Most Houston business owners associate high electricity costs with summer heat, and for good reason. But there is a second seasonal driver that catches people off guard: winter. When cold weather settles over Texas, natural gas demand surges, and because so much of the grid runs on gas, your electricity rates can climb right along with it. Understanding how natural gas prices drive your electricity costs is the key to locking in winter rates before they move against you.
Why Natural Gas Sets the Price of Power
A large share of the electricity on the ERCOT grid is generated by burning natural gas. That means the price of natural gas is one of the biggest inputs into the wholesale price of power. When gas is cheap and plentiful, electricity tends to follow. When gas spikes, the cost of generating electricity spikes with it, and that flows through to the forward curve that retail providers use to price your contract.
This link is why your electricity rate is not purely about electricity. It is also about a fuel market. For a Houston business, watching natural gas is a useful early signal of where commercial electricity rates may be heading, especially as the calendar turns toward winter.
The Winter Demand Spike
In the colder months, natural gas gets pulled in two directions at once. It heats homes and buildings directly, and it fuels power plants that run harder to meet winter electricity demand. When a cold front hits Texas, both needs rise together, and that competition for the same fuel can push gas prices up sharply for a stretch.
Texans saw an extreme version of this during the February 2021 freeze, when gas supply tightened dramatically and prices soared. Most winters are far milder than that, but the underlying pattern holds: cold snaps strain the gas market, and a strained gas market lifts electricity costs. If your contract is exposed to the market during one of those stretches, the timing can be expensive.
A Houston Example: Locking Before the Cold
Say your business uses around 200,000 kilowatt-hours a year and your contract is up in the fall. If you wait until a January cold snap to shop, you may be pricing right as natural gas, and therefore electricity, has run up. If instead you lock a fixed rate in the milder fall window, before winter demand and any cold-weather gas spikes, you can carry a steady price straight through the season.
The fixed rate is what makes this work. With a fixed contract, a winter gas spike does not change the price you already locked. With a variable or index rate, you are riding the gas market in real time, which can feel fine in autumn and painful in January. The decision is less about predicting the weather and more about deciding who carries the fuel risk.
Your Pre-Winter Checklist
A few steps help you stay ahead of the season. Know your contract end date and whether you will be shopping near winter. If you are exposed to a variable rate heading into the cold months, treat that as a reason to review your options now. Consider locking a fixed rate in the calmer fall window rather than waiting for a cold snap. And keep a recent bill handy so any rate analysis reflects your real usage.
A Simple Next Step
Winter is the overlooked half of the energy calendar, and natural gas is the thread that connects cold weather to your electricity bill. At Excelsior Energy, we help Houston businesses time their contracts so a winter gas spike does not become a winter bill shock. If you want to review your rate before the cold sets in, we are happy to do a free bill review. Call us at 713-898-3164 and we will walk through your numbers, no pressure and no jargon.