Millions of Americans are being forced to bet on power and natural-gas prices at a time when even seasoned professionals are unsure where highly volatile markets are headed.
For Floyd Stanley, a 66-year old retired software marketer in Dallas, keeping up with electricity rates is akin to a full-time job: He tracks them in a spreadsheet. Shopping around, he found that prices can swing by as much as 10% depending on the time of day.
“You are being asked to play the market out a year to three years, and that is not a comfortable decision,” said Stanley, whose home state of Texas has a deregulated electricity market and allows customers to choose from power companies.
Stanley recently switched to a different provider and signed a three-year contract to try to cap his costs, which soared by 145% in July over the previous year. He’s still keeping an eye out on the markets, because he wants to get the best plan for his 100-year-old father-in-law come October.
With the price of gas, electricity and heating oil soaring, monthly utility bills have reached records. The surge is sparing no one, but for many Americans who live in states with competitive utility markets, there’s the added anxiety of having to figure out whether energy costs will keep rising, by how much and until when.
That’s because under so-called customer-choice programs that predominate in these states, consumers have the option to go with a variable rate of electric, oil or natural gas — usually the priciest option — or lock in a fixed rate that comes with a term ranging from six months to as many as five years.
These previously ho-hum decisions are far more nerve-wracking and consequential this year. Wrong-way bets could cost hundreds of dollars or more.
“It’s terrifying. I don’t know how to shop either, and I’m grateful to be on city of Austin’s contracts right now,” Alison Silverstein, an energy consultant and former adviser to chairman of the Public Utility Commission of Texas, said on a conference call this month about the effects of energy costs on low-income Texans.
Although Europeans are facing a much deeper energy crisis than Americans, soaring home power costs are taking a toll on budgets already strained by decades-high inflation. Some 20 million households across the US — about one in six — have fallen behind on their utility bills, the worst the National Energy Assistance Directors Association has ever recorded. Many are facing shutoffs.