Every summer, electricity providers profit from predictable rate spikes that you could have avoided.
Here’s what they don’t tell you: Texas summer rates follow the same pattern every single year. Prices climb starting in May, peak in July-August, and drop in October. The industry knows this. Wall Street traders bet on it. But most Texans sign contracts whenever their old one expires—even if that’s the worst possible time.
The average Texas household sees their electric bill jump from about $150 in spring to $250 or more in August. That increase isn’t entirely about usage. A huge portion is timing—signing contracts when rates are at their annual peak.
Here’s how to stop being the person who subsidizes everyone else’s lower rates.
The Rate Spike Is Not a Mystery
Texas summer rates don’t increase randomly. This is a completely predictable economic pattern that repeats annually—and that providers exploit.
Record-Breaking Demand
When temperatures climb above 100°F day after day, every home and business in Texas runs their air conditioning at full blast. This creates massive demand on the ERCOT grid—often setting new records.
In recent years, ERCOT has repeatedly broken summer demand records. Peak demand during afternoon hours can exceed 80,000 megawatts—enough to power the entire United Kingdom. For context, spring demand typically runs around 45,000-50,000 megawatts. That’s a 60% increase in how much power the state needs.
When demand spikes, wholesale electricity prices follow. During normal conditions, wholesale power trades at $25-50 per megawatt-hour. During peak summer afternoons? Prices can hit $1,000 or more per megawatt-hour. Those costs flow through to what you pay at retail. Understanding how ERCOT and the Texas grid works helps explain why this happens.
The ERCOT Grid Under Stress
Texas runs its own independent power grid through ERCOT, isolated from the rest of the country. This means we can’t easily import power from other states when things get tight. If Texas needs more electricity than Texas can generate, we have a problem.
During extreme summer heat, the grid operates with thin margins between supply and demand. ERCOT issues conservation appeals, asking Texans to reduce usage. In the worst cases, the grid operator may implement rolling blackouts to prevent a total system collapse.
This grid stress translates directly to rates. Retail electricity providers know that wholesale prices will spike during summer, so they price their summer-starting contracts accordingly. If you’re shopping for a plan in June or July, you’re paying a premium for that anticipated demand surge.
Peak Demand Pricing Explained
Some electricity plans include peak demand pricing—higher rates during afternoon and early evening hours when the grid is most stressed. Understanding this pricing structure matters for your summer bill.
Time-of-use plans charge different rates depending on when you consume electricity. You might pay 8 cents per kWh at night and 15 cents per kWh between 2 PM and 7 PM. If you can shift your usage away from peak hours, these plans save money. If you run your AC at full blast all afternoon, they’ll cost you more.
Free nights and weekends plans flip this concept around. You pay higher rates during peak daytime hours but get discounted or free electricity at night. These work well if you’re away during the day and do most of your heavy electricity use at night—running the dishwasher, doing laundry, or pre-cooling your home before morning.
Fixed-rate plans charge the same rate regardless of time. You’re protected from wholesale price spikes, but you pay a slight premium for that stability. For most Texas households, fixed-rate plans offer the best balance of predictability and value during summer months.
When Summer Rates Start Rising
Texas summer electricity pricing doesn’t flip on like a switch on June 1st. The rate increases follow a predictable pattern that savvy shoppers can anticipate.
The Timeline
March-April: This is the sweet spot. Mild weather means low demand, and providers compete aggressively for customers. Rates are typically 15-25% lower than summer pricing. If your contract allows, lock in a new plan now.
May: Rates start climbing as providers anticipate summer demand. You can still find competitive deals, but the best offers are disappearing. This is your last chance to lock in spring pricing.
June: Summer pricing has arrived. Wholesale forward contracts are trading at premiums, and retail providers have adjusted their rates accordingly. Signing a new contract in June means paying more than you would have a month earlier.
July-August: Peak pricing season. The hottest months bring the highest rates—often 40% or more above shoulder season prices. If your contract expires during these months, you’re shopping at the worst possible time.
The Numbers
Here’s what the rate differential looks like in practice:
A 12-month fixed plan signed in April might cost 10-11 cents per kWh. The same plan signed in July? Expect 14-16 cents per kWh or higher. For a household using 1,500 kWh per month, that’s the difference between a $165 bill and a $240 bill—$75 per month, or $900 per year.
The lesson: timing matters enormously. Shopping for electricity in spring versus summer can save you hundreds of dollars annually.
