Commercial Electricity Rates in Texas (Get a Quote)
Commercial electricity rates in Texas typically range from 8¢ to 14¢ per kWh depending on usage volume, contract term, and market conditions. Texas businesses in the deregulated ERCOT market can compare quotes from extensive network of retail electricity providers to find rates 15-30% lower than their current contract by working with a professional service that negotiates better terms.
Last updated: January 2026
💡What is the average commercial electricity rate in Texas?
In 2026, the average commercial electricity rate in Texas ranges from 8¢ to 14¢ per kWh. However, total costs including TDU delivery charges and other fees typically land between 13¢ and 17¢ per kWh. Rates vary significantly based on usage volume, location, and contract length.
Understanding Commercial Electricity Rates in Texas
Commercial electricity rates in Texas are determined by the deregulated ERCOT market, where an extensive network of retail electricity providers compete for business customers. Unlike residential rates, commercial rates are highly negotiable and vary significantly based on your business's usage patterns, contract terms, and the provider's wholesale energy costs.
Most Texas businesses pay between 8¢ and 14¢ per kilowatt-hour (kWh) for electricity, but this range can shift based on market conditions, your annual consumption volume, and whether you choose a fixed or variable rate structure. Businesses with higher usage volumes (over 100,000 kWh annually) typically secure better per-kWh rates because providers compete more aggressively for larger accounts.
The total cost on your bill includes three components: the energy charge (the per-kWh rate you negotiate), transmission and distribution utility (TDU) charges for maintaining power lines (set by your local utility and the same across all providers), and ERCOT fees for grid management. Understanding this breakdown helps you compare quotes accurately and identify the true cost of switching providers.
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What Impacts Commercial Electricity Rates in Texas?
Annual Usage Volume
Businesses consuming more than 100,000 kWh annually typically secure rates 1-3¢ lower per kWh than smaller operations because providers compete aggressively for high-volume accounts. Multi-location businesses can aggregate usage across all sites to negotiate even better volume discounts.
Contract Term Length
Longer contract terms (24-36 months) generally offer lower rates than shorter terms (12 months) because providers can lock in wholesale energy costs for extended periods. However, shorter terms provide flexibility to renegotiate if market rates drop significantly.
Wholesale Market Conditions
ERCOT wholesale electricity prices fluctuate based on natural gas costs, weather patterns, and grid demand. When wholesale prices are low, retail providers can offer more competitive rates to business customers, making timing your contract renewal critical for maximizing savings.
Peak Demand Patterns
Businesses with consistent usage throughout the day pay lower rates than those with high peak demand spikes during expensive grid hours (typically 2-7 PM in summer). Some contracts include demand charges that penalize peak usage, adding 2-4¢ per kWh to your effective rate.
Fixed vs. Variable Rate Structure
Fixed rates lock in your per-kWh price for the contract term, providing budget predictability but preventing you from benefiting if market rates drop. Variable rates fluctuate monthly with wholesale costs, offering potential savings during low-price periods but exposing you to spikes during high-demand months.
TDU Zone and Infrastructure Costs
Your local transmission and distribution utility (TDU) zone determines infrastructure charges, which are the same across all retail providers but vary by region. Oncor, CenterPoint, AEP Texas, and TNMP each have different TDU rates, typically adding 3-5¢ per kWh to your total bill.
Credit Profile and Deposit Requirements
New businesses or those with limited credit history may face security deposit requirements or slightly higher rates from some providers. Established businesses with strong credit can negotiate better terms and avoid upfront deposits, reducing total switching costs.
Professional Negotiation Leverage
Commercial electricity professionals access wholesale rates not available to businesses shopping directly and leverage industry relationships to negotiate better terms. Professional services typically secure rates 1-2¢ lower per kWh than direct quotes, translating to 15-30% savings for most Texas businesses.
Seasonal Timing of Contract Renewal
Electricity rates in Texas are typically lowest in spring and fall when grid demand is moderate. Renewing contracts during these periods can secure better rates than signing during peak summer or winter months when wholesale costs and provider margins are higher.
Contract Terms and Hidden Fees
Some providers advertise low per-kWh rates but include base charges, minimum usage fees, or high early termination penalties that increase your effective rate. Professional quote services review all contract terms to calculate the true total cost and identify hidden fees that could add 1-3¢ per kWh to your bill.
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Typical Commercial Electricity Rate Ranges in Texas
These ranges reflect typical market conditions and vary based on the 10 factors above. Actual rates depend on your specific usage patterns and contract terms.
| Business Size | Annual Usage | Typical Rate Range |
|---|---|---|
| Small Business | Under 50,000 kWh | 10¢ - 14¢ per kWh |
| Medium Business | 50,000 - 200,000 kWh | 9¢ - 12¢ per kWh |
| Large Business | 200,000 - 1,000,000 kWh | 8¢ - 11¢ per kWh |
| Enterprise | Over 1,000,000 kWh | 7¢ - 10¢ per kWh |
Note: These ranges are for energy charges only and do not include TDU charges (typically 3-5¢ per kWh) or ERCOT fees. Your total per-kWh cost will be higher. Always compare total cost, not just the advertised energy rate.
