When Do Texas Electricity Rates Go Up?

The Texas electricity industry profits from a simple fact: most people don’t know when rates go up.

Here’s their playbook: Rates spike every summer like clockwork—40% higher than spring. Wall Street traders bet on it. Wholesale markets price it in months ahead. But the average Texan signs contracts whenever their old one expires, oblivious to the fact that timing alone can cost them $500 or more per year.

This isn’t a mystery. Texas electricity rates follow predictable seasonal patterns. Understanding them is the single biggest advantage you can have as a consumer. Here’s exactly when rates spike, when they drop, and how to stop paying premium prices.

The Annual Rate Cycle

Texas electricity rates move in a predictable cycle tied to the seasons. Understanding this pattern is the key to timing your contract right.

Summer (June-August): Peak rates. Air conditioning drives massive demand across the ERCOT grid. [DATA: 15-20 cents per kWh] during peak summer periods, with the average Texas household using [DATA: 1,537 kWh] and paying [DATA: $237 per month] in August.

Fall (September-November): Declining rates. As temperatures cool, electricity demand drops and prices follow. [DATA: 9-13 cents per kWh] typical for new contracts.

Winter (December-February): Moderate rates with risk. Generally lower than summer, but severe cold snaps can trigger price spikes. Winter Storm Uri in February 2021 saw wholesale prices hit [DATA: $9,000/MWh] for several days.

Spring (March-May): Lowest rates. Mild weather means low demand and high competition among providers. [DATA: 8-12 cents per kWh] for new fixed-rate contracts. Prices in Texas drop [DATA: 15-25%] during these shoulder season months.

Month-by-Month Rate Guide

Here’s what to expect each month based on historical patterns and market data:

January: Expensive

Average rate: [DATA: 18.19 cents per kWh]

January is historically the most expensive month to shop for electricity in Texas. Wholesale markets are hedging against potential winter storms, and providers factor in higher risk premiums. If your contract is expiring in January, start shopping in November or wait until February if you’re on month-to-month.

February-March: Improving

Winter demand tapers off and rates start dropping. By March, you’re entering the shoulder season—one of the best times to lock in low rates.

April: Sweet Spot

Average rate: [DATA: ~15 cents per kWh]

April consistently offers some of the lowest rates of the year. Demand is low, weather is mild, and providers are competing aggressively for customers before summer hits.

Strategy: If your contract expires in April, take advantage. Lock in a 12-24 month fixed rate and you’ll carry those low rates through the expensive summer months.

May: Still Good

Rates start climbing as providers anticipate summer demand, but competitive deals are still available. This is your last chance before summer pricing kicks in.

June-August: Peak Prices

June marks the beginning of peak pricing season. By July and August, rates have spiked significantly—sometimes [DATA: 40%+ higher] than shoulder season rates.

The math: Summer rates can reach [DATA: $110-165/MWh] for wholesale prices during on-peak hours in July and August, according to forward contract data. That gets passed through to retail customers.

Worst months to sign: July and August. If your contract expires during these months, you’ll be choosing from the most expensive options available all year.

September-October: Rates Drop

Average rate in October: [DATA: 15.34 cents per kWh]

October is the best month to shop for electricity in Texas. Air conditioning season is over, demand plummets, and providers offer competitive rates to capture customers for the winter.

Strategy: If your contract expires in October, you’re in luck. Shop aggressively and lock in a rate that will last through the next summer.

November-December: Good Options

Rates remain competitive through the end of the year. November and December shopping can yield solid deals, though not quite as good as October.

Why Rates Spike in Summer

The summer rate spike isn’t arbitrary. It’s driven by fundamental supply and demand economics on the ERCOT grid.

Record-Breaking Demand

In 2023, ERCOT set multiple demand records as Texas temperatures soared. When everyone runs their air conditioners simultaneously, the grid strains to meet demand. Wholesale electricity prices respond accordingly—price spikes above [DATA: $1,000/MWh] occurred [DATA: 182 times] in 2023’s real-time market, compared to [DATA: 73 times] in 2022.

