How Texas Business Electricity Is Different
Last updated: October 18, 2026 · 8 min read
Texas business electricity runs on the same ERCOT grid, the same TDU infrastructure, and the same PUCT rules as residential — but the pricing structures, contract terms, and shopping mechanics are different enough that residential advice doesn't really apply. Commercial customers pay for both energy and peak demand. Contracts are usually negotiated, not selected. And the savings from getting the contract right scale with the size of the business.
The short answer
Texas commercial electricity is priced by both energy use (per kWh) and peak demand (per kW). Contracts are typically 12 to 36 months and negotiated, not picked from a list. Small businesses under ~50 kW peak demand can shop pre-filed REP plans. Larger businesses run RFPs and benefit from interval-data load analysis.
The Two-Part Commercial Rate
A typical Texas commercial electricity bill has two main usage-related charges. The energy charge is paid per kWh consumed, similar to residential. The demand charge is paid per kW of peak 15-minute load during the billing period. A restaurant that briefly runs all its ovens, dishwashers, AC, and refrigeration simultaneously can hit a demand peak far higher than its average load — and that peak sets the demand charge for the whole month.
The math: demand charges add up fast
A Tex-Mex restaurant in Austin with a 90 kW peak demand pays roughly $10/kW × 90 kW = $900 in demand charges on top of the energy charge for that month. If the restaurant could stagger startups to keep peak under 70 kW, the demand charge drops to $700 — saving $2,400 a year without changing total energy consumption.
Demand charges typically range from $5 to $20 per kW per month in Texas, depending on TDU and contract terms. For a business with a 100 kW peak, that's $500 to $2,000 a month for demand alone, on top of energy charges. Reducing peak demand — by staggering equipment startups, installing variable-frequency drives, or using thermal storage to shift HVAC load — often saves more than reducing total energy use.
Small Business: Under 50 kW Peak Demand
A small office, retail shop, salon, or single-location restaurant typically has a peak demand below 50 kW. At this size, you can usually choose from pre-filed REP plans similar to residential. Plans are 12, 24, or 36 months — fixed or variable — with rates that include both the energy charge and the demand component bundled where applicable. The Power to Choose listings for small commercial customers cover this segment.
The same shopping discipline as residential applies: compare plans by total monthly cost at your business's actual load profile, not by the advertised rate at a generic 1,500 kWh figure. The plan choice is more sensitive to demand profile than residential because of the demand-charge layer.
Mid-Sized Business: 50 kW to 500 kW
At this size, REPs typically offer custom-priced contracts rather than pre-filed plans. You provide the REP with 12 to 24 months of interval-level meter data (or the REP pulls it from Smart Meter Texas with your authorization), and the REP returns a quote based on your actual load shape. The shape matters: a business with a flat 24/7 load is cheaper to serve than one with sharp afternoon peaks, because the REP can hedge the flat shape more cheaply.
Smart move: the 3-bid RFP
Running a quick RFP — soliciting quotes from 3 to 5 REPs simultaneously — typically saves 5% to 15% over signing with whichever provider reaches out first. The RFP can be informal (email each provider your load data and ask for a quote) or run through a commercial electricity broker. For a mid-sized restaurant doing $80,000/year on electricity, that's $4,000 to $12,000 a year in your pocket.
Large Commercial and Industrial: 500+ kW
At this scale, the contract becomes a meaningful financial instrument. Customers may contract for multiple years, layer in physical or financial hedges, and consider direct Power Purchase Agreements with generators. The TDU tariff class shifts to large general service, with different demand-charge structures and the option for primary-voltage service that bypasses some transformer charges.
Bitcoin mining facilities and large data centers — both growing rapidly in Texas — sit at the upper end of this scale and have access to ERCOT's "large flexible load" interconnection class, which trades grid-flexibility commitments for favorable interconnection terms.
Aggregating Multiple Meters
| Aggregation Scenario | Typical Savings vs Per-Meter |
|---|---|
| 2–5 retail locations | 2% – 5% |
| 10+ restaurant or retail locations | 5% – 10% |
| 50+ locations | 10% – 15% |
| Multi-state, Texas only | Variable; depends on shape diversity |
Why aggregation reduces price: portfolio diversification. Multiple locations rarely peak at the exact same moment, so the aggregate load shape is flatter than any individual meter's shape and cheaper to hedge. The REP passes part of that hedging savings back to you.
