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Explore Seasonal Pricing Trends for Low Commercial Energy Rates

Shopping for a cost-effective business energy plan is no easy task. Between comparing retail energy providers and contract terms to understanding volatile pricing dynamics, energy shopping can be overwhelming. While some aspects of the energy industry are completely out of our control, understanding pricing trends provides some clarity. Understanding seasonal energy pricing trends empowers businesses to be proactive in finding the lowest energy rates on the market.  

What Seasons Have the Lowest Energy Prices?

Energy demand and energy pricing go hand-in-hand. The milder energy demands of spring result in low commercial electricity prices. On the other hand, the low energy demands of fall result in lower natural gas prices. As a general rule, energy prices increase as energy demands increase. That’s why it’s best to avoid shopping for energy during the peak heating and cooling demands of summer and winter.

Spring and summer electricity pricing trends

The biggest factors affecting warm weather energy prices are increased usage of air conditioning and fans. Nearly half of the energy consumed at a home or business goes towards heating and cooling. As temperatures jump off the charts, businesses and homeowners start cranking up their HVAC systems.  

When everyone puts significant demands on the electrical grid, energy prices increase. Late May through early September are often the most expensive months for electricity bills. As early fall weather starts to break around Labor Day, energy prices finally lower to a more stable level. 

Fall and winter natural gas pricing trends 

While electricity is particularly volatile in scorching summer months, natural gas prices increase as temperatures begin to drop. Natural gas consumers are likely to notice a short dip in prices at the beginning of September. This brief decrease in pricing in late August to Mid-September is an annual trend. Each year the fall natural gas pricing decrease occurs as suppliers make the switch from expensive summer-grade gas to less expensive winter-grade gas. This small pocket of time can be ideal for locking in a low natural gas rate before increased heating demand affects rates.  

About 60% of the United States use natural gas for space heating, cooling, and cooking. As temperatures begin to drop, the demand for heating and warm meals increases. On average, Mid-September through February are the peak winter months for gas pricing in the United States. However, this can fluctuate depending on your specific climate. Colder states will feel the sting of winter pricing sooner than more moderate climates. 

Do Energy Rates Change Throughout the Day?

Did you know energy rates can change depending on the time of day? Daily electricity demands can affect your energy bill as well, especially if you’re on a variable rate plan. High electricity demands can affect the cost of supplying energy to consumers. Daily pricing fluctuations are typically reflected in energy bills as demand charges and time-of-use rates. These unexpected fees on your bills exist to encourage customers to consume energy during less demanding times. Understanding when these extra fees occur can help you lower your monthly utility bills. 

What are the demand charges on my energy bill?

Commercial electrical demand charges are fees businesses pay based on the highest amount of electricity they use within a set period, typically measured in kilowatts (kW). It’s like paying a premium for the peak amount of energy you need, regardless of how much you use overall. Essentially, the more energy you consume during their demand charge interval, the higher the demand charge will be. 

Demand charges exist to allow energy providers the ability to equitably cover the costs associated with maintaining a reliable supply of power during peak demand. Electricity consumers with the greatest energy demands pay an equitable fee for their needs. Demand charges are determined by each energy supplier, so it’s important to keep them in mind when comparing energy contracts. 

What are time-of-use electricity rates?

Time-of-use (TOU) rates are part of supplier rate structures that adjust the rate you pay for electricity throughout the day. Occasionally called time-varying rates, TOU rates are low when electrical demand is low. Conversely, TOU rates increase during periods of peak demand. The TOU rate structure may be mandated by your local government or a unique stipulation of your energy contract. 

While TOU rates vary by season and supplier, peak demand periods for businesses are often 4pm-9pm on weekdays. Keep seasonality in mind with TOU rates as well. Mid-afternoon on a hot summer day is likely a high demand time. Furthermore, early morning on a cold winter day could trigger TOU pricing as well. Regardless of the season, energy efficiency and practicing conservation can help mitigate these costs. 

Shop Smarter, Not Harder, by Partnering with Integrity Energy

Understanding seasonal pricing trends and energy supplier rate structures is essential for managing business energy expenses. Understanding predictable trends and market dynamics at play empowers a proactive approach to energy management and lowering bills. Fortunately, you don’t have to navigate the complex energy market alone. Leverage the expertise of Integrity Energy’s brokers to secure a low, fixed rate while avoiding undesirable demand charges. With Integrity Energy, your dedicated account manager keeps their eye on the market so you can focus on what makes your business thrive. Request a free quote to shop the lowest energy rates today! 

Frequently Asked Questions (FAQ)

1. When is electricity the most expensive?

Electricity is most expensive during the peak energy demands of summer and winter. Additionally, electricity is more expensive during specific times of the day, typically between 4pm-9pm on weekdays.

2. When is energy the cheapest during the year?

Energy is often at the cheapest rate during the mild climate of early spring and fall. Electricity often has the lowest rates during early spring, before summer heat sets in. Natural gas often has the lowest rates at the beginning of September, when suppliers make the switch from summer-grade gas to less expensive winter-grade gas. 

3. What time of day is electricity cheapest?

While it varies depending on your location and energy supplier, electricity is often cheapest during lower demand periods like midday and midnight. High demand periods, like mid-afternoon during the summer or a cold winter morning, are prone to high electricity rates.

4. How can I reduce the demand charges in my electricity bill?

The best method for reducing demand charges is understanding the time periods your provider applies these charges. If your energy contract has TOU rates with a specific schedule, try shifting some operations to off-peak times. For example, if your business uses electric vehicles (EVs), consider charging them during lower demand periods such as overnight or early morning. This practice lowers energy consumption during peak demand periods, resulting in lower demand charges.

For additional answers to your energy industry questions, please visit our general FAQ page.