Hurricane Season May Raise Electric Rates

The National Weather Service’s Climate Prediction Center is expecting a rough Hurricane season in 2010 that may have a negative effect on retail electricity prices.  Electric rates in the majority of competitive electric markets have a direct correlation with natural gas prices.  Bad hurricane seasons result in a decline in natural gas production that eventually pushes electric prices up for consumers.

The Climate Prediction Center estimates an 85% chance for an above normal hurricane season with only a 10% of a near normal season, and a 5% of a below normal season.  They are estimating 166 (Bcf) of natural gas shut in production which may cause electric prices to increase across the country.

The hurricane season is between June 1 and November 30.  Most utilities have default rate structures that cause their default customers to pay higher rates in the summer as oppposed to the rest of the year.  With those two factors added to the fact that at the moment fixed electric rate contracts have been low (10-30% lower than default rates depending on your location and energy consumption patterns), now is an idea time to look into locking in a low fixed electric rate. 

If you are currently on a floating rate you would also want to think about locking into a fixed rate as the floating rate will be affected by a bad hurricane season.  Customers in Pennsylvania, Connecticut, New York, New Jersey, Delaware, Maryland, and Texas should get off of default rates on lock into a competitive fixed electric rate.