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COVID-19 Pandemic Affects Electricity Demand, Prices

Summer temperatures always increase the load on electric grids across the country, but this summer, the COVID-19 pandemic has been another factor generators have had to consider. With many more people working from home, the demand on the system was expected to be higher this summer than in previous years. However, the question was to what extent business closures would lower the demand. According to Andrew Barlow of the Texas Public Utility Commission, “There has been an uptick, like I said, in the residential use of electricity, and it is broadly accepted that it is simply a factor of people working more from home, but, at the same time, I would argue that there is an offset in class A office space using less electricity because there are fewer people in them.”

Combined with extreme temperatures, this can cause uncertainty in the energy market. Prior to a period of triple-digit heat last month, ERCOT announced that demand could reach record-breaking highs. Ultimately, the records weren’t broken, but they did come within 500 megawatts of both their weekend record and their total record.

Why Does Demand Matter

Energy providers essentially gamble on the availability of energy, paying ahead of time for the energy they believe their customers will use. If the provider has to come back and buy extra energy to make up the difference in a low estimate, they will have to pay spot market rates, and at times this can be passed on to the customers. If you are paying month-to-month rates for your home or business–and if your provider doesn’t hedge their bets well enough–you could be held hostage to these market fluctuations.

The upside to all of this is that a long-term contract can protect you from these fluctuations, and prompt renewals can prevent you from accidentally slipping into those month-to-month rates. Once a provider agrees to a specific rate for a specific contract term, you are safe from increases even in times of the worst demand spikes. Not all providers are equal though, and contract terms can vary. TruEnergy can help you compare dozens of providers to find one that meets your specific needs at the lowest rate available. All our consultations come with no cost or obligation, so contact us today with any questions.