Texas business owners can lower operating costs by finding the right electricity provider and plan. Texas’s average commercial energy rate is 9.00 cents per kilowatt-hour (kWh)—approximately 38% lower than the national average. Businesses have a unique opportunity to reduce overhead through the state’s deregulated energy market.
Business Electricity Rates in Texas
Electricity rates can have a big impact on your bottom line, whether you own a coffee shop, run a manufacturing facility or lease office space. Texas businesses pay an average of 9 cents per kWh, significantly cheaper than the national average. Depending on which sources you use, commercial energy rates can start as low as 5 cents per kWh, but may go higher.
Most of Texas has a deregulated energy market, which means your business isn’t limited to one utility. Instead, you can shop for a plan that fits your usage needs, budget and contract preferences. Choosing the right electricity company in Texas can lead to lower electricity bills, better customer support, and more control over your electricity.
This guide will walk you through what to expect from business electricity rates and how to pick the best energy plan.
Types of Business Electricity Plans
Some energy providers offer several plan types to fit your needs, such as fixed, variable, block, and index plans. However, the most common plan type—and the one we recommend for most businesses and homeowners—is the fixed-rate energy plan.
Commercial operations generally use more electricity than the typical household because equipment, lighting and air conditioning systems run for longer hours. Since you use more energy, you’ll pay a cheaper rate per kilowatt-hour. It’s similar to buying in bulk, where the more you use, the lower you pay per unit.
Understanding how each electricity plan type works can help you choose the best fit for your budget.
Fixed-Rate Plans
A fixed-rate electricity plan locks in your rate for the entire contract term. Because your rate is set, you can go six, 12, 24 or 36 months without stressing about picking a new plan or the fluctuating energy market.
These plans offer budget stability and protection from market fluctuations. They’re especially helpful for businesses with tight budgets that need predictable bills. Before choosing a long-term plan, consider the early termination fee (ETF). You’ll have to pay this fee if you cancel your energy plan before the contract ends. Fixed-rate plans work best for businesses that value stability and want to avoid surprise price spikes.
Demand Response Plans
Some energy providers may offer energy plans with discounted rates based on energy demand. For example, you may be able to enjoy lower rates by using power when demand is low, often at night or over the weekend. However, these plan types are not very common. Additionally, because most businesses have dayshifts that run when demand is at its peak, you may realize much savings from a demand response plan.
Other potential plan types may include variable-rate plans, indexed-rate plans and block and index plans. These plan types, not typically used these days, charge rates that change based on market conditions.
Factors Affecting Business Electricity Rates
How much you pay for commercial electricity depends on more than just your provider’s rate. Your location and utility service area also play a role. Utility companies such as Oncor, CenterPoint and AEP Texas have different delivery charges added to your total bill.
Each utility has a different fee and service area, so how much you pay in Houston differs from what businesses pay in Dallas.
Your usage patterns also impact pricing. Manufacturing companies that run operations all day and night use more electricity and have more expensive bills than a retail shop open from 9 a.m. to 5 p.m. The higher usage businesses might secure a lower rate, but pay a more expensive total bill.
Contract length and market conditions affect your rate, too. Longer contracts typically offer lower prices, but can have a more expensive ETF. You might find cheaper business electricity rates in the spring or fall when demand is lower.
Historical Commercial Electricity Rates
Business electricity rates in Texas have stayed at or below the U.S. average commercial rate since April 2009, with the exception of winter storm Uri in February 2021, according to U.S. Energy Information Administration (EIA) data. At the same time, residential rates have stayed at or below the nationwide average since 2011.
Even while remaining less expensive per kWh, Texas residential electricity rates have followed a steady upward trend, similar to the national average. Commercial rates in Texas have stayed relatively stable over the past decade, aside from the 2021 spike.
How To Compare Business Electricity Rates
Shopping around for a business energy plan is a great way to lower your electricity bills. Providers offer a variety of plan options, pricing models, and contract terms to consider. Before choosing a plan, take time to understand your usage and compare more than just the advertised rate. Knowing how much energy you use is a good place to get started.
While small businesses with low energy needs can simply sign up online, you may need to request a custom quote for your energy plan if your business has very high energy usage.