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Frequently Asked Questions About Commercial Electricity Rates in Texas
Get answers to common questions about Texas commercial electricity pricing
What is the average commercial electricity rate in Texas?
The average commercial electricity rate in Texas ranges from 8¢ to 14¢ per kWh for the energy charge, depending on usage volume and contract terms. When including TDU charges and ERCOT fees, total rates typically range from 11¢ to 19¢ per kWh. Larger businesses with higher consumption volumes secure lower per-kWh rates because providers compete more aggressively for high-volume accounts.
How do commercial electricity rates differ from residential rates in Texas?
Commercial electricity rates in Texas are typically 1-3¢ lower per kWh than residential rates because businesses consume more electricity and have more negotiating power. Commercial contracts are also more flexible, with customizable terms, volume discounts, and options for demand charge management. Residential customers usually choose from standardized plans, while commercial customers can negotiate specific contract terms based on their usage patterns.
Should I choose a fixed or variable commercial electricity rate in Texas?
Most Texas businesses choose fixed rates for budget predictability and protection from market volatility. Fixed rates lock in your per-kWh price for 12-36 months, preventing unexpected cost increases during high-demand periods. Variable rates can save money when wholesale prices are low but expose you to spikes during extreme weather or grid stress. Businesses with tight budgets typically prefer fixed rates, while those with flexible cash flow may benefit from variable rates.
What are TDU charges and how do they affect my commercial electricity rate?
TDU (transmission and distribution utility) charges are fees for maintaining power lines and delivering electricity to your business. These charges are set by your local utility (Oncor, CenterPoint, AEP Texas, or TNMP) and are the same across all retail providers, typically adding 3-5¢ per kWh to your bill. TDU charges are non-negotiable and appear as a separate line item on your electricity bill, distinct from the energy charge you negotiate with your retail provider.
How can I get the lowest commercial electricity rate for my Texas business?
To secure the lowest commercial electricity rate, work with a professional service that compares quotes from extensive network of Texas providers and negotiates on your behalf. Professional services access wholesale rates not available to businesses shopping directly and leverage industry relationships to secure rates 1-2¢ lower per kWh. Timing your contract renewal during low-demand seasons (spring/fall) and committing to longer terms (24-36 months) also helps secure better pricing.
Do commercial electricity rates in Texas change throughout the year?
Yes, commercial electricity rates in Texas fluctuate based on wholesale market conditions, which vary seasonally. Rates are typically lowest in spring and fall when grid demand is moderate and highest during peak summer and winter months when demand spikes. Fixed-rate contracts protect you from these fluctuations by locking in your rate for the contract term, while variable-rate contracts adjust monthly based on market conditions.
What is a demand charge on commercial electricity bills in Texas?
A demand charge is a fee based on your business's peak electricity usage during a billing period, typically measured in kilowatts (kW). Some commercial contracts include demand charges that penalize high peak usage, adding 2-4¢ per kWh to your effective rate. Businesses with consistent usage throughout the day avoid demand charges, while those with large equipment that spikes usage during expensive grid hours may face higher costs.
How do multi-location businesses get better commercial electricity rates in Texas?
Multi-location businesses secure better commercial electricity rates by aggregating total usage across all Texas sites to negotiate volume discounts. Professional services present your combined consumption to providers, who compete for larger accounts by offering rates 1-3¢ lower per kWh than single-location quotes. Coordinating staggered contract renewals across locations also prevents all sites from expiring simultaneously, giving you more negotiating leverage and flexibility to time renewals during favorable market conditions.
What contract term length offers the best commercial electricity rates in Texas?
Longer contract terms (24-36 months) typically offer lower per-kWh rates than shorter terms (12 months) because providers can lock in wholesale energy costs for extended periods. However, shorter terms provide flexibility to renegotiate if market rates drop significantly. Professional services can recommend the optimal term based on current market conditions, your business growth plans, and budget requirements. Most Texas businesses choose 24-month contracts for the best balance of rate stability and flexibility.
Are there hidden fees in commercial electricity rates in Texas?
Some Texas commercial electricity contracts include hidden fees such as base charges, minimum usage fees, or high early termination penalties that increase your effective rate by 1-3¢ per kWh. Professional quote services review all contract terms to calculate the true total cost and identify hidden fees before you sign. Always compare total cost per kWh (including energy charges, TDU fees, base charges, and any demand charges) rather than just the advertised energy rate to avoid surprises on your bill.
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