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: Wholesale power for July and August trades at a steep premium months ahead, and companies price that into the plans they sell in summer. But the average Texan signs contracts whenever their old one expires, oblivious to the fact that timing alone can cost them $150 to $300 a year, based on the gap between the cheapest and priciest shopping months of 2024 and 2025 (electricityplans.com 12-month plan averages, 1,000 to 1,500 kWh).

This isn’t a mystery. Texas electricity rates follow seasonal patterns, though the swings are smaller and less regular than the folklore suggests. 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 with the seasons, but not as neatly as most guides claim. Understanding the real pattern is the key to timing your contract right.

Summer (June-August): Peak rates. Air conditioning drives massive demand across the ERCOT grid. Average 12-month plan rates hit 17.8 cents per kWh in July 2024 and 16.6 cents in July 2025 (electricityplans.com, 1,000 kWh, delivery included), with the average Texas household using about 1,537 kWh in August and paying roughly $230 to $290 for the month on a competitive fixed rate.

Fall (September-November): Declining rates. As temperatures cool, electricity demand drops and prices follow. Average 12-month plan rates ran 16.0 to 16.3 cents per kWh in the fall months of 2024 and 2025.

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 $9,000/MWh for several days.

Spring (March-May): Often among the lowest rates. Mild weather means low demand and high competition among providers. Average 12-month plan rates were 15.4 cents per kWh in April 2026, the low point of the first half of the year, though April 2025 (16.9 cents) was that year’s high. Shoulder-season discounts, when they show up, run a few percent, not the 15 to 25 percent some shopping sites claim.

Month-by-Month Rate Guide

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

January: Expensive

Average rate: 16.5 cents per kWh (January 2026, 12-month plans at 1,000 kWh, electricityplans.com)

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: 15.4 cents per kWh (April 2026); 16.9 cents in April 2025

April brought the lowest rate of the first half of 2026, but it was the most expensive month of 2025. Spring is a good time to shop, not a guaranteed one. 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. In 2024, July’s average (17.8 cents) ran about 9 percent above October’s (16.3 cents); in 2025 the gap was about 2 percent; in 2026, July and August were the cheapest months of the year so far.

The math: Summer wholesale prices can reach $110-165/MWh during on-peak hours in July and August, according to forward contract data from early 2025. That gets passed through to retail customers.

Riskiest months to sign: July and August. In a year like 2024, that’s when you’ll find the most expensive options; in 2026, cheap solar pushed summer rates down instead.

September-October: Rates Drop

Average rate in October: 16.25 cents per kWh (2024 and 2025)

October is a solid month to shop for electricity in Texas, though the data doesn’t crown it the cheapest: in 2024 and 2025, December and August came in slightly lower. 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, and in 2024 and 2025 both months averaged slightly below 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 a then-record 85,464 MW on August 10 as Texas temperatures soared, and it broke that again with 91,134 MW on July 22, 2026 (unofficial until final settlement). When everyone runs their air conditioners simultaneously, the grid strains to meet demand. Wholesale electricity prices respond accordingly—price spikes above $1,000/MWh occurred 182 times in the summer 2023 real-time market (June through August, 15-minute intervals), compared to 73 times in summer 2022, according to the Dallas Fed.

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 carries the best-known price risk, 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 $9,000/MWh. Customers on wholesale-indexed plans saw bills of thousands of dollars. The storm caused $80-130 billion in economic losses, by the Dallas Fed’s estimate.

Post-Uri, the Public Utility Commission of Texas cut ERCOT’s price cap to $5,000/MWh (approved December 2021), 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 NERC’s 2025-2026 Winter Reliability Assessment, in a Uri-like storm, power demand could reach 85.3 GW, leaving the state 14.9 GW short of its 70.4 GW of 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 (Fall Sweet Spot)

October combines low demand with strong competition, and its average rate landed at or below the yearly average in 2024 and 2025. If you can time your contract expiration or shopping window to fall, do it.

April (Spring Sweet Spot)

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: Shoulder-season discounts are real but modest. In 2024, the cheapest shoulder month (September, 16.2 cents) came in about 9 percent under the July peak; in 2025 the whole year moved within a 1.2-cent band. 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 (Riskiest)

Peak summer demand means peak wholesale pricing. In 2024 you’d have paid about 9 percent more than shoppers who waited for fall; in 2025 and 2026 the summer premium mostly disappeared.

The cost of bad timing: If you had signed in July 2024 at the 17.8-cent average when you could have waited until October and signed at 16.3 cents, that’s about $23 a month more at 1,500 kWh usage—roughly $270 a year lost to 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 month-to-month plan or the shortest fixed term you can find, and re-shop in October. You’ll pay July pricing for a few months, but then you can lock in a better rate in the fall.