Know Your Usage Profile
Understanding how your company uses energy can help you find the best business electricity rate. Review past energy bills to find your average monthly usage, what time of day you use the most electricity and how it varies throughout the year. This information can help you choose a plan that fits your actual needs and cut back on operating costs. Knowing your energy usage habits can help you avoid gimmicky plans that advertise low prices but cost more in the long run.
Evaluate Rate Structures
Each electricity plan type has a different pricing structure, plus utility fees, usage charges and other costs that impact your total bill.
Each plan comes with terms of service and rate disclosures. Review these documents carefully to make sure you’re aware of your business’s actual rate. If you’re working with an energy broker to negotiate a rate quote from a provider, make sure they request “full-swing” or “all-in” pricing. This should help make sure you don’t get hit with penalties for using significantly more or less than initially estimated.
In short, understanding how the rate structure works can help your business avoid surprises.
Look Beyond the Rate
The lowest price per kilowatt-hour isn’t always the best deal. You have to consider the contract terms, cancellation fees, billing options and customer service to ensure you have the best experience for your needs. A slightly higher rate with a high-quality provider might be worth it for better support, flexible billing or fewer hidden fees.
Check customer reviews and provider ratings to understand how it handles billing issues or plan changes. Reliable service and responsive customer service can save you time and stress.
Top Business Electricity Providers in Texas
Dozens of electricity providers in Texas compete to offer you the best business energy plans. While Public Utility Commission of Texas (PUCT) has 140-plus light companies registered, not all offer commercial energy services.
To choose the best light company for your needs, you’ll typically need to submit information about your business to receive quotes and compare options. Business energy plans are tailored to your specific usage, location and contract preferences.
Below are some of our top-rated business energy providers to consider:
Constellation Energy
Constellation has over 25 years of experience in the Texas energy market and offers a variety of business electricity options to meet your budget and sustainability goals. You can choose from fixed-rate, index-rate, flexible index and other options. Add carbon-free electricity supply (EFECs) or renewable energy certificates (RECs) to any plan and offset your usage with clean power sources.
Just Energy
Just Energy is one of the largest electricity providers in North America and has offered plans since 1997. If your business is in a deregulated area of Texas, you can request custom quotes tailored to your budget, usage and plan type preference. You can also add JustGreen to your plan to offset your business electricity usage with renewable power.
TXU Energy
TXU Energy offers electricity plans for small and large businesses, including fixed, variable and renewable energy options. Plans are designed to support flexibility, long-term budgets and sustainability goals. The company offers different plan options and levels of support based on the business size. TXU has experience in a variety of industries, including healthcare, manufacturing, hospitality and commercial real estate.
Reliant Energy
Reliant offers customizable commercial energy plans for small and large businesses. You can choose from fixed-rate, index price, block and index and renewable energy plans. The company also provides energy-efficient tools, cost management advice and 24/7 support.
Gexa Energy
Gexa Energy supplies commercial energy plans with fixed or market-based pricing. The company helps your business build a strategy to match your budget and sustainability goals. Gexa is known for being an affordable energy provider with 100% renewable plans.
Energy Saving Tips for Texas Businesses
Finding a lower energy rate is one way to save, but improving your energy efficiency can cut costs even more. Start by identifying where your business uses the most energy and find ways to reduce waste, such as unplugging equipment not in use, upgrading outdated systems and adjusting your thermostat settings.
Combining a competitive business energy plan and energy-efficient habits can help you lower operating costs.
Efficiency Improvements
Upgrading to more efficient systems can help your business use less energy while maintaining or improving performance. You may have to invest in the upgrade, but it pays off over time with lower energy bills and maintenance costs. Here are a few energy-efficient improvements to consider:
- Lighting upgrades: Switch to LED bulbs and add motion sensors, so lights only turn on when needed.
- HVAC maintenance: Change the filter and have your system checked regularly to avoid expensive breakdowns and repairs.
- Energy efficient equipment: Replace old appliances with Energy Star models to improve efficiency.
- Building insulation: Seal leaks and upgrade insulation to maintain comfortable indoor temperatures without wearing out your HVAC system.
