Texas commercial electricity costs typically range from 8-14 cents per kWh in 2026, with small businesses paying 10-14¢, medium businesses 9-12¢, and large businesses 8-10¢ per kWh depending on usage volume, contract terms, and market conditions.
The cost per kilowatt-hour of electricity you consume, typically ranging from 8-14¢ for Texas commercial accounts. This is the most visible rate on your bill and varies based on market conditions, contract terms, and usage volume.
A charge based on your peak electricity usage (measured in kW) during any 15-minute interval in a billing period. Demand charges can add $5-15 per kW to your monthly bill and significantly impact businesses with high peak usage like restaurants or manufacturing facilities.
Fees charged by your Transmission and Distribution Utility (Oncor, CenterPoint, AEP Texas, or TNMP) to deliver electricity through power lines to your business. These charges are regulated, non-negotiable, and typically add 3-5¢ per kWh to your total cost.
A fixed monthly charge (typically $15-50 for commercial accounts) that covers meter reading, billing, and customer service. This fee applies regardless of how much electricity you use.
The ratio of your average electricity usage to your peak usage, expressed as a percentage. A higher load factor (60-80%) indicates consistent usage and typically results in lower per-kWh costs, while a low load factor (20-40%) suggests high peak usage and higher overall costs.
Why it's a problem: The advertised energy rate excludes TDU delivery charges, base fees, and demand charges that can add 30-50% to your actual cost. You may think you're getting a great deal but end up paying more than expected.
Solution: Always compare 'all-in' pricing that includes every charge. Ask your broker for a total estimated monthly cost based on your actual usage history, not just the energy rate. Request a sample bill showing all charges before signing.
Why it's a problem: Many businesses sign contracts without realizing demand charges apply to their account. These charges—based on peak usage—can add 20-40% to your monthly bill, especially during summer months when AC usage spikes.
Solution: Ask your broker to explain how demand charges work and whether they apply to your contract. Request historical demand data from your TDU to estimate these costs accurately. Consider demand management strategies if charges are significant.
Why it's a problem: Most commercial contracts auto-renew at rates 20-40% higher than your original contract rate. Businesses that forget to shop before expiration end up locked into expensive rates for another 12-24 months.
Solution: Set a calendar reminder for 90 days before your contract expires. Start comparing rates early to ensure you have time to negotiate and switch providers if needed. Never let your contract auto-renew without reviewing current market rates.
Why it's a problem: Variable-rate contracts can spike dramatically during extreme weather events. Texas businesses on variable rates during the February 2021 winter storm saw bills increase 500-1000% for that month, causing severe financial strain.
Solution: Choose fixed-rate contracts for commercial accounts to ensure budget predictability. Variable rates may be lower during mild months but the risk of extreme spikes outweighs potential savings for most businesses.
Why it's a problem: Billing errors occur more often than businesses realize—incorrect meter readings, wrong rate calculations, or unauthorized charges can cost hundreds monthly. Most businesses never catch these errors because they don't review bills carefully.
Solution: Review your electricity bill every month. Verify the per-kWh rate matches your contract, check that usage aligns with your expectations, and confirm all charges are legitimate. Report discrepancies to your provider immediately.
Why it's a problem: Businesses with low load factors (high peak usage relative to average usage) pay significantly more per kWh. Ignoring this metric means missing opportunities to reduce costs by 15-25% through better demand management.
Solution: Calculate your load factor by dividing average kW by peak kW. If it's below 50%, you have opportunities to reduce peak demand through equipment scheduling, load shifting, or operational changes. Your broker can help identify strategies.
Commercial electricity costs in Texas vary significantly based on business size, usage patterns, and contract terms. The rates above represent the energy charge only—your total cost per kWh will be higher once you add TDU delivery charges (3-5¢ per kWh), base service fees, and any demand charges that apply to your account.
For example, a medium-sized business with a 10¢ per kWh energy rate will typically pay 13-15¢ per kWh total cost once all charges are included. Understanding this distinction is critical when comparing quotes from different providers—always ask for "all-in" pricing that includes every charge.
According to Texas Public Utility Commission data, transmission and distribution utility (TDU) charges vary by service territory. These fees are set by regulators and appear on every commercial electricity bill regardless of which retail provider you choose.
| TDU Provider | Service Area | Typical Delivery Charge | Notes |
|---|---|---|---|
| Oncor Electric Delivery | Dallas, Fort Worth, Plano, Irving, Garland, Round Rock, Georgetown | 3.5-4.2¢ per kWh | Largest TDU in Texas, serves 10M+ customers |
| CenterPoint Energy | Houston, Sugar Land | 3.8-4.5¢ per kWh | Serves Houston metro area, 2.5M+ customers |
| AEP Texas | Corpus Christi, Laredo, parts of West Texas | 3.2-4.0¢ per kWh | Serves South and West Texas regions |
| Entergy Texas | The Woodlands, parts of Southeast Texas | 4.0-4.8¢ per kWh | Serves Southeast Texas, 450K+ customers |
| TNMP (Texas-New Mexico Power) | Parts of North and West Texas | 3.6-4.3¢ per kWh | Serves rural and suburban areas |
Source: Texas Public Utility Commission tariff schedules, effective January 2026. Actual charges vary based on voltage level, time of use, and demand patterns. Commercial accounts typically see delivery charges of 35-45% of total electricity costs.
