Electricity rates are on the uptick across the country. According to a report by the U.S. Energy Information Administration (EIA), 78 of 89 utilities proposed a rate increase to their regulators.

To put this number into perspective, the 89 utilities that requested rate changes from their regulators represent almost half of the entire electricity utilities in the country.

In accordance with the law, regulated electric utilities need permission from their regulators before any rates are changed. Historically though, regulators only approve a fraction of the requested rate changes. This means there’s a real disparity between the proposed rates and the delivered changes.

But overall, this begs the question, why were so many regulated utilities requesting price increases in the past year?

Why Rate Changes Are Being Requested

Regulated utilities have needed to request higher rates because of infrastructure costs, electricity generation and delivery, as well as equipment-related costs (among others).

As the EIA states in the aforementioned report, the surging rate increases is a result of higher electricity delivery demands. Electricity delivery is getting more expensive because modern systems for customer information and billing, sustainable energy modifications to equipment, and a more modern grid require a lot of financial support.

Electricity generation also factors into the rising asking price for electricity rates:  nuclear power plants are expensive to operate and maintain as well as ramped up environmental compliance costs.

Events That Lead to Rising rates

When considering large events that necessitate a rise in rates, look no further than these examples provided by the EIA. They state that there haven’t been this many requests for rate changes since the Oil Embargo of 1973-1974, the partial nuclear meltdown at the Three Mile Island plant, and the PURPA Act of 1978.

And recent events like Hurricane Sandy and the Northeast Blackout of 2003 have meant that regulatory bodies are allocating more money for improving the grid and less for reducing the costs for electricity generation and delivery for utilities.

But these complications and rate proposals don’t affect a huge sector of the electricity industry: the deregulated electricity providers in Texas. In fact, none of this is really the case for retail electric providers (REPs) in deregulated parts of Texas.

The Difference in a Deregulated Market

If a REP in a deregulated market wants to adjust their own rates to offset infrastructure costs or increase their revenue, they can do that. But local competition naturally curbs any sharp spike in rates.

Because electricity in deregulated parts of Texas is customer-centric, there are natural pressures to keep prices low. After all, higher rates will drive customers away to the nearest competitor.

So, as the proposals for rates keep increasing for regulated utilities, the invisible hand of the free market continues to self-regulate in various parts of Texas.

We will see how 2019 shapes up as the data is collected.

So far in 2018, 45% of the electricity generated in Texas came from the burning of natural gas. That is an increase of market share from the previous year, where natural gas accounted for 38% of the electricity generation in Texas. This should come as no surprise since 25% of the nation’s known gas reserves are located in Texas. Natural gas is cheap and plentiful in the state, and it produces less carbon dioxide emissions than coal.

Coal’s contribution to the electricity grid continues to slide, coming in at 24%. Last year coal accounted for 33% of the state’s electricity generation. By the end of the year, the percentage will be even lower, thanks to a municipal coal plant being mothballed for the winter.

Wind’s contribution to the Texas electricity grid went from 17% to 19%. While that may not sound like much of an increase, Texas is increasing its wind generating capacity at a rate that is triple that of the next fastest state, Oklahoma.

Nuclear and solar did not see a noticeable uptick over last year’s numbers, though that will soon be changing for solar. There are several notable power plants coming online in Texas over the next several years, with solar accounting for 37% of the expected new electricity generation. Of the remaining new electricity production slated for the near future in Texas, wind is expected to make up 47% of it, and gas will be 14%.

After a three-year hiatus, the Texas program that gives away $2,500 rebates for electric vehicles, plug-in hybrids and fuel cell cars is back in business. Buyers of compressed natural gas and liquified petroleum gas vehicles could receive up to $5,000.

The Texas Commission on Environmental Quality just released the rules on the the program that was approved last year by the Texas legislature. The program is called the Texas Emissions Reduction Plan (TERP), and its aim is to improve the air quality in Texas. The program was started in 2013, but was shelved in 2015.

To qualify for the rebate, the car must be purchased or leased through an authorized franchise dealership. Tesla buyers, however, are not eligible for the rebate, as Texas does not allow Tesla to sell directly to customers.

This rebate program is only slated to run until May 31, 2019, or until the set-aside funds have run out. Because Texas has 1,000 electric charging stations across the state which makes operating electric vehicles much easier, the funds could run out quickly.

Texas offers other incentives and rebates for drivers that want to be environmentally friendly, as does the federal government. You can search for local and federal incentives by visiting the Office of Energy Efficiency & Renewable Energy website.

Austin has recently surpassed Dallas and Houston as the Texas city with the most electric vehicles, and it is working hard to make sure it keeps that badge of honor.

In order to keep up with the ever increasing numbers of electric cars on the road, the city’s co-op electricity provider, Austin Energy, is continuing to add EV charging stations in and around the city to be used to top-off commuters who may have failed to get a complete charge at their home. Currently, there are over 650 public charging stations, with new ones coming online every week.

A new initiative for the city is to add state of the art DC Fast charging stations, which can charge a vehicle in 5-20 minutes, as opposed to several hours for a standard charging station. The city has only one of these fast charging stations at the moment, located on Electric Drive, formerly West Second Street. 10 more will be rolled out in 2019, and 24 more by 2021. At a cost of $150,000 for each DC Fast charger, the commitment to Austin’s EV future is evident.

This push to increase the infrastructure for public charging of electric vehicles is needed, as The Electric Reliability Council of Texas (ERCOT) has recently published a report forecasting 1.6 million EVs on Texas roads by 2031. That would mean 20% of all passenger vehicles in Texas will be electric, which translates into 320,000 in Austin.