Supply Constraints

During extreme heat, some power plants operate at reduced capacity or shut down due to heat stress. This reduces supply exactly when demand is highest—pushing prices up further.

Forward Hedging

Electricity providers buy power on the wholesale market months in advance to hedge their exposure. Summer months trade at significant premiums because everyone knows demand will be high. Those higher wholesale costs get baked into the retail rates you see when shopping for plans.

The Winter Storm Wild Card

While summer is predictably expensive, winter is unpredictable. Most years, winter rates are moderate. But severe cold events can trigger dramatic price spikes.

Winter Storm Uri: The $9,000/MWh Event

In February 2021, Winter Storm Uri sent wholesale electricity prices to the maximum cap of [DATA: $9,000/MWh]. Customers on variable or indexed plans saw bills of thousands of dollars. The storm caused [DATA: $80-130 billion] in economic losses.

Post-Uri, ERCOT reduced the price cap to [DATA: $5,000/MWh], but that’s still high enough to devastate anyone on an unprotected plan.

Current Winter Risk

Five years post-Uri, challenges remain. Rising demand from AI data centers and cryptocurrency operations puts additional strain on the grid. According to recent ERCOT reports, in a Uri-like storm, power demand could reach [DATA: 85.3 GW], leaving the state [DATA: 14.9 GW short] of total available resources.

The takeaway: Even though winter rates are typically moderate, unexpected cold snaps pose serious price risk. Fixed-rate contracts protect you from these events.

Best Months to Lock In Low Rates

Based on historical rate data, wholesale market patterns, and demand cycles, here are the absolute best months to shop for electricity in Texas:

October (Best Overall)

October combines low demand with strong provider competition. If you can time your contract expiration or shopping window to October, do it.

April (Second Best)

Spring rates are nearly as good as fall. April offers competitive pricing and mild weather—demand is minimal and providers want your business.

March (Also Strong)

March kicks off the shoulder season. Rates are dropping from winter and haven’t yet climbed toward summer peaks.

Pro tip: Electricity prices drop [DATA: 15-25%] during March-May and September-November. If you’re shopping during these months, you’re already ahead.

Worst Months to Sign a Contract

Avoid signing new electricity contracts during these months if at all possible:

July-August (Worst)

Peak summer demand means peak pricing. You’ll pay a significant premium compared to shopping just a few months later.

The cost of bad timing: If you sign in July at [DATA: 16 cents/kWh] when you could have waited until October and signed at [DATA: 11 cents/kWh], that’s [DATA: $75/month] more at 1,500 kWh usage—[DATA: $900/year] wasted on poor timing.

January (Also Bad)

Winter risk premium pushes rates up. January is the single most expensive month to shop on average.

How to Time Your Contract Around Rate Cycles

Knowing when rates spike isn’t enough—you need a strategy to avoid getting caught shopping during expensive months.

Use Contract Length Strategically

If your current contract expires during a peak month, don’t just accept whatever rates are available. Instead, consider these tactics:

Sign a short-term plan: If your contract expires in July, sign a 3-month plan. That pushes your next renewal to October—right when rates drop. You’ll pay July pricing for one contract, but then you can lock in much better rates in the fall.

Example: Instead of signing a 12-month plan at [DATA: 16 cents] in July, sign a 3-month plan at [DATA: 15 cents], then switch to a 12-month plan at [DATA: 11 cents] in October. You’ll pay more for three months but save significantly over the full year.

Break the cycle with odd terms: Most contracts are 6, 12, 24, or 36 months. If your renewal keeps falling in expensive months, choose an 8-month, 10-month, or 14-month plan to shift your next expiration into a cheaper season.

Shop Early, Lock When Ready

Start monitoring rates 45-60 days before your contract expires. If you’re heading into a shoulder season (spring or fall), you’re in good shape. If you’re heading into peak summer or winter, consider shopping early and using a short-term contract to bridge to better timing.

