Why Texas Commercial Electricity Rates Spike Every Summer (and How to Lock In Before They Do)
If you run a business in Houston, you already know the feeling. The July electricity bill lands, and the number is noticeably bigger than the one from April, even though your operation did not change much. That jump is not a billing error. It is the predictable result of how Texas commercial electricity rates behave when summer heat settles over the state. The good news is that this pattern is well understood, which means you can plan around it instead of getting surprised by it every year.
What Drives Texas Commercial Electricity Rates Higher Every Summer
Texas runs on its own power grid, managed by ERCOT, the Electric Reliability Council of Texas. When temperatures climb into the high 90s and air conditioners across Houston, Dallas, and San Antonio all run at once, demand on that grid surges. Power plants have to dispatch their more expensive units to keep up, and the wholesale price of electricity rises with them.
Retail providers do not wait until August to react. They price future months based on what is called the forward curve, which is the market’s best guess today about what power will cost on each day going forward. Because everyone expects heavy summer demand, the forward curve for June, July, and August is almost always higher than the curve for the mild spring and fall months. When you sign a contract during peak season, you are buying at the top of that curve. That is the core reason Texas commercial electricity rates feel punishing in summer.
How ERCOT Demand and the Forward Curve Move Together
It helps to separate two things that show up on your bill. The energy charge is the part tied to the wholesale market and the forward curve. The delivery charge, often called the TDSP charge, covers the poles, wires, and meters that move power to your building. Your TDSP is your Transmission and Distribution Service Provider, which is CenterPoint Energy for most of the Houston area. TDSP rates are set by regulators and stay the same no matter which retail provider you choose.
The piece you actually shop and lock in is the energy charge. When you choose a fixed rate, you agree to one price per kilowatt-hour for the length of the term, which protects you if the forward curve climbs later. When you sit on a variable or index rate, your price floats with the market, so a brutal Texas summer can push your cost up fast. There is also basis, which is the local price difference between the broad Texas market and the Houston zone specifically. None of this is something you can control. What you can control is when you decide to lock.
A Houston Example: Why Timing Beats Luck
Say your business uses 200,000 kilowatt-hours a year and your current contract is set to expire in late July. If you wait until the expiration notice arrives to start shopping, you are negotiating during the hottest, most expensive stretch on the ERCOT calendar. Providers are quoting off a forward curve that has already priced in the heat, so the offers you see may look high across the board.
Now imagine you started looking in March or April instead. The same future summer demand exists, but you would be locking a rate during a calmer pricing window, often before the curve fully runs up. You could even sign a contract today that does not start until your current one ends, a common approach called a forward or blend and extend agreement. The kilowatt-hours you use do not change. The price you pay for them can, simply because of when you signed.
Your Pre-Summer Checklist
A few practical moves can keep summer from catching your budget off guard. Find your contract end date now, not when the renewal letter shows up. Start shopping rates three to six months before expiration, ideally outside peak summer. Ask whether a fixed rate fits your risk tolerance better than a variable one. Confirm whether your quote separates the energy charge from the CenterPoint TDSP delivery charge so you are comparing apples to apples. And keep a recent bill handy so any rate analysis reflects your real usage.
A Simple Next Step
You do not have to guess where the forward curve is headed or watch ERCOT demand forecasts yourself. That is what we do every day at Excelsior Energy. If you want a clear read on your current rate and whether locking now could save you money before the next price run, 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.