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Winter heating costs set to soar for Texans
Feeling the Chill

Texans are likely to feel a bit chilled this winter as their home heating bills soar, due to higher electricity and natural gas prices. Nationwide, natural gas customers can expect to see bills rise 48 percent higher than in 2005, according to the U.S. Energy Information Administration (EIA).

In Texas, residential prices for electric heating could be 25 percent higher in January 2006 than in January 2005, said Jess Totten, division director of Electric Industry Oversight for the Texas Public Utilities Commission (PUC).

Texans' bills are higher largely because of the increase in natural gas prices. Gas fuels 51 percent of the electricity generated in Texas, according to EIA.

Consumers can do a number of things to lower heating bills this winter. First, if they use electric heating, they can shop for electric providers.

"The number one thing that we tell people is to look at whether there are alternative suppliers of electricity in their area that offer a better price," Totten said.

Texas began deregulating electricity in 2002 under a mandate from the Texas Legislature. About 65 percent of the state's residents live in areas with competing electricity providers, said Totten. These areas are primarily around Houston and Dallas-Fort Worth but also include Abilene, Corpus Christi, Galveston, Laredo, McAllen and San Angelo. Customers can find alternative providers and rates using the PUC's "Power to Choose" Web site,

"They [consumers] need to shop," said John Fainter, president of the Association of Electric Companies in Texas. "They can go to the PUC Web site and plug in where they live and they can get data on who is offering what for where they live."

For example, someone living in the 75201 ZIP code in Dallas, located in a deregulated area, can plug in that ZIP code on the PUC Web site and choose from 16 different utility providers, which in December 2005 offered monthly rates ranging from $134 a month to $171 per month. Rates are based on electricity usage of 1,000 kilowatt-hours (kWh) per month.

In December 2005, a Houston resident in the 77003 ZIP code had a choice of 17 different utility providers, which offered monthly rates ranging from $105 to $175 per month, based on usage of 1,000 kWh per month. A Corpus Christi resident in the 78419 ZIP code could choose one of 16 providers that offered rates ranging from $123 to $191 per month.

Power to choose
Although most Texans can shop for power, residents served by the state's 76 cooperatives and 85 municipally owned utilities must wait until these utilities choose whether and when to open their systems to retail competition, according to the PUC. Customers of cooperatives and municipally owned utilities should contact their local electric cooperative or city utility for more information.

Austin is in a non-competitive area and has a municipally owned utility, Austin Energy. Austinites who enter their ZIP codes onto the PUC's Web site would find that they have no alternative. The same is true for San Antonio.

At the direction of the Texas Legislature, the PUC postponed electric competition in some areas of Texas to ensure that sufficient infrastructure and a viable market are in place. Since the Texas market opened to competitive utility providers in 2002, 2 million customers have switched to competing providers, according to the PUC.

Conservation counts
Consumers have other options for cutting heating bills besides switching providers.

"They can be careful where they set their thermostat and try to do things to minimize the use of electricity," said Fainter.

Residents also can open shades and blinds to allow sunlight to heat rooms on sunny days, said Totten.

"They can replace heating and air conditioning filters on a regular basis and use compact fluorescent lamps in place of incandescent lamps," said Totten. "They should also have their heating and air conditioning systems inspected and maintained and may be able to reduce their energy use by installing programmable thermostats."

When customers shop for appliances, they should consider buying appliances with the "Energy Star" label. These products meet strict energy efficiency guidelines set by the Environmental Protection Agency and the U.S. Department of Energy.

Some consumers can diversify or use alternative power sources, said Fainter. However, those options are not available to all Texans.

El Paso Electric offers a Renewable Energy Program that enables customers in Texas and New Mexico to purchase renewable energy certificates in blocks of 100 kWh. Renewable energy sources include wind, solar and hydropower. Customers pay a fixed monthly surcharge on their electric bills.

Poor hit harder
Low-income consumers could be especially hard hit by rising home heating costs. Congress funds the Low-Income Home Energy Assistance Program (LIHEAP) to help low-income families pay their heating bills.

The Texas Department of Housing and Community Affairs (TDHCA) administers the LIHEAP program in the state. In 2004, the program helped 66,051 households with heating and cooling bills and 2,914 households with weatherization needs. The program was allocated $47.2 million for fiscal 2005, but the funding level did not meet needs, according to TDHCA.

The Texas Legislature established the System Benefit Fund in 1999 to ensure that low-income customers would benefit from reduced electric rates during the transition to deregulated electric utility markets. All the state's electricity customers pay into the fund. According to estimates from the Texas Comptroller's office, the System Benefit Fund is expected to collect another $267 million in revenues in 2006-07, but the Legislature chose not to appropriate these funds for low-income assistance programs.

Help with bills
Retail utility providers in competitive areas must offer customers deferred payment plans, unless the customers have failed to pay bills or have been customers for fewer than three months, Totten said.

If customers are having trouble paying their heating bills, they can ask their electric providers about balanced bill plans, which let customers pay an average amount each month year-round.

Comptroller Staff