Start Shopping 60 Days Before Expiration

Most providers let you schedule a switch up to 60 days in advance. This gives you flexibility—if your contract expires in July but you start shopping in May, you can lock in May’s better rates for a July start date.

Don’t Let Your Contract Lapse

When your contract expires, you’re automatically moved to a month-to-month holdover rate that’s typically [DATA: 20-40% higher] than competitive fixed rates. Even if you expire during an expensive month, shop immediately—don’t compound the problem by staying on expensive holdover pricing.

For more on this, see our guide on what happens when your electricity contract expires.

Wholesale Market Trends to Watch

Retail rates follow wholesale market trends. Understanding what’s happening in the wholesale market helps you anticipate where retail rates are headed.

2026 Rate Forecast

The EIA expects average wholesale electricity prices in Texas to decrease to approximately [DATA: $27-34/MWh] in 2025-2026, down from around [DATA: $35/MWh] in 2024. However, forward contracts are trading above [DATA: $50/MWh], with summer on-peak months reaching [DATA: $110-165/MWh].

What this means for you: Overall market conditions are moderating, but summer premiums remain significant. The seasonal spread between cheap and expensive months will continue.

Long-Term Trends

From January 2021 to December 2024, the average price for a 12-month electricity plan increased from [DATA: 10 cents/kWh] to nearly [DATA: 16 cents/kWh]—a [DATA: 60% increase] over four years.

Looking ahead, a modest [DATA: 3-5% rise] in electricity prices is expected in Texas from 2025 to 2026, with residential rates averaging [DATA: 14-19 cents/kWh] including delivery costs.

The takeaway: Rates are generally climbing over time, which makes locking in low rates during shoulder seasons even more valuable. When you find a good rate in October or April, lock it in for as long as you’re comfortable—12 to 24 months protects you from future increases.

Contract Length Strategy Based on Timing

The best contract length depends on when you’re shopping:

Shopping in October or April (Low-Rate Months)?

Lock in a long contract: 24 or even 36 months. You’re getting favorable pricing—protect yourself from future rate increases and the next summer spike. Major providers like TXU Energy and Reliant Energy offer long-term fixed-rate contracts.

Example: If you lock in [DATA: 11 cents/kWh] in October 2026 on a 24-month plan, you’re protected through October 2028—including two summer rate spikes.

Shopping in July or January (High-Rate Months)?

Go short: 3 to 6 months. This bridges you to the next shoulder season where you can lock in better long-term rates. Consider month-to-month plans for maximum flexibility during this period.

Example: July contract at [DATA: 16 cents/kWh] for 3 months takes you to October, where you can sign a 24-month plan at [DATA: 11 cents/kWh]. You’ll pay more for summer, but minimize your exposure.

Shopping in Winter (Moderate Rates)?

Consider 12 months: Gets you through the next summer and positions your renewal for the following winter or spring. Twelve-month terms offer flexibility without locking you into high rates if you’re shopping during an uncertain period.

How Weather Events Affect Rates

Texas electricity rates are uniquely vulnerable to extreme weather because the ERCOT grid is isolated from the rest of the country. We can’t import power from other states during crises, so local weather has outsized impacts.

Heatwaves

Extended periods above [DATA: 100°F] push ERCOT demand to record levels. In 2023, summer heat drove multiple price spikes above [DATA: $1,000/MWh] in real-time markets.

Retail rate impact: Providers anticipate high summer demand and price their plans accordingly. The more extreme the forecast, the higher the rates.

Winter Storms

Severe cold threatens natural gas infrastructure that powers many Texas electricity plants. When pipelines freeze, fuel can’t reach plants, reducing supply exactly when heating demand spikes. This is what happened during Winter Storm Uri.

Retail rate impact: Providers factor in winter storm risk, which is why January rates average higher than shoulder months. If you’re on a variable or indexed plan, a winter storm can trigger bill increases of [DATA: 50%+] or more. For a deeper understanding of fixed vs. variable plans, see our fixed vs variable rate plans guide.

