Last Updated on November 26, 2023 by Mary Pressler

Texas vs California- Two Powerful Energy Markets

Texas and California have the two largest populations and economies among all 50 states. Texas has a population of 30 million and a GDP of $2,356 billion, while California has a population of 39 million and a GDP of $3,598.1 billion. Both states consume large amounts of electricity and natural gas, but there are important differences when you compare their energy consumption profiles and utility tariffs.

Energy Production in Texas and California

Texas is the largest oil and gas producer in the US, representing 42% of national crude oil output and 25% of natural gas output. California also produces both fuels, but in much smaller amounts: around 3% of national oil output and less than 1% of natural gas output. There is also also important difference in how the power grid operates in each state:

  • Texas has a fully independent grid that is managed by ERCOT, where almost all the electricity consumed is generated within the state.
  • California is part of the WECC (Western Electricity Coordinating Council), which covers the entire US west coast and some regions of Canada and Mexico. California does not generate enough electricity to meet its demand, importing between 20% and 33% from other states and Mexico.

Texas is the top producer of renewable electricity in the US, followed by California. Both states are rich in renewable sources and actively working to expand their generation capacity.

  • Texas has the highest wind power output among all states and the second highest solar power output after California.
  • California has the highest solar and geothermal power output and the second highest biomass output after Georgia. California is also a major hydroelectricity producer, surpassed only by three states: Washington, Oregon and New York.

Texas and California are both dependent on natural gas: California generates 42% of its power and Texas generates 50% of its power with this fossil fuel. However, while Texas has a high local production, California relies on gas imports. Texas has more than enough gas production to keep all local power plants running, while California covers less than 10% of its gas demand with local production. Both California and Texas have a deregulated energy market.

Texas Electricity Rates Compared to California

Comparing Energy Prices in Texas and California

California has higher electricity prices than Texas throughout the year, while natural gas prices tend to be higher in Texas during summer and in California during winter. This is reflected in the latest data published by the US Energy Information Administration: on their website, you can check electricity prices by state and natural gas prices by state.

Electricity Price Comparison: Texas vs California

The US EIA provides a breakdown of prices by sector (residential, commercial, industrial and transportation) and the average price considering all sectors. The latest figures available at the US EIA website are normally from a few months ago, since gathering energy data for all states is a time-consuming process.

The following table compares the electricity prices reported in September 2023 for Texas, California and the US in general.

Sector California kWh Price Texas kWh Price US Average kWh Price
Residential 29.99 cents/kWh 14.58 cents/kWh 16.29 cents/kWh
Commercial 27.34 cents/kWh 9.42 cents/kWh 13.25 cents/kWh
Industrial 20.72 cents/kWh 8.00 cents/kWh 8.53 cents/kWh
Transportation 15.18 cents/kWh 7.77 cents/kWh 14.20 cents/kWh
All Sectors 27.03 cents/kWh 11.13 cents/kWh 13.25 cents/kWh

In the 12-month period from September 2022 to September 2023, residential electricity prices decreased slightly in Texas: from 14.75 to 14.58 cents/kWh (-1.1%). On the other hand, California prices increased from 25.96 to 29.99 cents/kWh (+15.5%). For comparison, the US average tariff increased from 16.19 to 16.29 cents/kWh (+0.6%) in the same period. Texas’ kWh prices are currently lower than the US average, while California’s kWh prices are much higher.

Here is a chart showing residential electricity prices month-by-month, between September 2022 and September 2023.

Natural Gas Prices: Texas vs California 

In the case of natural gas, the price difference between Texas and California varies by sector. The following table summarizes the latest data from the US EIA, which covers August 2023:

Sector California Gas Price (per 1000 cubic feet) Texas Gas Price

(per 1000 cubic feet)

US Average Gas Price (per 1000 cubic feet)
Residential $18.17/MCF $31.68/MCF $23.22/MCF
Commercial $13.24/MCF $10.35/MCF $11.02/MCF
Industrial $10.71/MCF $2.71/MCF $3.78/MCF
Citygate $5.58/MCF $3.52/MCF $4.79/MCF
Electric power $5.95/MCF $2.67/MCF $3.02/MCF

In the 12-month period from August 2022 to August 2023, residential gas prices decreased from $33.1 to $31.68 per MCF in Texas (-4.3%), and from $21.53 to $18.17 per MCF in California (-15.6%). For comparison, the US average price of residential gas decreased from $25.34 to $23.22 per thousand cubic feet (-8.4%).

However, comparing gas prices for a single month can be misleading, since they tend to vary depending on the season. The following chart provides the same comparison as the table above, but considering all months between August 2022 and August 2023:

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