Why Texas electricity rates are rising — and why longer-term plans may make sense right now
Texas electricity prices have been under pressure in recent years, and the biggest reason is simple: demand is rising fast. ERCOT says that growth is being driven by continued population and economic expansion, along with large new loads such as data centers, industrial facilities, oil and gas electrification, and cryptocurrency mining.
ERCOT’s recent load data and forecasts show how quickly the system is changing. Recent peak demand has been in the mid-80-gigawatt range, and ERCOT’s 2025 long-term forecast puts normal-weather summer peak demand at about 85.8 GW in 2025, rising to about 138.9 GW by 2030. In more extreme winter scenarios, ERCOT shows system peaks reaching roughly 146.7 GW to 155.3 GW by 2030.
That demand growth is one reason Texas is seeing such a large pipeline of new generation projects. Reporting based on project trackers and permit filings shows that Texas has more than 100 proposed gas-fired power plant projects, with roughly 58 GW of potential additional capacity. But many of those projects are still in proposal or preconstruction stages, so they should not be treated as guaranteed future supply.
Data centers and AI-related infrastructure are adding to the pressure. The EIA has reported that large flexible loads in ERCOT — a category that includes many large-scale computing facilities — are expected to account for about 54 billion kWh in 2025, up nearly 60% from 2024, or about 10% of total ERCOT consumption.
It is also worth being careful about saying rates rose “almost entirely” because of demand. Demand is a major factor, but Texas power prices are also influenced by natural gas costs, transmission congestion, infrastructure investment, weather, and the overall cost of serving load. EIA notes that wholesale prices reflect both fuel costs and transmission congestion, while Dallas Fed analysis says Texas retail electricity prices kept drifting upward even as natural gas prices fell for part of 2024.
From a shopping perspective, that backdrop is why Lantern is currently favoring longer-term fixed plans. While some 12-month offers may look cheaper today than 24- or 36-month plans, the broader market outlook suggests that waiting to renew next year could expose customers to higher prices. For customers who want price certainty, a 36-month fixed-rate plan may be the more prudent option right now.