Lock In Your Rate Before Summer
The single best strategy for managing summer electricity costs is simple: sign your contract before summer arrives. Here’s how to execute this strategy.
The Optimal Shopping Window
Best time to lock in: Late March through April. Demand is low, competition is high, and you’re signing well before summer pricing kicks in.
Still decent: Early to mid-May. Rates are creeping up, but competitive deals remain available.
Too late: June onward. You’ve missed the window. Consider a short-term contract (3-6 months) to bridge to fall, when rates drop again.
Contract Length Strategy
If you’re shopping during the optimal window, go long. A 24-month contract signed in April at 10 cents per kWh locks in that rate through two full summers. You’ll carry spring pricing while everyone else pays peak summer rates.
If you missed the window and you’re shopping in June or July, go short. Sign a 3-6 month contract to get through summer. When October arrives, rates drop significantly—that’s when you lock in your long-term contract.
Example calculation: If you sign a 12-month contract at 15 cents/kWh in July versus waiting and signing at 11 cents/kWh in October, you’ll pay an extra $60 per month at 1,500 kWh usage. That’s $720 more for the year. A short-term bridge contract, even at higher summer rates, minimizes your exposure while positioning you for better fall pricing.
Watch Your Contract End Date
Check when your current contract expires. If it ends in summer, you have a problem—you’ll be shopping during the most expensive months.
Options for contracts expiring in summer:
- Shop early: Start looking 60 days before expiration. Many providers let you schedule a switch in advance.
- Go short: Sign a 3-month contract to bridge to October.
- Accept the pain: If you need a long-term contract now, understand you’re paying a premium. Lock in anyway rather than letting your contract lapse into expensive month-to-month rates.
For more on timing your contract, see our guide on when Texas electricity rates go up.
How to Cut Your Summer Electricity Bill
Even if you’re locked into a rate, your total bill depends on how much electricity you consume. Here are proven strategies to reduce summer usage without sacrificing comfort.
Thermostat Management
Your air conditioner is the biggest driver of summer electricity costs—typically 50-70% of your total bill. Small adjustments make a big difference.
Set it and forget it at 78°F: Every degree below 78°F increases your cooling costs by 3-5%. If you normally set your thermostat at 72°F, bumping it to 78°F could cut your AC costs by 20% or more.
Use a programmable thermostat: Let the temperature rise to 82-85°F while you’re at work, then cool down before you get home. You’ll save 5-15% on cooling costs without ever feeling uncomfortable.
Smart thermostats go further: Devices like Nest, Ecobee, or Honeywell learn your patterns and optimize automatically. Many Texas providers offer rebates or free smart thermostats—check with your provider. Providers like TXU Energy and Reliant Energy often include thermostat deals with new plans.
Pre-cool strategically: If you’re on a time-of-use plan, run your AC harder in the morning when rates are lower. Drop the temperature to 74°F by noon, then let it drift up to 78°F during expensive afternoon hours. The thermal mass of your home holds the coolness.
Time-of-Use Plan Strategies
If you’re on a plan with peak pricing or free nights, structure your usage accordingly.
Shift heavy loads to off-peak hours: Run your dishwasher, washer, and dryer at night. These appliances don’t care what time it is, but your bill does.
Pre-cool before peak hours: Crank the AC in the morning, then ease off during expensive afternoon hours.
Use timers: Set pool pumps, water heaters, and other discretionary loads to run during cheaper hours.
Charge devices overnight: Electric vehicles, laptops, and phones should charge during off-peak periods.
Reduce Heat Gain
The less heat that enters your home, the less your AC has to work. Attack heat gain from multiple angles.
Close blinds and curtains: South and west-facing windows let in the most heat. Blocking direct sunlight can reduce cooling needs by 10-15%.
Use ceiling fans: Fans don’t cool the air, but they make you feel 4-6°F cooler through wind chill. This lets you raise your thermostat setting while staying comfortable. Turn fans off when you leave the room—they only work if you’re there to feel them.
Seal air leaks: Hot air sneaking in around doors, windows, and electrical outlets forces your AC to work harder. Caulk and weatherstripping are cheap fixes with quick payback.
Add insulation: If your attic is under-insulated, you’re losing cool air to the outside. Proper attic insulation can reduce cooling costs by 15-25%.
