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Tips to Battle Skyrocketing Summer Energy Prices in Texas

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It’s that time of the year in Texas that everyone loves (or dreads): summer time! Hello grilling, swimming and running your air conditioner. Simultaneously, it’s also the time when your electricity bill skyrockets as you attempt to keep your home or business cool.

Two summers ago, many Texans experienced sticker shock as the state dealt with one of the hottest summers on record and in turn, electricity prices skyrocketed. The heat was unbearable and was made worse by the lack of rain. This year could be a repeat but only time will tell. The risks due to a hot summer are greater this year because the state’s drought situation has worsened over the past six months. Last year we didn’t experience that as the state saw a significant amount of rain specifically in the eastern part of the state which kept temperatures down and the ground moist which helped cap the radiation heating throughout the hottest parts of the daytime. It’s a good time to think about what you can do to protect yourself from the possible upcoming energy price spikes. Read more for some tips.

  1. Business owners should scrutinize their energy contracts. Take caution in being on any type of index product during the summer months. Index, floating or market-based rate products may provide savings versus a fixed price over a term, but are especially risky during a hot summer. The index price is based on the “real time prices” calculated by ERCOT for each 15-minute interval, based on supply and demand requirement of the grid; these prices can rise rapidly during extreme conditions. In 2011 this price was capped at $3,000 per MWh (or $3.00 per KWh)and this cap has increased to $5,000 per MWh effective June 1, 2013. The higher prices are necessary to balance supply and demand by incenting more generation and conservation, but can results in significantly higher prices for buyers.
  2. Consider the demand side. Direct Energy now offers Demand Response programs and specific products than can assist customers in this way. Not familiar with demand response and demand management? Click here to learn more.
  3. Also consider little things that you can do to help reduce the demand and strain on ERCOT’s grid, such as keeping all the doors and windows shut, turn the thermostat up a few degrees when you’re not home or at work, keep the AC running at a minimum during the peak demand hours of the day, or between 4 and 7 pm, when system demand and real-time prices are highest. Alternatively, run the AC a little more in the off-peak hours, especially overnight, to cool off the house in advance.
  4. Lastly, enjoy the summer and [try to] stay cool (in the most efficient manner, of course)!

Check out these links to recent ERCOT-related articles to learn more:
ERCOT expects a hot summer: Electricity use alerts anticipated
ERCOT forecasts 2014 reserve margin above target, more evidence of working energy

Posted: May 09, 2013

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