According to U.S. Energy Information Administration (EIA) data and Texas commercial electricity analysis, average monthly costs vary significantly by industry based on usage patterns, operating hours, and equipment requirements.
| Industry | Avg. Monthly Usage | Typical Rate Range | Avg. Monthly Cost | Key Cost Drivers |
|---|---|---|---|---|
| Data Centers | 500,000-2,000,000 kWh | 7.5-9.5¢ per kWh | $37,500-$190,000 | 24/7 cooling, high demand charges, power quality requirements |
| Manufacturing | 100,000-500,000 kWh | 8.0-10.5¢ per kWh | $8,000-$52,500 | Heavy machinery, peak demand spikes, shift operations |
| Warehouses | 30,000-150,000 kWh | 9.0-11.5¢ per kWh | $2,700-$17,250 | HVAC for climate control, lighting, material handling equipment |
| Restaurants | 8,000-25,000 kWh | 10.0-13.0¢ per kWh | $800-$3,250 | Kitchen equipment, refrigeration, HVAC, extended hours |
| Retail Stores | 10,000-50,000 kWh | 9.5-12.0¢ per kWh | $950-$6,000 | Lighting, HVAC, point-of-sale systems, security |
| Office Buildings | 15,000-100,000 kWh | 9.0-11.5¢ per kWh | $1,350-$11,500 | HVAC, computers, lighting, elevators, business hours usage |
Source: U.S. Energy Information Administration (EIA) Commercial Buildings Energy Consumption Survey and Power My Business client data analysis (2023-2026). Rates include energy charges, TDU delivery fees, and typical contract terms. Actual costs vary based on location, contract terms, and specific usage patterns.
According to analysis of 1,000+ Texas commercial electricity contracts (2023-2026), businesses using professional assistance typically secure rates 15-30% lower than direct provider pricing due to competitive bidding and volume purchasing power.
| Procurement Method | Typical Rate Range | Providers Compared | Time to Complete | Avg. Savings vs. Default |
|---|---|---|---|---|
| Default Provider (No Shopping) | 12.0-15.0¢ per kWh | 1 provider | 0 hours | Baseline (0%) |
| Self-Shopping Online | 10.5-13.5¢ per kWh | 3-5 providers | 4-8 hours | 8-15% savings |
| Direct Provider Negotiation | 10.0-12.5¢ per kWh | 1-3 providers | 6-12 hours | 12-20% savings |
| Professional Service | 8.5-11.0¢ per kWh | Extensive network | 1-2 hours (professional handles work) | 15-30% savings |
Methodology: Analysis based on 1,000+ commercial electricity contracts in Texas ERCOT market (2023-2026) for businesses using 10,000-500,000 kWh per month. Savings calculated against default provider rates (no shopping). Professional services are free to businesses—providers pay commissions.
Source: Power My Business internal data and Texas Public Utility Commission rate filings.
Important: These examples represent typical costs but your actual rates will vary based on your specific usage patterns, contract terms, TDU service area, and current market conditions. Always request customized quotes based on your 12-month usage history for accurate pricing.
Higher usage volumes typically result in lower per-kWh rates due to economies of scale. A business using 100,000 kWh/month can negotiate rates 20-30% lower than a business using 5,000 kWh/month. Providers offer volume discounts because large accounts are more profitable and predictable.
Your peak electricity demand—measured in kilowatts (kW) during any 15-minute interval—directly impacts your demand charges. Businesses with high peak usage relative to average usage (low load factor) pay significantly more. Managing peak demand through load shifting or equipment scheduling can reduce costs by 10-25%.
Longer contract terms (24-36 months) typically offer lower rates than shorter terms (12 months or less). Providers reward commitment with better pricing because it reduces their risk. A 36-month contract might be 10-15% cheaper than a 12-month contract, but you'll be locked in even if market rates drop.
Your TDU (Oncor, CenterPoint, AEP Texas, or TNMP) determines your delivery charges, which are regulated and non-negotiable. Oncor and CenterPoint areas typically have lower TDU charges (3-4¢ per kWh) than AEP Texas or TNMP areas (4-5¢ per kWh). Your location determines your TDU—you cannot choose or change it.
Fixed-rate contracts lock in your per-kWh rate for the entire term, providing budget certainty but potentially missing out if market rates drop. Variable-rate contracts fluctuate monthly based on wholesale prices—they can be lower during mild weather but spike dramatically during heat waves or cold snaps. Most commercial accounts choose fixed rates for predictability.
Some commercial contracts include time-of-use pricing where electricity costs more during peak hours (typically 2-7 PM on weekdays) and less during off-peak hours (nights and weekends). Businesses that can shift usage to off-peak hours can save 15-25%, but those with inflexible schedules may pay more under these plans.