Keep the heat outside: Cook on the grill instead of the oven. Use the microwave instead of the stovetop. Run heat-generating appliances (dishwasher, dryer) at night. Every BTU of heat generated inside your home is another BTU your AC must remove.
Maintenance Matters
A well-maintained AC system runs more efficiently. Neglected systems work harder and cost more.
Change your air filter monthly during summer: A clogged filter restricts airflow, forcing your system to work harder. Filters cost $5-15; the efficiency loss from a dirty filter costs far more.
Clean the outdoor unit: The condenser coils outside your home need airflow to release heat. Clear away leaves, debris, and anything within two feet of the unit. Gently rinse the coils with a hose if they’re dirty.
Schedule annual maintenance: A professional tune-up before summer catches problems early and optimizes efficiency. Many providers offer maintenance plans or can recommend HVAC contractors.
Don’t ignore problems: Strange noises, weak airflow, or inconsistent cooling mean something’s wrong. Fixing small problems early prevents expensive failures during a July heatwave.
Understanding Your Summer Bill
When your August bill arrives, it helps to understand what you’re looking at. Texas electricity bills include several components.
The Breakdown
Energy charge: The rate you pay per kilowatt-hour, multiplied by your usage. This is what varies based on your plan choice and shopping timing.
TDU delivery charges: Transmission and Distribution Utility fees for moving electricity to your home. These are regulated, the same regardless of your provider, and typically $40-60 per month for average households. See our guide on understanding TDU charges for details.
Taxes and fees: State and local taxes, plus various regulatory fees. Usually 5-10% of your total bill.
Why Summer Bills Shock People
Even with the same rate, your summer bill will be dramatically higher than spring or fall. The culprit: usage.
A typical Texas household uses around 1,000 kWh in April and 1,500-2,000 kWh in August. At 12 cents per kWh, that’s the difference between a $120 energy charge and a $180-240 energy charge—plus TDU charges remain relatively constant, so your percentage increase feels even larger.
If you also signed your contract during summer at a higher rate, you’re getting hit twice: higher usage AND a higher rate per kWh. This is why timing matters so much.
Comparing to Neighbors
Wondering if your bill is normal? The average Texas household uses about 1,200 kWh per month across the year, with August peaks around 1,500-2,000 kWh depending on home size, insulation, and habits.
If you’re significantly above these numbers, there may be efficiency improvements worth pursuing—or you might have a larger-than-average home. If you’re significantly below, congratulations on either an efficient home or excellent usage management.
When Summer Bills Indicate a Problem
Sometimes high summer bills point to issues beyond normal seasonal increases.
Red Flags
Usage doubled compared to last summer: Weather varies year to year, but a dramatic increase with no change in habits suggests a problem—failing AC, air leaks, or a billing error.
Bill increased but usage didn’t: Your rate may have jumped when your contract expired and you rolled onto month-to-month pricing. Check your rate per kWh against your contract terms.
AC runs constantly but house doesn’t cool: Your system may be undersized, low on refrigerant, or failing. This inefficiency shows up in both your comfort and your bill.
Neighbors with similar homes pay much less: If your bill is dramatically higher than comparable households, investigate efficiency issues or rate problems.
What to Do
Request a usage history from your provider. Look for unexpected spikes or gradual increases that don’t match weather patterns. Check your rate per kWh against your contract terms—you may have rolled onto expensive holdover rates without realizing it.
For more on analyzing your bill, see our guide on how to read your electricity bill.
The Bottom Line on Summer Electricity
Texas summer electricity rates spike because demand spikes. The ERCOT grid strains under the load of millions of air conditioners, wholesale prices surge, and retail rates follow. If you’re shopping for a new plan in June or July, you’re paying peak prices for the year.
The smart strategy:
- Lock in your rate in spring (March-April) before summer pricing arrives
- Go long on contracts when rates are low—24 months protects you through two summers
- Go short if you’re stuck shopping in summer, then re-shop in fall
- Manage your usage through thermostat discipline, time-of-use awareness, and efficiency improvements
- Maintain your AC so it runs efficiently when you need it most
The difference between thoughtful planning and reactive shopping can easily be $500-900 per year. That’s real money that stays in your pocket with a little advance preparation.
Ready to compare summer rates? Check current pricing at ComparePower.com. And if you’re deciding between providers, explore our provider comparisons to see how companies stack up on rates, service, and reliability.
For more strategies to control your electricity costs, see our guides on how to lower your electric bill in Texas and average electricity usage in Texas.