Texas Electricity Bills Jump Over 20% Since 2020, Driven by Distribution Costs and Natural Gas Prices

Austin, Texas – Despite the increasing presence of renewable energy sources, Texas residents have seen their electricity bills rise significantly, with average residential retail rates increasing by approximately 22% since 2020, reaching 14.57 cents per kilowatt-hour in 2023. Energy expert Doug Lewin, author of the Texas Energy and Power Newsletter, highlighted this paradox, stating in a recent tweet, > "Renewables lower bills. They have no fuel cost and covered all of Texas’ new demand growth so far this year." Lewin addressed the common question, "If renewables are so cheap, why are my bills going up?" by identifying the primary culprits.

According to Lewin, the "biggest drivers of higher power prices" are distribution costs and natural gas prices, particularly in 2022. Natural gas fuels over 45% of Texas's electricity generation. Global events, such as Russia's invasion of Ukraine, caused natural gas prices to surge by over 200% since late February 2022, directly impacting the cost of electricity generation.

Distribution costs, often appearing as "TDU charges" on electricity bills, represent the fees paid to utility companies for maintaining and managing the infrastructure that delivers power to homes. These charges, which retail electricity providers do not control, have seen recent increases. This rise is partly attributed to the financial fallout and necessary grid improvements following Winter Storm Uri in February 2021, as utilities work to recover costs and enhance grid resilience.

While renewables, such as wind and solar, have zero fuel costs and have met Texas's new demand growth, their increasing integration has also led to discussions around grid stability and infrastructure needs. Texas leads the nation in wind power and is second in solar, with significant planned developments. However, the need for improved storage solutions and transmission lines to deliver this power across the state adds to infrastructure costs that are ultimately passed on to consumers.

Beyond these factors, Texas's booming population, which has grown by over 45% since 2000, has driven unprecedented demand for electricity. This increased demand, coupled with an aging grid infrastructure and extreme weather events, further strains the system and contributes to rising energy costs for consumers.