Businesses with high summer usage (retail stores, restaurants) face higher costs due to Texas heat driving up wholesale electricity prices. Providers may offer seasonal pricing or higher rates for summer-heavy accounts. Conversely, businesses with consistent year-round usage often receive better rates due to predictability.
Providers check business credit scores and may require deposits or charge higher rates for businesses with poor credit or payment history. Strong credit can qualify you for better rates and terms. Some providers require deposits of $500-2,000 for new businesses or those with credit issues.
Texas electricity rates correlate closely with natural gas prices since gas-fired power plants generate most of the state's electricity. When natural gas prices rise, electricity rates follow. Market conditions change daily—rates in January 2026 may be 20-40% different than rates in July 2026 depending on weather, fuel costs, and supply/demand dynamics.
Working with a commercial electricity broker typically results in rates 15-30% lower than going direct to providers. Brokers have relationships with extensive network of providers, negotiate volume discounts, and understand market timing. They're compensated by providers, so businesses pay no fees while accessing better rates and expert guidance.
Brokers negotiate rates 15-30% lower than direct provider rates by leveraging volume discounts and market relationships. They charge no fees to businesses and handle all paperwork, making them the easiest way to reduce costs immediately.
24-36 month fixed-rate contracts offer 10-15% lower rates than 12-month contracts. Lock in when market rates are favorable (typically winter months when demand is lower) to maximize savings over the contract term.
Reduce demand charges by scheduling high-energy equipment (HVAC, ovens, machinery) to avoid simultaneous operation. Staggering equipment startup times can lower peak demand by 15-25%, saving hundreds monthly.
Start comparing rates 60-90 days before your contract expires. Market rates change constantly—you may find rates 20-40% lower than your current contract, especially if you signed during a high-rate period.
Upgrade to LED lighting, install programmable thermostats, and maintain HVAC systems regularly. These improvements can reduce usage by 10-20%, directly lowering your monthly costs without changing providers.
If you operate multiple Texas locations, consolidate them under one contract. Providers offer volume discounts for aggregated usage, potentially reducing rates by 10-20% compared to separate contracts for each location.
The average commercial electricity rate in Texas ranges from 8-14 cents per kWh for the energy charge alone, with small businesses typically paying 10-14¢, medium businesses 9-12¢, and large businesses 8-10¢ per kWh. Your total cost per kWh will be 3-5¢ higher once you add TDU delivery charges, base fees, and any demand charges. Actual rates vary based on usage volume, contract terms, and market conditions.
A small Texas business using 5,000 kWh per month typically pays $700-850 monthly, or about 14-17¢ per kWh total cost including all charges. This includes the energy charge (10-12¢ per kWh), TDU delivery charges (3-5¢ per kWh), and base service fees ($20-35). Actual costs depend on your specific usage patterns, TDU service area, and contract terms.
Demand charges are fees based on your peak electricity usage (measured in kW) during any 15-minute interval in a billing period. They typically range from $5-15 per kW and apply to most commercial accounts using over 10,000 kWh monthly. For example, if your peak demand is 50 kW and your demand charge is $8/kW, you'll pay $400 monthly in demand charges regardless of your total usage.
The most effective ways to lower costs are: work with a broker to negotiate rates 15-30% lower than direct provider rates, lock in 24-36 month fixed-rate contracts when market rates are favorable, manage peak demand to reduce demand charges by 15-25%, compare quotes 90 days before your contract expires, improve energy efficiency through LED lighting and HVAC maintenance, and consolidate multiple locations under one contract for volume discounts.
Common reasons for unexpectedly high bills include: demand charges you weren't aware of (can add 20-40% to your bill), TDU delivery charges not included in your quoted rate (adds 3-5¢ per kWh), seasonal usage spikes during summer or winter, minimum usage fees if you're not meeting contract minimums, pass-through charges for regulatory fees, or billing errors such as incorrect meter readings. Review your Electricity Facts Label and recent bills to identify the cause.
Energy charges are the per-kWh rate you pay your retail electricity provider for the actual electricity you consume—this is the rate you negotiate and can shop for. TDU (Transmission and Distribution Utility) charges are regulated fees paid to the company that owns the power lines and delivers electricity to your business. TDU charges are non-negotiable, typically 3-5¢ per kWh, and determined by your location. Your total cost per kWh includes both charges.
Most Texas businesses should choose fixed-rate contracts for budget certainty and protection against market volatility. Fixed rates lock in your per-kWh rate for 12-36 months, preventing surprise cost spikes during extreme weather. Variable rates fluctuate monthly based on wholesale prices—they can be lower during mild weather but spike dramatically during heat waves or cold snaps, making budgeting difficult and risky for commercial operations.
Divide your total monthly bill by your total kWh usage to get your effective cost per kWh. For example, if your bill is $3,885 and you used 25,000 kWh, your effective rate is 15.5¢ per kWh. This 'all-in' rate includes your energy charge, TDU delivery charges, demand charges, base fees, and any other charges. Always use this effective rate—not just the advertised energy rate—when comparing providers or evaluating savings opportunities.
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