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Understanding the Summer Surge: Why Energy Rates Increase When the Temperature Rises

June 1, 2023

As the mercury climbs and the sun beats down during the summer months, you may notice a slight spike in your energy bills due to increasing rates and AC use. Have you ever wondered why energy rates tend to increase during this time of the year? Let’s explore the factors behind the summer surge in energy rates and shed light on how you can manage your energy costs effectively.

Increased Demand for Electricity:

One of the primary reasons for the uptick in energy rates during summer months is the increased demand for electricity. As temperatures soar, air conditioners work harder to keep our homes cool, pushing the demand for electricity to peak levels. The strain on the power grid during this time requires utility companies to use peaking power plants to generate and distribute more electricity, leading to higher costs that are passed on to consumers.


If a utility or energy provider doesn’t have enough available generation to meet demand, they’re left with the choice of buying more power from a neighboring state (usually at a steep price), or implementing rolling blackouts, like what happened in past summers in California and Texas.

Cost of Fuel and Generation:

The production of electricity relies on various fuel sources, such as natural gas, coal, and renewable energy. During the summer, the demand for natural gas increases for electricity generation as well. As a result, the cost of fuel rises, affecting the overall cost of producing electricity. Additionally, if there is a higher reliance on fossil fuels due to increased demand, the costs associated with their extraction, transportation, and emissions compliance may contribute to the rise in energy rates.

Maintenance and Infrastructure Upgrades:

There’s also ongoing maintenance activities and infrastructure upgrades to ensure the reliability of the power grid. These projects require significant investments, and the costs are ultimately reflected in energy rates. Upgrading aging infrastructure, improving transmission lines, and investing in smart grid technologies are essential to maintain a reliable and efficient electrical system.

Regulatory and Market Factors:

Energy rates are influenced by regulatory policies and market dynamics as well. Changes in government regulations, taxes, and environmental policies can impact the overall cost of electricity production and distribution. Additionally, market forces such as fluctuations in fuel prices, supply and demand imbalances, and regional energy markets can contribute to the rise in energy rates during the summer months.

While energy rates may increase during the summer, there are several steps you can take to manage your energy costs effectively.




  1. Embrace Energy Efficiency: Invest in energy-efficient appliances, seal air leaks, and insulate your home to reduce the need for excessive cooling. “Fans use around 1% of the electricity consumed by air conditioners. You could leave a fan running for a full 24 hours and still use less energy than 15 minutes of air conditioning.” – USA TODAY
  1. Practice Smart Energy Usage: Shift your energy-intensive activities to off-peak hours, when energy rates are generally lower. Be mindful of phantom loads by unplugging electronics and chargers when not in use. A gaming system alone can add over $19 a month. Use timers or smart plugs to schedule shutting off electronics at the end of the day for an average savings of $10 per month.
  1. Optimize Your Cooling: HVAC costs are nearly half your energy bill. Consider using programmable or smart thermostats to adjust the temperature based on occupancy and time of day, including scheduling your thermostat to pre-cool your home in advance of the on-peak, higher cost period. Automatically raising the temp during the day can cut costs by as much as 10% a year.
  1. Close Your Curtains: According to, “During summer days, you should close draperies on windows receiving direct sunlight to prevent heat gain. Studies demonstrate that medium-colored draperies with white-plastic backings can reduce heat gains by 33%.”
  1. Monitor Your Energy Usage: Take advantage of energy monitoring tools provided by your utility company, like the DTE Insight App by Powerley. Use the DTE Insight app to set a monthly budget and receive alerts to stay on track – savings up to $10 per month.
DTE Insight App with HVAC usage breakdown

If you live in Michigan and have DTE as your electricity provider, then you can download the app now!

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Click here to learn more about the DTE Insight App

The summer surge in energy rates can put a strain on our budgets, but Powerley believes that with a mindful approach, energy-saving habits, and the right energy monitoring tools in place, it’s possible to manage your energy costs effectively.

Powerley provides tools and features to help everyone understand ALL of the factors contributing to energy bills; including how much you use, when you use it, and the breakdown by appliance. Understanding the factors and following the steps above will not only save money but also contribute to a more sustainable future. So, stay cool, stay informed, and enjoy a summer with controlled energy costs.

Estimated energy savings are based on the average electric bill for Michigan households.


U.S. Energy Information Administration; McKinsey & Company: Sizing the Potential of Behavioral Energy-Efficiency Initiatives in the U.S. Residential Market


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