Business Electricity Rates in Texas 2026
Complete guide to understanding Texas commercial electricity pricing, rate structures, and how to secure the lowest rates for your business.
Texas businesses face unique electricity pricing dynamics due to the state's deregulated energy market. Understanding how business electricity rates work in Texas is essential for controlling operational costs and maximizing profitability. This comprehensive guide explains everything you need to know about commercial power pricing in the Lone Star State.
Key Takeaway
Texas business electricity rates typically range from 8¢ to 15¢ per kWh depending on usage volume, contract terms, and market conditions. Businesses that compare rates from multiple providers save an average of 20-30% on their annual electricity costs.
Current Texas Business Electricity Rates (2026)
As of January 2026, Texas commercial electricity rates vary significantly based on business size, location, and consumption patterns. Here's a breakdown of typical rates across different business categories:
| Business Size | Monthly Usage | Typical Rate Range | Annual Cost |
|---|---|---|---|
| Small Business | 2,000 - 10,000 kWh | 10¢ - 13¢/kWh | $2,400 - $15,600 |
| Medium Business | 10,000 - 50,000 kWh | 9¢ - 11¢/kWh | $10,800 - $66,000 |
| Large Business | 50,000 - 200,000 kWh | 8¢ - 10¢/kWh | $48,000 - $240,000 |
| Industrial | 200,000+ kWh | 7¢ - 9¢/kWh | $168,000+ |
*Rates updated January 2026. Actual rates vary based on specific location, contract terms, credit profile, and market conditions.
Understanding Texas Business Rate Structures
Unlike residential electricity, commercial rates in Texas involve multiple pricing components that impact your total cost. Understanding these structures is crucial for accurate cost comparison and budgeting.
1. Energy Charges (¢/kWh)
The base cost per kilowatt-hour of electricity consumed. This is typically the largest component of your bill and varies based on wholesale market prices, contract type (fixed vs. variable), and your negotiated rate.
Example: A business using 20,000 kWh/month at 10¢/kWh pays $2,000 in energy charges.
2. Demand Charges ($/kW)
Charges based on your peak power demand (the highest rate of electricity use during any 15-minute interval in the billing period). Demand charges can represent 20-50% of total costs for businesses with high peak usage.
Example: A facility with 500 kW peak demand at $8/kW pays $4,000 in demand charges monthly.
3. Transmission & Distribution (TDU) Charges
Non-bypassable charges from your local utility (Oncor, CenterPoint, AEP, TNMP) for maintaining power lines and infrastructure. These are the same regardless of which retail electric provider you choose.
Typical Range: $200-$800/month depending on usage and location.
4. Base/Customer Charges
Fixed monthly fees for account maintenance and meter reading, typically ranging from $10-$50/month depending on your service level and provider.
7 Factors That Affect Your Business Electricity Rate
Usage Volume
Higher consumption typically qualifies for lower per-kWh rates due to economies of scale. Businesses using 50,000+ kWh/month can negotiate rates 20-30% lower than small users.
Contract Length
Longer contracts (24-36 months) offer more rate stability and often lower prices. Short-term contracts (6-12 months) provide flexibility but may cost 10-15% more.
Load Profile
Businesses with consistent, predictable usage get better rates than those with erratic consumption patterns. High load factor (steady usage) = lower rates.
Credit Profile
Strong business credit qualifies for lower rates and better contract terms. Poor credit may require deposits or result in 15-25% rate premiums.
Market Timing
Wholesale electricity prices fluctuate seasonally. Locking in rates during low-demand periods (spring/fall) can save 10-20% compared to peak summer/winter pricing.
Location/TDU Zone
Transmission costs vary by utility territory. Oncor (Dallas) and CenterPoint (Houston) zones typically have lower TDU charges than smaller utilities.
Renewable Energy Content
Plans with higher renewable energy percentages may cost slightly more (1-3¢/kWh premium) but provide sustainability benefits and potential tax incentives for green energy adoption.
How to Secure the Lowest Business Electricity Rates in Texas
Compare Quotes from Multiple Providers
Don't settle for the first offer. Request quotes from at least 5-10 licensed Texas retail electric providers (REPs). Rates can vary by 20-40% for identical usage profiles.
Provide Accurate Usage Data
Share 12 months of interval data or detailed utility bills. Accurate load profiles enable providers to offer precise pricing instead of conservative (higher) estimates.
Negotiate Contract Terms
Everything is negotiable: energy rates, demand charges, early termination fees, and renewal terms. Businesses with strong usage profiles can negotiate 10-25% below initial offers.
Time Your Contract Strategically
Monitor wholesale market trends and lock in rates during low-price periods. Avoid renewing during peak demand seasons (July-August, January-February) when prices spike.
Work with a Commercial Electricity Broker
Experienced brokers have relationships with extensive network of providers and can negotiate rates 15-30% lower than businesses can secure independently. Broker services are typically free (providers pay commissions).
Frequently Asked Questions
What is the average business electricity rate in Texas?
The average commercial electricity rate in Texas ranges from 8¢ to 13¢ per kWh depending on business size and usage volume. Small businesses (under 10,000 kWh/month) typically pay 10-13¢/kWh, while large businesses (50,000+ kWh/month) can secure rates as low as 8-9¢/kWh through volume discounts and competitive bidding.
How can I reduce my business electricity costs in Texas?
The most effective strategies include: (1) comparing quotes from multiple providers to find the lowest rate, (2) negotiating contract terms based on your usage profile, (3) timing contract renewals during low-price market periods, (4) reducing peak demand to lower demand charges, and (5) working with a commercial electricity broker who can access wholesale pricing and negotiate on your behalf.
Should I choose a fixed or variable rate plan?
Most Texas businesses benefit from fixed-rate contracts (12-36 months) for budget predictability and protection from price spikes. Variable rates can be advantageous during periods of low wholesale prices but expose you to significant cost volatility. Fixed rates are recommended for 90% of businesses, especially those with tight operating budgets.
What are demand charges and how do they affect my bill?
Demand charges are fees based on your peak power consumption (measured in kW) during any 15-minute interval in the billing period. For businesses with high peak usage, demand charges can represent 20-50% of total electricity costs. Reducing peak demand through load management, equipment scheduling, or energy storage can significantly lower these charges.
When is the best time to lock in a business electricity rate?
The best times to secure commercial electricity rates in Texas are typically during spring (March-May) and fall (September-November) when wholesale prices are lowest due to moderate weather and lower demand. Avoid locking in rates during peak summer (July-August) or winter (January-February) when prices spike due to extreme temperatures and high ERCOT demand.