Grid Improvements Since Uri

Since 2021, roughly [DATA: 40,000 MW] of power capacity has been added to the ERCOT grid. Much of this new capacity comes from renewable energy sources and batteries, which store electricity and release it during peak demand.

While the grid is more resilient than it was during Uri, significant challenges remain—especially with rising AI and cryptocurrency data center demand.

Action Plan: When to Shop Based on Your Situation

Here’s exactly when to shop depending on when your current contract expires:

Your Contract Expires in October, March, or April

You won: Lock in a long contract

Shop 30-45 days before expiration
Compare 12-, 24-, and 36-month fixed-rate plans
Choose the longest term you’re comfortable with at a competitive rate
Schedule your switch for your ETF-free window (final 14 days of current contract)

Your Contract Expires in July, August, or January

You’re in a tough spot: Go short

Start shopping 45-60 days early to see if rates improve
If rates are high, sign a 3-6 month contract to bridge to the next shoulder season
Accept that you’ll pay more short-term but position yourself for better pricing later
Set a reminder to shop again when your short contract nears expiration

Your Contract Expires in Other Months

You’re in decent shape: Shop normally

Follow standard advice: shop 30-45 days before expiration
Compare 12-month plans for balance of price and flexibility
Consider 24 months if rates are competitive

Your Contract Expired and You’re on Month-to-Month

You’re overpaying: Shop immediately

Don’t wait for the “right” season—you’re already on expensive holdover pricing
Shop today and lock in a fixed rate
Any fixed contract is better than continued month-to-month overpayment
Even if you’re shopping during an expensive month, you’ll still save compared to holdover rates

For step-by-step instructions on switching, see our guide on how to switch electricity providers.

Should You Switch Mid-Contract to Time the Market?

Let’s say your contract doesn’t expire until July, but it’s currently October and rates are low. Should you pay an Early Termination Fee (ETF) to switch now and lock in better pricing?

Maybe. Here’s the math:

Your current plan: [DATA: 14 cents/kWh], 9 months remaining, [DATA: $150 ETF]

Available plan: [DATA: 11 cents/kWh], 12-month fixed

Your usage: 1,500 kWh/month

Monthly savings: [DATA: $45/month]

Break-even point: [DATA: $150 ETF ÷ $45/month = 3.3 months]

In this scenario, you’d break even in about 3 months and save [DATA: $405] over the next year after accounting for the ETF.

When it makes sense:

Significant rate difference (3+ cents/kWh)
You’re shopping during a low-rate month
Your ETF is relatively small
You have many months left on your contract

When it doesn’t:

Small rate difference (1-2 cents/kWh)
High ETF relative to potential savings
You’re within 3-4 months of contract expiration anyway

For more on this calculation, see our guide on the best time to switch electricity providers.

The Seasonal Shopping Checklist

Here’s your action plan to time your electricity shopping for maximum savings:

Bottom Line: October and April Win

Texas electricity rates spike in summer and stabilize in winter, with the best deals available in spring and fall.

Best months to shop: October (absolute best), April, and March. Rates drop [DATA: 15-25%] during shoulder seasons.

Worst months to shop: July, August, and January. Rates spike [DATA: 40%+] during peak summer demand.

Strategic timing: If your contract expires during an expensive month, sign a short 3-6 month plan to bridge to better pricing in shoulder seasons. If you’re shopping during October or April, lock in a 24-36 month plan to maximize your savings.

The difference between shopping in July versus October can be [DATA: $900+/year] for an average household. That’s real money worth timing for.

Ready to compare rates? Check current pricing at ComparePower.com. And if you’re trying to decide between providers, start with our provider comparisons to see how they stack up on rates, customer service, and reliability. A popular comparison is TXU vs Reliant, two of Texas’s largest providers.

For more on managing your electricity costs, see our guide on how to lower your electric bill in Texas and our breakdown of average electricity usage in Texas.

When Do Texas Electricity Rates Go Up? (Best Time to Lock In)