As temperatures begin to rise across the United States, many business leaders are focused on revenue growth, staffing, operations, and strategic initiatives for the second half of the year. However, one of the most overlooked threats to profitability during the summer months is energy cost volatility.

For many organizations, electricity is no longer a predictable operating expense. Energy costs are increasingly influenced by weather patterns, grid reliability concerns, infrastructure constraints, growing demand, and market dynamics that can change rapidly.

While utility bills may represent a relatively small percentage of total operating expenses for some businesses, they can still have a significant impact on margins—especially for organizations operating large facilities, manufacturing plants, healthcare campuses, warehouses, data centers, distribution centers, and multi-site operations.

The summer of 2026 is expected to bring warmer-than-average temperatures across much of the country. Although forecasts currently suggest a lower probability of extreme heat compared to some recent years, businesses should not assume they are insulated from energy price spikes.

Understanding how energy markets work—and taking proactive steps now—can help organizations reduce risk and better manage costs throughout the summer and beyond.

Why Summer Electricity Prices Tend to Increase

Electricity prices are driven by the basic economic principle of supply and demand.

During the summer months, demand rises significantly as air conditioning systems work harder to keep homes, offices, hospitals, schools, and industrial facilities comfortable and productive.

As temperatures climb, grid operators must bring additional generation resources online to satisfy growing demand. In many cases, those resources are more expensive to operate, resulting in higher wholesale electricity prices.

Several factors contribute to rising summer energy costs, including:

• Increased air conditioning demand
• Peak electricity consumption periods
• Higher strain on transmission infrastructure
• Regional supply constraints
• Weather-related disruptions
• Fuel supply fluctuations
• Grid reliability concerns

When these factors converge during periods of extreme heat, electricity markets can experience significant volatility.

The Long-Term Trend: America Is Getting Warmer

Historical weather data reveals a clear trend toward warmer temperatures across the United States.

Many of the warmest years ever recorded have occurred within the last two decades. This trend has important implications for energy markets because warmer temperatures generally translate into greater demand for cooling.

As temperatures increase, businesses can expect:

• Higher cooling requirements
• Greater electricity consumption
• Increased strain on power grids
• More frequent periods of peak demand
• Greater potential for price volatility

For organizations with significant energy usage, these trends can have a meaningful financial impact over time.

Cooling Degree Days: A Key Indicator for Energy Demand

One of the most important metrics used by energy professionals is Cooling Degree Days (CDDs).

Cooling Degree Days measure how much—and for how long—outside temperatures exceed 65 degrees Fahrenheit. The higher the number of Cooling Degree Days, the more energy is typically required to cool buildings and facilities.

Data from major metropolitan regions shows a steady upward trend in Cooling Degree Days over time.

This means businesses are likely to face:

• More cooling demand
• Longer cooling seasons
• Increased electricity consumption
• Greater pressure on electrical infrastructure

For organizations looking to control costs, understanding these trends is an important part of long-term energy planning.

What Recent Summers Have Taught Us

The summer of 2024 serves as a powerful example of how quickly electricity markets can become volatile.

Although many regions experienced only brief periods of above-normal temperatures, electricity markets reacted dramatically. In several major markets, wholesale power prices surged to levels many times higher than normal.

These events demonstrated several important realities:

• Short-term weather events can have significant financial consequences.
• Electricity prices can rise rapidly with little warning.
• Market volatility can occur even without a prolonged heatwave.
• Organizations without a strategy may face substantially higher costs.

Perhaps most importantly, businesses do not need months of extreme temperatures to experience energy price shocks. Just a few consecutive days of elevated demand can trigger significant market movements.

What the Summer of 2026 Could Look Like

Current forecasts suggest much of the continental United States will experience above-average temperatures during the summer of 2026.

While some weather patterns may moderate the intensity of summer heat in certain regions, energy experts continue to monitor conditions closely.

Forecasts can change quickly, and even modest increases in temperature can significantly affect electricity demand.

The most likely scenario includes:

• Above-average summer temperatures
• Periodic regional heat events
• Isolated price spikes
• Continued growth in electricity demand

However, businesses should also prepare for less favorable scenarios, including extended heatwaves, drought conditions, severe weather events, or unexpected grid disruptions.

Additional Challenges Facing the Grid

Weather is only one part of the equation.

Grid operators across North America are managing several long-term challenges that could impact electricity prices and reliability.

Rising Electricity Demand

Demand continues to increase due to several factors, including:

• Population growth
• Economic expansion
• Electrification initiatives
• Increased manufacturing activity
• Data center growth
• Artificial intelligence infrastructure

As demand grows, maintaining grid reliability becomes increasingly complex.

Changing Generation Resources

The generation mix across the country continues to evolve.

Utilities and grid operators must balance reliability requirements, environmental objectives, capacity needs, and economic considerations. This transition creates both opportunities and challenges for electricity markets.

Transmission Constraints

Many regions continue to face transmission limitations that can restrict the efficient movement of electricity.

