Texas, home to the most powerful natural gas and electric utility, Texas Public Service, has a big problem: The cost of its electricity and water is higher than in many other states.
According to the Energy Information Administration, Texas was ranked the 20th most expensive power provider in the nation by EIA, with the state spending $9.75 per megawatt hour in 2013.
The average price of electricity in Texas in 2013 was $4.86 per megajoule.
Texas Public Utility Commissioner Michael Frerichs says the state is doing the right thing by paying more to utilities for the service they provide.
But it’s not easy.
He says the new rule means more people need to buy the expensive, older power systems to get power.
“If you’re a household with four people, you can pay $2,000 for the old system, but if you’re having a family of five, that’s going to get you less power than you would pay to go to a new system,” he said.
“And the cost of replacing the old equipment is going to be much higher than what you would save by switching.”
Texas is also spending more to get people to upgrade their existing homes and buildings.
But with that comes a cost.
Frerich said that in order to pay for upgrades, the state has to spend about $3.5 billion a year on energy-efficiency upgrades, which are often called carbon-neutral measures.
The state also plans to spend another $1.6 billion to install solar panels in homes and other buildings.
In order to get those solar panels, the utilities have to sell the power generated by the solar panels to the state.
“So, that money comes from your taxes and from your customers,” Frerich says.
“It’s a very expensive way to pay off the debt that’s been built up in the past decades.
It’s an incredibly difficult process.”
So far, about half of the state’s residents have solar panels on their homes.
“I don’t know how you could justify that kind of money for that kind a system,” Freichs said.
In many states, people can purchase energy-efficient lighting systems for less than they pay for electricity.
That’s because most states are selling the electricity they generate from their power plants to consumers, who then pay the electricity’s price.
But in Texas, the cost for those systems is about $4,000 per megapower hour, which is much higher.
The rate that Texas is paying for electricity is also much higher, making it a “catastrophic” situation for homeowners, according to a 2013 study by the Competitive Enterprise Institute.
It estimated that Texas would be spending $4 billion to fix and upgrade homes, which means it would be taking $10,000 out of each home’s energy bill each year.
And it’s taking away the savings that homeowners are getting from the solar system.
“In a state like Texas, where we have such high electricity prices, it is going be hard for a homeowner to pay the higher rate and still be able to afford to have a solar system,” said Jennifer Schloss, a senior fellow at the Competitive Endowment.
Schloss said the new solar regulations are an important step toward bringing down the cost and creating jobs.
But the Texas Public Utilities Commission says the cost is too high and that solar customers should not be required to pay more.
“The commission will continue to evaluate how to best make it possible for customers to purchase energy efficiency and solar systems, but in the meantime, they have stated that they will require customers who choose solar to pay a fixed price for their system,” a statement from the commission reads.
“We continue to work with the public utility commissions in other states and other regions to identify ways to encourage energy efficiency in the home.”
The Texas Public Power Commission says it is taking a hard look at the cost-sharing provisions of the new rules.
It also said it is exploring new ways to get energy-savings incentives for the utility’s customers.
“To date, the commission has not developed any plans to incentivize the purchase of energy efficiency systems in order for utility customers to get an incentive,” the commission said in a statement.
“However, the Commission is reviewing a number of options to make sure we can work with our customers to achieve the goals of achieving energy savings through energy efficiency.”
So while Texas is trying to get its house in order, it has a long way to go.