Is There a 'Best Time of Year' to Sign a Commercial Electricity Contract?

For businesses navigating the complexity of commercial electricity contracts, timing can make a big difference in cost. It is often said that spring and fall— the “shoulder months”—brings lower prices, but the reality is a little more nuanced. Seasonal price trends do play a part, but locking in a rate when the market is more favorable often matters more than waiting for a particular time of year or your current contract’s expiration. Understanding these patterns can help you make smarter decisions and potentially save more money.

Shoulder Months vs. Peak Seasons

Electricity pricing is heavily influenced by supply and demand dynamics, which tend to follow predictable seasonal patterns. Summer cooling demand - driven by electric chillers and HVAC systems - typically pushes electricity prices higher. In winter, natural gas drives most of the heating demand, often leading to higher overall energy prices. These shoulder months, which are the transitional periods between the more extreme seasons, can sometimes offer a pricing advantage for businesses willing to time their contract signings carefully.

That said, while individual months in spring and fall may have lower rates, fixed contracts usually span multiple months—including peak periods—which can offset these savings. For example, a 12-month contract signed in the fall might include expensive winter months, driving the average cost up despite the initial lower rate.

Why Timing Your Contract to Market Conditions Matters

Beyond seasonal weather-based trends, future wholesale electricity market prices are a crucial factor in selecting the best contract timing. These prices represent the expected cost of electricity over the upcoming months or years based on predictions about fuel prices, supply conditions, and regulatory changes.

Signing a contract when market prices are low locks in stable rates that protect you from unpredictable price spikes during high-demand months. Conversely, waiting until your current contract nears expiration to shop risks missing favorable market conditions.

Experts often recommend monitoring wholesale market trends. Suppliers’ trading and market analysis teams often generate forecasts using tools like historical price data, weather models, and regulatory outlooks. For instance, if future prices show an upward trajectory due to anticipated fuel shortages or regulations, locking in a fixed-rate contract early might save your business considerable money.

Flexibility and Contract Length

Another important consideration is contract length and flexibility. Shorter contracts can allow you to capitalize on improving market conditions, but they also come with risks, including price increases or less predictability. Longer contracts can stabilize your electricity costs and protect further against market volatility, but might lock you in when prices eventually drop (although some suppliers may allow you to “blend and extend” your contract if that happens).

Some businesses opt for contracts that mix fixed-price blocks with variable-rate portions, balancing stability and market responsiveness.

Customize Your Energy Supply

By blending awareness of seasonal price patterns with more precise market timing and contract choices, you can turn energy supply management from a routine task into a strategic advantage. Catalyst Power® helps businesses capture more value by tailoring retail electricity plans to your specific needs and market conditions, making it easier to secure competitive prices. Reach out to our Energy Experts today to learn how you can optimize your energy supply and gain greater control over your electricity costs.