Natural gas prices remain the lowest we’ve seen them in the last ten years, which has been beneficial for anyone shopping for commercial electricity. Because of the close tie between the natural gas market and the energy market, commercial electricity rates have been low. However, we’re beginning to see the cost of commercial electricity rise, even as the cost of natural gas continues to decline. The trend is changing, and that’s big news for business owners.
The shift in the trend has a lot to do with how heat rates impact the cost of energy. The heat rate is a measure of how efficiently fuel is converted into electricity. In Texas, natural gas is a very common fuel for energy production, which explains the close relationship between the two markets. The lower the cost of the fuel, the lower the cost of power, provided that the heat rate stays the same.
Unfortunately, there is no easy way to track heat rates. Unlike the cost of commercial electricity or the cost of natural gas, there isn’t a public index you can refer to for heat rates. This is largely due to the fact that the heat rate is changing in real time, often in unpredictable ways. Factors like inclement weather and the number of power plants online have the potential to greatly influence the heat rate, and the impact of the heat rate on commercial electricity rates is great enough that it can offset low natural gas prices, driving the cost of power up even as the cost of fuel continues to go down.
That is what we are seeing happening in the market now.
This matches what we’ve seen in the commercial electricity market before. Typically, when natural gas prices fall, heat rates go up. When heat rates fall, natural gas prices tend to go up. At the moment, the increase in heat rates is out-pacing the low natural gas price, which leads up to believe that we’re seeing a shift in a significant market trend.
We believe that commercial electricity rates have hit their lowest, at least for the time being, and that the next few months will mark increases in commercial energy costs. But while the cost of energy is beginning to rise, the swing from lower prices toward higher prices has just begun. This is still an excellent time to buy.
For that reason, the talented team members here at Live Energy are working with our clients to secure low rates before commercial electricity costs rise higher. We know that the business owners we work with are busy people with full plates. Watching the market closely enough to know when and how to contract is a big job, and most business owners simply don’t have the time, resources, energy market knowledge base, and technology to tackle it. But we do.
Each and every day we’re working with our clients to save them money. We diligently stay on top of the market, tracking the trends so that our clients can benefit from our expertise. And we can offer the same benefits to you. If you’d like to learn more about how the team at Live Energy can work with you to lower your commercial electricity costs, please give us a call at (877) 810-7770.
The market is changing. Let us help you stay ahead of the curve.