Last Updated on September 14, 2022 by Mary Pressler

An explanation of why your electric bill is so hig


Why Is My Electric Bill So High All Of A Sudden?

High inflation is being mentioned everywhere in the news, and this also affects the energy sector. Texas has been characterized by having lower energy prices than many other states, but there are many homeowners paying over 20 cents/kWh as of summer 2022. If your monthly power bill has increased dramatically during the last few months, here are five possible explanations.


1) Your Retail Electric Provider Has Been Increasing Their Rates

Considering the high inflation rates affecting the US in 2022, this is the most likely cause of an increased power bill. The Consumer Price Index report from August shows a general inflation rate of 8.5%, but this number reaches 32.9% in the energy sector. In particular, electricity prices were up by 15.2% in the 12-month period between July 2021 and July 2022.

In Texas, the average electricity price for residential consumers was 12.01 cents/kWh back in June 2021 (Source: US EIA). As of August 2022, many electricity plans are above 20 cents/kWh. If your electricity consumption has not increased since last year and you’re getting higher bills, inflation is a likely cause.


2) Your Electricity Plan Ended and You Were Switched to a More Expensive Rate

Having a fixed-rate electricity plan is excellent when energy costs are rising, since your provider does not increase kWh prices for the entire contract duration. However, you need to be careful:

  • Most providers will switch you to a variable-rate plan automatically at the end of a fixed-rate plan.
  • This means you are suddenly paying the current kWh price, after several months (or years) with no tariff increases.

The kWh price increase when switching from a fixed-rate to a variable-rate plan is more drastic if your fixed-rate plan had a long duration. For example, if you reach the end of a 36-month plan, you will get three years of tariff hikes applied at once!

If you’re on a fixed-rate plan, make sure you keep track of the months remaining on the contract. There will be a rate increase when you choose another fixed-rate plan at current prices, but you will avoid monthly increases once the next plan is active.


3) You’re on the POLR Tariff – Your Retail Electricity Provider Went Out of Business

Retail electric providers purchase electricity in the wholesale market, and then resell that energy to you according to the tariff in your chosen plan. However, Texas is a competitive market and your REP can go out of business. When this happens to an electricity provider, all customers are switched to the “Provider of Last Resort” or POLR, who charges a very high rate per kWh.

Normally, you will be notified if your REP is going bankrupt and you’re being switched to the POLR. This gives you time to find another electricity plan and avoid the high POLR tariff. However, there may be cases where a consumer misses the notifications and gets switched over without knowing. You should look for a favorable electricity plan ASAP if this happens, or you can expect a very high bill next month!


4) Your Home Has Undetected Energy Waste Issues

High electricity bills can also be caused by energy waste. The following are some common issues that can drive up your energy expenses:

  • Deficient insulation.
  • Air leaks.
  • Air conditioning / space heating / water heating equipment issues.
  • Setting the thermostat too low during summer, or too high during winter.
  • Using incandescent lamps.

If you suspect that energy waste is causing your high power bills, the best recommendation is performing a home energy audit. The Inflation Reduction Act has introduced a 30% federal tax credit and two rebate programs for home energy upgrades – now is an excellent time to invest in energy efficiency measures!


5) Your Electricity Consumption Has Actually Increased

Last but not least, your high power bills could be simply caused by higher consumption. This is probably the case if you’ve been working from home since the COVID-19 pandemic – you’re now paying for electricity that was previously used at your workplace (and paid by your employer).

Higher electricity consumption can also be expected after a home expansion, or if you recently installed a pool pump or other power-hungry equipment. Energy efficiency measures can help you compensate for increased home consumption.

Keep in mind that your high power bills could have more than one cause. For example, a 25% increase in your tariff and a 20% increase in consumption will lead to a 50% increase in the dollar amount paid (125% x 120% = 150%).

Lock In Your Electricity Rate Today

Are you out of contract with your energy provider? While electric rates are climbing, it is important to lock in your price. At Quick Electricity, we offer 6 and 12 month electricity plans for every Texan, even those with bad credit. Secure our lowest rates today to avoid another high bill. Sign up online now, or give us a call. We’re Texans helping Texans.

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