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Texas Electricity Rates Spike as Temperatures Rise

Written by Caitlin Ritchie/

Edited by Hannah Hillson

Last updated 05/20/2022

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Texas electricity rates are increasing, due in part to summer temperatures arriving earlier than expected in the Lone Star State. This is not an unprecedented event in Texas — residents and business owners normally experience higher energy prices during hotter months. But temperatures are even warmer than expected for this time of year, and global events like the war in Ukraine are also impacting the energy market.

In a statement released on Friday, May 13, the Electric Reliability Council of Texas (ERCOT) warned that six power generating facilities had fallen offline, resulting in a loss of 2,900 megawatts (MW) of power. ERCOT requested that Texans conserve electricity by setting their thermostats to 78 degrees and avoiding using appliances during peak usage hours of 3 p.m. to 8 p.m. 

ERCOT released its Seasonal Assessment of Resource Adequacy (SARA) on Monday, May 16, which predicted a new record high in energy demand in Texas this summer. The SARA report stated the ERCOT region expects to have enough power generation to meet the record high demand throughout the summer months.

Here’s a rundown of why Texas electricity rates are going up and what you can do about it.

Why Texas energy prices are increasing

A few factors impact electricity prices in Texas, the most common being seasonality. Texas experiences hotter summers than many other states, and when the temperature goes up, energy demand increases as residents rely more on air conditioning to cool their homes. 

This graph uses information from the U.S. Energy Information Administration (EIA) to show how Texas energy prices fluctuate over time.

There are other factors at play that aren’t seasonal. The war in Ukraine and subsequent sanctions placed on Russia have driven up the price of oil in the U.S. The war has also impacted natural gas prices, which directly affects the cost of 45% of all electricity generated in Texas. Natural gas accounts for approximately 35% of the energy mix across the country, so the spike in natural gas prices has had a nationwide impact.

Texas’ independence from other nationwide grids could also be a factor to electricity rate spikes. Because the Texas grid is separate, it can’t draw electricity from other power grids, leaving it vulnerable to a lack of supply when energy demand suddenly increases. When supply is low and demand is high, the price of electricity goes up.

According to the New York Times, some energy experts are concerned that this is only the beginning of electricity rate increases in the U.S. as energy companies begin to improve the reliability of their power production facilities. The 2021 winter storm in Texas serves as an example of a power grid failing on a large scale. Experts believe as energy companies make improvements to weatherize facilities and avoid future weather-related disasters, the cost will trickle down into consumers’ electricity bills.

What you can do about high energy rates

As Texas electricity prices go up, some consumers will want to shop around for another plan with a lower rate. However, the supply of available energy plans is currently limited because there has been a sharp increase in consumers looking to switch to a new energy plan. Providers have a limited amount of electricity they can offer, so some providers have had to pause enrollments on some of their plans to make sure they have enough electricity for existing customers. 

If experts’ predictions about the future of energy prices are accurate, now could be a good time to sign up for a fixed-rate plan with a longer contract if you are nearing the end of an existing contract or are enrolled in a variable-rate plan. Fixed-rate plans lock in the price for every kilowatt-hour (kWh) of energy you use, so you wouldn’t need to worry about future rate increases. You can secure a rate with a fixed-rate plan and delay beginning your service for up to 90 days. And if you are currently under contract for another energy plan, you can switch to a new plan without paying an early termination fee if there is less than 14 days left in your contract. 

Consumers who are already signed up for a fixed-rate plan should avoid switching to another plan at the moment since rates are increasing quickly. 

There is also the possibility that volatility in the Texas energy market could result in energy providers going out of business, which was the case for several providers after last year’s winter storm. If your energy provider stops offering service in your area, ERCOT will switch you to another provider, called the Provider of Last Resort (POLR). 

ERCOT requested Texans conserve energy when demand is high. Lowering your energy usage levels can also help to keep your electricity bill down. ERCOT specifically asked that consumers keep their thermostats at 78 degrees and avoid running appliances during peak usage hours (3 p.m. – 8 p.m.). There are many other simple methods of lowering your energy consumption, including turning off lights when you leave a room and closing your blinds or curtains during the day to keep rooms cooler without using the air conditioner. You can use the SaveOnEnergy usage calculator to estimate how much electricity you normally consume so you know where to lower your usage. 

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