Since deregulation began within the state of Texas at the turn of the millennium, Texans have learned as much or more about how electricity works than people in any other place in the world. Some of the lessons learned were great for the foundation of understanding how the market would affect customers in principle. Some of the lessons learned could be considered more symptomatic of the times than as part of the bedrock of how the market will always function.

One of the lessons that we’ve all learned and been taught to expect is that electricity rates will always go up, sometimes way up, during the summer heat season. The notion of the rate increasing and the bills increasing seems almost intuitive. And frankly, why wouldn’t it? Since the days before deregulation, Reliant’s rates jumped each summer from May – November.

Was the seasonal rate increase a product of additional expenses during that period? Greed? State mandate?

The reality of it is that it was almost exclusively a product of the companies incurring additional expenses in the summer time. But shouldn’t the cost of generating electricity more or less remain constant between the winter and the summer? The simple answer is usually “no”.


Given that it is much hotter in the summer within the state of Texas, more air conditioners are run, for both homes and businesses. It takes more A/C power to heat the same room at the same temperature as the outside heats up, too. The A/Cs have to run longer and later to keep homes and businesses cooled off. As more electricity is needed on a household by household basis, and a business by business basis, more electricity has to be generated and placed onto the state’s electricity grid. As that happens, more electricity generators need to be run to keep up with demand than in other times of the year. The generators that are forced to come on line during this period are usually more expensive to run for the provider – which is why they’re not the first generators online each day. When the generation becomes more expensive, the price increase is spread down the supply chain. The Retail Electricity Provider has to pay more and the customer, ultimately, has to pay more as well.