Last Updated on February 8, 2024 by Mary Pressler

What Causes Electricity Rates to Spike in Texas?

Texas has a competitive electricity market, and the kilowatt-hour price is constantly changing due to supply and demand.

On a hot summer day, when the state is using a lot of electricity, the kWh rate increases. This is because all generators must be brought online, including those that are expensive to use. Since homes and businesses use their air conditioners at full capacity, power plants and transmission lines are burdened.

On the other hand, when there is surplus production from the abundant wind farms in Texas, electricity prices drop. In the wholesale market, electricity prices can reach up to $9 per kWh during high-demand periods.

Controlling Energy Expenses in When Electric Rates are High 

Summer will be here before you know it, and most of us are prepared for a higher light bill. Energy price spikes are inevitable, but there are many ways to combat the expenses. At Quick Electricity, we’re Texans helping Texans, so we’re sharing simple things homeowners can do to help control energy expenses during our hottest months.

Texas Electricity Grid Explained

The Biggest Energy Cost in Texas: Air Conditioning

Air conditioning is the highest electricity expense on hot summer days, and especially if you are dealing with the Texas heat. While you can’t control the price of electricity, you can reduce the amount used by your air conditioner.

Here’s three ways to use less air conditioning:

  • Set back the thermostat. According to the US Department of Energy, you can reduce air conditioning costs by up to 3% for every 1°F increase in the thermostat.
  • Make sure your home is well insulated with no air leaks. This will reduce the amount of heat that enters your building, lowering the workload on air conditioners. Weatherproofing your home is simple and very cost-effective. 
  • Upgrade to a more efficient air conditioning system. Mini-splits with a high Seasonal Energy Efficiency Ratio (SEER) are recommended for individual rooms or small commercial spaces. Owners of larger buildings can deploy a Variable Refrigerant Flow system (VRF) or a high-efficiency water-cooled chiller.

Setting back the thermostat is the simplest measure, since it requires no investment on your part. However, you can save energy more easily with a smart thermostat, which learns your usage habits on its own. Smart thermostats can find the best times for setback without affecting your comfort.

Upgrading your air conditioner unit and improving your building envelope are viable measures against energy price spikes.

Quick Tip: Perform a DIY home energy audit. This will reveal your insulation deficiencies, air leaks, and help you to identify the energy suckers in your home. 

Keeping Your Electricity Usage In Check 

Air conditioning will represent the lion’s share of your power bill during summer. However, other appliances can also use plenty of energy if left unwatched. In the event that electric rates spike, it’s an important habit to use less power at home. 

Every property is unique, but the following devices tend to have a high consumption:

    • Any heating device that consumes electricity will likely have a high energy footprint. Two examples are electric water heaters and coffee machines.
    • Lighting systems consume a lot of energy when they have a long operating schedule. For example, lighting has a high cost in offices with a 9 to 5 schedule. Energy consultants often recommend upgrading to LED lighting.
    • Appliances with motors typically consume a lot of power. For example, pool pumping systems should be programmed for minimal use when electricity prices are high.

In general, you should use electrical appliances as little as possible on hot summer days, since kilowatt-hour prices can get very high. However, you will achieve the best results if your energy conservation measures focus on the appliances described above: air conditioning in the first place, but also heating devices, lighting fixtures and motor appliances.

Another viable strategy is locking a fixed-rate electricity plan since this ensures a constant kWh price. However, using the air conditioner efficiently is still important in this case. While you are spared from peaks in the electricity price, the kWh amount can still be high if the air conditioner is used without care.

Quick Electricity Usage Checklist

Know which home appliances use the most energy and what you can do to conserve.

Appliance Electricity Consumption Patterns
Air conditioner The power consumption is high, and the operating schedule can be very long during summer. Air conditioning will likely be the largest electrical expense in your home.
Electric space heater Gas heaters are more common due to their lower operating cost. However, you can expect high power bills during winter if you use electric resistance heating. An electric heat pump will normally cut consumption by 50% or more.
Electric water heater Gas heating is more common, for the same reason as above. Heat pumps are recommended if you plan to use electricity.
Electric clothes dryers It can consume as much electricity as four room air conditioners operating at the same time. The clothes dryer should be used as little as possible.
Clothes iron Avoid leaving it on for long periods, since it uses an electric resistance to produce heat.
Coffeemaker This appliance also uses electric resistance, and should not be left on for extended periods.
Ceiling and pedestal fans Their wattage is moderate, but they are often left operating when not needed. This can accumulate many kilowatt-hours of consumption in the long run.
Pumping systems If your property needs a pump, it should have a control to minimize its runtime. Consider a NEMA Premium Efficiency motor to save even more electricity.
Lighting fixtures with long schedules An individual lighting fixture does not use much energy, but the total consumption counts. Upgrade the lighting fixtures you use the most to LED.
Desktop and laptop computers Desktop computers use more power than laptops, and both tend to be left on for long hours when not in use. If you will not return to the computer soon, turn it off.

Note: If you have an old refrigerator, it will probably represent a large fraction of your electricity consumption. Since you cannot reduce its operating schedule, the best recommendation is upgrading to a newer unit with an ENERGY STAR certification.

Avoid Price Spikes with a Fixed Rate Electricity Contract

As temps warm up, it’s a good time to switch to fixed rate energy. Unless you have a fixed price contract, you can expect to pay more for every kWh on hot summer days.  

When you choose a fixed energy plan, your rate does not change for the life of your contract. 12, 24 and 36 month terms are favorable for homeowners who want to avoid rate hikes.

As a bonus, many long term energy plans include freebies such as Nest Learning Thermostats and Google smart home devices.

Quick Electricity features the best fixed rate deals in Texas from the top energy providers in the state. Take a look and switch in minutes!

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