are no longer using natural gas to heat their buildings or power their machinery. This has left a surplus of natural gas. According the U. S. Government's Energy Information Service, total amounts of natural gas in storage right now are 16 percent above the five year average ( ) and 20 percent above last year's level. Right now, the cost for one million British thermal units (MMBtu) of natural gas is around $3.70. That's down over 50 percent from last year. With spring coming, the heating demand for natural gas is going to fall further and increase the surplus. This means the cost of generating electricity will drop as well and so will it's cost to the consumer.

3 So now is a great time to take advantage of the falling price of electricity by canceling that current high fixed rate energy provider contract and switching over to a variable rate plan like those offered by Bounce Energy. You could be saving a lot of money with a variable rate plan right now. For example, let's say back on July 1, 2008 you locked in a fixed rate with your energy provider at 17 cents per kilowatt hour. With the average Texas consumer using about 1,500 kilowatt hours per month, the monthly charge would be $255. But over the past 6 months, the average cost dropped to 11.8 cents per kilowatt hour by February 9, With the fixed rate that month, you paid $78 more than someone with a variable rate plan. Over the course of the remaining 18 months of an existing 24 month fixed rate contract, you could pay more than double the average monthly rate of someone with a variable plan. That's about $1404 or more over the length of the contract period. Now let's say for example that you got ahead of the July price spike and settled on a 12 month fixed plan when the rate was lower at 16.3 cents per kilowatt hour. Again, using the average consumer usage at 1,500 kilowatt hours, the cost is $ Again, with an average cost having fallen to 11.8 cents per kilowatt hour, you paid $67.5 more in February than someone with a variable plan. Over the course of the remaining 6 months of the contract, you'll pay about $400 or more than the customer who selected variable rate. That fixed rate is an expense you can live without.

4 While it is true that historically the summer months show increases in fuel prices as well as peak demand for electrical usage, most economic indicators forecast that the current economic recession will continue for a year or more. Consumers have been cutting back on buying all across the country. This summer, they will be less likely to spend their savings on travel and that will help keep oil, gasoline, and natural gas prices low (compared to July, 2008). Commodity futures speculation, OPEC production, and other factors will further influence the price of oil and natural gas (and ultimately electricity) especially in the light of the Obama Administration's commitment to national energy independence. Further development of renewable fuels is expected. These include a variety of fuels such as biodiesel, ethanol, hybrid fuel vehicles, and fuel cell technology. As demand on foreign oil and gas declines, so too will the price. But the real change to generating electricity in the Texas is in the wind. Unlike gas and coal fired generating plants, wind turbine produced energy emits no greenhouse gases. According to the American Wind Energy Association in January, 2009, Texas currently leads the nation in wind energy generation, producing 7,116 megawatts of power. The Texas State Energy Conservation Office describes 1 megawatt of electricity being able to power 230 typical Texas homes in a year. This means current wind generation alone is powering over 1.6 million homes. And while this might seem small by comparison to the output of gas and coal fired plants, wind generated electrical capacity is expanding and will help further reduce cost. Already, another 1,651 megawatts of wind power

5 capacity is currently under construction. There are also research projects slated for installation along the Gulf Coast to assess wind power generation off shore. With all this change in power generation happening in Texas, it makes economic sense to switch your fixed rate plan to a variable plan. Sure, having a fixed plan makes great sense during a time when rates are undergoing inflation. But when the rates are decreasing from month to month as they are now, a variable rate is the way to go that can save you hundreds of dollars over the life of a service contract. Bounce Energy offers a number variable rate contracts that make economic and environmentally responsible sense for their customers. The Blue Sky Plan not only offers clean energy from wind, geothermal, and solar sources but also helps consumers become more energy efficient with a home energy audit from the experts at Standard Renewable Energy. The Super Saver Plan gives consumers a $50 bill credit when they sign up for auto bill pay, enrolls them in the Bounce Energy Loyalty Program (featuring cash rewards), a home energy audit, and free airfare for one year. Bounce's Express Move Plan also takes the headache out of moving for customers setting up a new home by offering same day turn on service, up to $100 in bill credits, submitting the USPS change of address form, adding your name to the Do Not Mail & Do Not Call lists, free ID protections service, and a Home Energy Audit to help you save money. And for new movers looking to avoid paying deposits, Bounce 's Fresh Start Plan gets the power turned on without the need for a deposit (valid credit card required). After three months

6 of on time bill payment, customers are moved to the lowest priced plan automatically. Switch from that expensive fixed rate to a smart variable rate. Start saving money today and everyday. Call BOUNCE or Or click on over to