Market Trends

Natural Gas


What Drives Electricity Rates in Texas?

The answer is simple, Natural Gas. Why you might ask? Well, as the saying goes “everything is bigger in Texas” and that includes our production of natural gas. In fact we are the largest producer of natural gas in the country, providing more than 25% of our nations supply. So it only makes sense that over half of the power generation plants in Texas use their most readily available fuel source and that is natural gas. Even though natural gas-fired generation is most prevalent, we also use coal, nuclear and wind. Texas does have vast reserves of coal yet it is of a low grade. So the coal used is typically railed in from states like Wyoming and Montana. Added handling costs and freight make this a less economical option but none the less still a viable one. Texas produces and consumes more electricity than any other state. This makes it imperative that we produce it efficiently and economically. Production generated by natural gas can be ramped up quickly in order to meet consumer’s peak demands. These facilities are capable of running at twice the efficiency of other generation plants. It is also the cleanest fossil fuel. In 2007, for the first time in history, the amount of natural gas used to generate electricity in the U.S. exceeded the amount used by industry. This trend is likely to continue as generators attempt to meet America’s clean air goals and cost efficient energy demands.

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