- Smart thermostats: Program your temperature settings around your business hours to reduce heating and cooling use when no one’s in the building.
Demand Management
Demand management helps lower electricity costs by reducing usage during the highest demand times of the day or season. Commercial electricity plans in Texas may include demand charges based on your highest 15-minute usage in each summer month. Your usage during this period determines your demand charge for next year.
You can manage your demand by shifting heavy equipment use to off-peak hours or using energy from backup generators during peak demand. These strategies help you avoid extra charges and save money over time. Some Texas energy providers, like Reliant Energy, offer a Four Coincident Peak (4CP) alert program that sends notifications when a peak period may be coming, giving you time to reduce usage before it impacts your bill.
Switching Business Electricity Providers
Switching electricity providers for your business is a straightforward process. Once you select a new plan and sign a contract, your new provider manages the switch. You’ll receive a final bill from your current company and a new one from the company you selected. It usually takes between 15 and 45 days for businesses to complete the switch.
You won’t have to worry about power interruptions during this time. Your local utility company continues to deliver power and maintain service. Your new business energy provider supplies your electricity plan and manages billing.
Special Considerations for Small vs. Large Businesses
Texas energy companies generally offer different plan options for small and large businesses because they have different needs. You may qualify for small business plans if your company spends less than $2,500 a month on electricity. Some providers, like Constellation Energy, allow you to compare plans online, but others require you to request quotes before viewing your options. These plans include fixed rates and standard contract options for offices, storefronts, or small facilities.
Large commercial and industrial businesses must submit information and receive custom quotes based on energy usage, budget and risk tolerance. These plan options may include extra tools like demand forecasting, mixed plan types, and energy management strategies designed for higher electricity use.
Understanding Your Business Electricity Bill
Your Texas business energy bill includes several components other than just the electricity rate. Your total monthly bill includes usage fees, demand charges and utility delivery fees. Usage fees are based on the total kWh of electricity that your business uses. Demand charges reflect the highest amount of energy your business uses at one time.
Utility fees cover the cost of delivering power to your business. These charges vary month-to-month and are based on your usage and location. Understanding how these costs work can help you find ways to lower your bill, such as managing peak usage and reducing overall consumption.
Frequently Asked Questions
What is the average business electricity rate in Texas?
The average commercial electricity rate in Texas is 9 cents per kWh, lower than the 13.27 cents per kWh national average. Your exact price could be lower than average depending on your business type, location and typical usage. For example, larger industrial operations may receive a lower rate per kWh than a nail salon because it uses a higher amount of energy each month.
How do I find the cheapest business electricity rates?
You can find the cheapest energy prices by comparing multiple quotes and plan options from different providers. While the lowest price might seem like a good idea, it’s not helpful if the plan doesn’t actually meet your needs. Energy companies or brokers can help review your energy usage habits and pick the best plan to help you save.
What happens if my business uses more energy than expected?
Your bill will increase based on the additional kWh of energy you use. Your plan type also matters. If you’re on a plan with demand charges, higher usage during peak periods could raise your demand fee. Understand your plan type to know how variable usage might impact your costs.
Can I negotiate my business electricity rate?
You might be able to negotiate a better rate, especially for large commercial companies. Energy providers often customize plans based on your usage, operations and budget. If your preferred provider doesn’t offer the lowest rate upfront, you may be able to negotiate better terms before signing a contract.
What is ERCOT, and how does it affect my business electricity?
The Electric Reliability Council of Texas (ERCOT) is the independent system operator (ISO) that oversees the Texas electric grid, schedules power delivery and monitors supply and demand. ERCOT’s decisions about market conditions or responses to extreme weather can impact electricity rates and grid reliability. Its goal is to ensure a safe, stable electricity supply for homes and businesses across the Lone Star State.
Our Rating Methodology
The This Old House Reviews Team supports our energy provider ratings and recommendations with a transparent, research-backed provider review methodology. Our process includes surveying electricity customers in deregulated markets like Texas, analyzing customer review trends, conducting mystery shopping, and consulting with energy experts. Each provider is scored based on performance in customer satisfaction, loyalty, digital experience, and service quality to produce a final rating on a 5-point scale.