Example: Instead of locking in 12 months at July 2024’s 17.8-cent average, you could have ridden a month-to-month plan for three months, then locked in 12 months at October’s 16.3 cents. You’ll pay more for three months but come out ahead 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 off-cycle term such as 9, 13, or 14 months (Rhythm Energy’s Simply Select 9 and Simply Green 13 are examples) 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 electric companies let you schedule a switch 60 to 90 days in advance (Reliant allows up to 60 days; TXU Energy, Gexa, and Frontier up to 90). 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 (your company’s “default renewal product” under PUCT rule 16 TAC 25.475) that is usually well above the fixed rates you could get by shopping. 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

In January 2025, the EIA expected ERCOT wholesale prices to average about $30/MWh in 2025, down from around $35/MWh in 2024, thanks to new solar. It has since reversed course: its November 2025 outlook projected ERCOT North prices to rise roughly 45 percent in 2026 on summer peak-hour spikes, and its February 2026 outlook put the 2027 baseline near $47/MWh, with a data-center-heavy scenario about 79 percent above that. Forward contracts were already trading above $50/MWh in early 2025, with summer on-peak months reaching $110-165/MWh.

What this means for you: Wholesale costs are climbing again, and 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 10 cents/kWh to nearly 16 cents/kWh—a 60% increase over four years (electricityplans.com, 1,000 kWh, delivery included).

The EIA puts Texas’s average residential price at 15.94 cents per kWh for June 2026, up 4.5 percent from 15.26 cents in June 2025 (Electric Power Monthly, Table 5.6.A), with 12-month plans in the deregulated areas averaging 14.3 to 16.7 cents including delivery as of September 2026, depending on the delivery utility.

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 15 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: a month-to-month plan, or the shortest fixed term you can find. 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: A month-to-month plan from July takes you to October, where in 2024 you could have signed a 24-month plan at about 16.3 cents instead of July’s 17.8. 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 import only a small amount through a handful of DC ties during crises, so local weather has outsized impacts.

Heatwaves

Extended periods above 100°F push ERCOT demand to record levels. In 2023, summer heat drove multiple price spikes above $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 wholesale-indexed plan, a winter storm can multiply your bill many times over: during Uri, Griddy customers got bills of $5,000 to $9,000 for a single week. For a deeper understanding of fixed vs. variable plans, see our fixed vs variable rate plans guide.

Grid Improvements Since Uri

Since 2021, more than 60,000 MW of power capacity has been added to the ERCOT grid: about 31 GW of solar, 17 GW of batteries, 11 GW of wind, and 3 GW of natural gas as of mid-2026 (Texas Public Policy Foundation tally of ERCOT data). 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 short contract or go month-to-month 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: 14 cents/kWh, 9 months remaining, $150 ETF

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

Your usage: 1,500 kWh/month

Monthly savings: $45/month

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

In this scenario, you’d break even in about 3 months and save about $390 over the next 12 months after paying the ETF ($540 in lower bills minus the $150 fee).

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: fall (October through December) and spring (March and April). Shoulder-season rates ran a few percent below the summer peak in 2024, and in 2025 the whole year barely moved.

Riskiest months to shop: July, August, and January. The summer premium reached about 9 percent in 2024 but was absent in 2025 and 2026; January has been the most expensive shopping month on average.

Strategic timing: If your contract expires during an expensive month, sign the shortest plan you can find, or go month-to-month, 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 was about $270 a year for a household using 1,500 kWh a month in 2024. 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.

Frequently Asked Questions

What month has the highest electricity rates in Texas?

July and August had 2024’s highest rates thanks to peak summer demand from air conditioning, but summer 2026 was the cheapest stretch of the year. January is the most expensive shopping month on average (about 17.5 cents at 1,000 kWh, per Choose Texas Power’s multi-year averages). The cheapest month shifts from year to year; fall and late-year months are a reasonable bet.

How much more expensive is summer electricity in Texas?

In 2024, July’s average 12-month plan rate (17.8 cents) ran about 9 percent above October’s (16.3 cents), roughly $23 a month at 1,500 kWh usage. In 2025 the gap was about 2 percent, and in 2026 summer rates came in below spring.

Should I sign a long-term electricity contract?

If you’re shopping during a low-rate stretch (fall or spring), lock in a 24-36 month contract to protect against future rate increases. If shopping during an expensive summer, sign a short contract or go month-to-month and re-shop when rates drop in fall.

When should I start shopping for a new electricity plan?

Start monitoring rates 45-60 days before your contract expires. This gives you time to compare options without rushing and schedule your switch for the penalty-free window during your contract’s final 14 days.

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