HOAs and Multi-Tenant Properties
HOAs and apartment buildings face a choice between submetered service (each unit billed individually by the REP) and master-metered service (the property owner pays for all electricity and bills tenants through rent). Submetering is more common in Texas and gives each tenant the right to shop for their own provider. Master metering is sometimes used for short-term rentals and student housing, but the property owner takes on the price risk.
When to Renew or Re-Bid a Commercial Contract
The right shopping window is three to six months before the contract end date. This gives time to get quotes without urgency and to lock in a rate while wholesale prices are favorable. The holdover rate after expiration is often 2 to 3 times higher than the original contract rate — businesses that miss the window can pay tens of thousands of dollars before they notice.
Watch out: the holdover rate disaster
A Houston warehouse on a $0.072/kWh fixed commercial contract rolled to a $0.158/kWh holdover rate when the office manager retired and nobody handled the renewal. On 45,000 kWh/month, that's an extra $3,870 per month — over $46,000 a year — for the same electricity. Set a renewal alarm on day one of the new contract.
The Texas-Specific Bottom Line
Texas commercial electricity adds two complications to the residential shopping problem: demand charges and custom-quoted contracts. Small businesses can shop pre-filed plans similar to residential. Mid-sized and larger businesses run RFPs and benefit from interval-data load analysis. Aggregating multiple locations under one contract is typically worth 5% to 15%. Renewing on time — three to six months before expiration — is the single most important shopping discipline at every size.
Small business in Texas?
Start with the residential search — many small-business plans appear alongside it. Larger operations should run a formal RFP.
Compare Plans →Common Questions Texans Ask
Is Texas business electricity priced the same as residential?
No. Texas commercial electricity uses different rate structures, contract terms, and tariff classes than residential. Most commercial customers pay both an energy charge per kWh and a demand charge per kW of peak monthly load. Contracts are typically negotiated individually rather than picked from a pre-filed list.
What is a demand charge?
A demand charge is a fee based on the highest 15-minute rate of electricity consumption (in kilowatts) during the billing period. A business with a sudden 100 kW peak pays for that peak even if the average load was much lower. Demand charges are often the largest single line item on a mid-to-large commercial bill.
What size business needs a custom contract?
Small businesses below about 50 kW of peak demand can typically choose from pre-filed REP plans similar to residential. Above that, providers usually offer custom-priced contracts. Large industrial customers above several megawatts of peak load often run formal RFPs and contract for one to five years.
Can I aggregate multiple meters under one contract?
Yes. Texas REPs commonly offer aggregated contracts that bundle multiple ESI IDs (electricity service identifiers — one per meter) under a single negotiated rate. This is common for retail chains, restaurant groups, and multi-location offices. The aggregated rate is usually lower than the average of separate per-meter rates.
When should a business switch electricity contracts?
Three to six months before contract expiration. This window lets you get competitive bids without rushing, lock in a new rate while wholesale prices are favorable, and avoid the much higher "holdover" rate after expiration. Set a calendar reminder when the contract is signed.
Are TDU charges different for businesses?
Yes. Each TDU publishes separate tariff schedules for residential and commercial customers. Commercial schedules typically include demand charges, time-of-use distinctions, and different fixed monthly customer charges. The PUCT approves and publishes all of these.
Are renewable plans available for businesses?
Yes. Most major Texas REPs offer 100% renewable commercial contracts, often at a small premium. Large businesses with sustainability targets sometimes go further and sign Power Purchase Agreements (PPAs) directly with Texas wind or solar developers, locking in long-term renewable pricing.
Should I use a Texas commercial electricity broker?
Brokers can save time and may negotiate better rates on your behalf, especially for mid-sized businesses with complex load profiles. They earn a commission embedded in the rate. A reputable broker is transparent about that commission. Always get at least one direct quote from a REP to verify the broker's rate is genuinely competitive.
Your Next Move
For small businesses with simple loads, the ZIP search tool is a useful starting point — many small-business plans appear alongside residential listings. To understand the underlying market structure, read how the Texas electricity market works. For the TDU side of the bill, see Texas TDU delivery charges, fully explained. To understand how providers compete, read major Texas electricity providers compared.