Transmission bottlenecks can contribute to:

• Regional price spikes
• Congestion charges
• Reliability concerns
• Higher delivery costs

Weather Uncertainty

Severe weather events can quickly alter market conditions.

Potential disruptions include:

• Heat waves
• Hurricanes
• Droughts
• Flooding
• Severe storms
• Fuel supply interruptions

Any of these events can impact both electricity availability and pricing.

Areas of Elevated Concern

Industry reliability assessments have identified several regions that warrant close monitoring during the summer months.

Areas of concern generally share one or more of the following characteristics:

• Rapid demand growth
• Limited reserve margins
• Transmission constraints
• Generation challenges
• Weather-related vulnerabilities

While most regions are expected to maintain adequate operating reserves under normal conditions, forecasts can change quickly when unexpected events occur.

Business leaders should remember that today's favorable outlook can change tomorrow if weather conditions become more extreme.

Why Capacity and Transmission Costs Matter

Many organizations focus exclusively on the energy portion of their utility bill. However, non-energy charges are increasingly becoming major cost drivers.

Two of the most significant components are capacity charges and transmission charges.

Capacity Charges help ensure that sufficient generation resources are available to meet future peak demand. These costs are designed to support long-term grid reliability and resource availability.

Transmission Charges support the infrastructure required to move electricity from generation sources to end users. As transmission systems expand and modernize, these costs continue to grow in many markets.

In numerous deregulated markets, both charges are heavily influenced by a facility's electricity usage during specific peak-demand periods.

Organizations that can strategically reduce consumption during those critical periods may be able to significantly lower future utility expenses.

Common strategies include:

• Load shifting
• Demand response participation
• Pre-cooling facilities
• Operational scheduling adjustments
• Automated energy controls
• Building management optimization
• Equipment efficiency improvements

These initiatives can generate meaningful savings without negatively impacting day-to-day operations.

What Businesses Should Be Doing Right Now

Waiting until temperatures reach their seasonal peak is rarely the best strategy.

Organizations should evaluate their energy position before market volatility increases.

Here are five steps every business should consider taking before summer energy demand reaches its peak.

Review Existing Energy Contracts

Take time to evaluate your current energy agreements, including:

• Contract expiration dates
• Pricing structures
• Renewal provisions
• Market exposure
• Supplier options

Many organizations discover they have opportunities available long before a contract reaches its renewal date.

Assess Market Exposure

Determine whether any portion of your electricity costs remains exposed to short-term market fluctuations.

Understanding your level of risk is critical when developing a long-term procurement strategy.

Analyze Demand Patterns

Review historical usage data and identify opportunities to reduce consumption during costly peak-demand periods.

Areas worth evaluating include:

• Demand reduction opportunities
• Peak-load management
• Load shifting strategies
• Operational improvements

Even modest changes can produce meaningful savings over time.

Consider Strategic Hedging

Many organizations use layered purchasing strategies to reduce risk while maintaining flexibility.

A partial hedge can help protect against worst-case market scenarios while still allowing the organization to benefit if market conditions improve.

The objective is not to predict the future perfectly. The objective is to reduce exposure to extreme outcomes.

Develop a Procurement Strategy

Energy purchasing should be treated as a strategic initiative rather than a last-minute administrative task.

Organizations that plan ahead are often better positioned to:

• Manage risk
• Control costs
• Improve budgeting accuracy
• Capitalize on favorable market conditions

A proactive procurement strategy can help create greater cost certainty while reducing the likelihood of unexpected energy expenses.

The Cost of Waiting

One of the most common mistakes businesses make is delaying energy procurement decisions until prices have already moved higher.

When markets become stressed, organizations that remain exposed to short-term pricing can experience:

• Higher electricity costs
• Budget overruns
• Reduced profitability
• Increased forecasting challenges

Conversely, organizations that prepare in advance generally have more options and greater flexibility.

The objective is not to perfectly predict the future. The objective is to develop a strategy that performs well across multiple market scenarios.

Final Thoughts

The summer of 2026 presents both risks and opportunities for energy consumers.

Businesses face a combination of:

• Rising electricity demand
• Weather uncertainty
• Infrastructure constraints
• Grid reliability challenges
• Potential market volatility

Organizations that proactively review their contracts, evaluate their exposure, and develop a thoughtful energy strategy will be better positioned to navigate whatever conditions emerge.

The most successful organizations do not wait for volatility to arrive before taking action. They prepare in advance.

Now is an ideal time to:

• Review current energy contracts
• Assess procurement strategies
• Analyze usage patterns
• Explore cost-reduction opportunities
• Develop a risk-management plan

A relatively small investment of time today could help your organization avoid significant energy cost increases tomorrow.

Source & Attribution

This article is a summary and adaptation of research originally published by Brendan Boyle, Director of Market Intelligence at Transparent Energy, in June 2026. The original work examined summer energy market conditions, electricity pricing trends, weather forecasts, grid reliability concerns, and procurement considerations for commercial energy consumers.  To learn more, Contact Us.