As of December 2023, the average commercial electric rate in the United States is 11.93 cents per kilowatt-hour (kWh).  You can find better electric rates — particularly in deregulated states like Texas — on Electric Choice.

Business energy rates can vary significantly from state to state.  The highest rates are typically found in Hawaii and Alaska, while the lowest rates are typically found in Texas and in the Midwest.

Commercial Electricity Rates in Texas

Texas is the largest market for commercial deregulated energy in the United States.  Since deregulation arrived in Texas in 2002 around 85% of the state has taken steps to provide customer choice to related consumers.

Prior to energy deregulation, utilities had control over all elements of energy from generation to customer service. This type of control created many challenges for consumers — especially business consumers. Companies had limited options when it came to their electricity related services because utilities provided services to businesses based on area, and gave little to no choice in terms of rates or plans.

In order to make electric rates more fair and reasonable, utilities in many areas of Texas separated their business into different elements. The result of this separation has had a very positive effect on business consumers because the supply element of electricity is no longer a utility only driven product.

Through energy deregulation, entities known as, Retail Electricity Providers (REPs) can now enter or establish themselves within the Texas energy market and offer supply services to business consumers.

Texas Commercial Energy Providers

Texas has a deregulated electricity market, which means that customers can choose their own electricity provider — formally known as retail electricity providers (REPs).  REPs are regulated and approved by the Public Utility Commission (PUC) of Texas.

This can help to keep rates competitive, as providers are constantly vying for customers’ business.

FAQ

What makes up most of a business’ electricity bill?
Electricity rates can vary depending on a number of factors, including the location, the type of business, and the amount of electricity used.

What determines the rate a business pays for electricity?
The kWh rate (ie electric rate) a business pays for electricity can vary depending on a number of factors including the location of the business, the type of business, the amount of electricity that the business uses, as well as when electricity is used.

Which types of businesses use the most energy?
As we mentioned before, the term “commercial” building can encompass a variety of buildings with different purposes. The top five types of commercial buildings use a little less than two-thirds of energy consumed by all commercial buildings.

Out of the different types of commercial buildings, retail and service buildings use the most energy — they use 20% of all energy consumed by all commercial buildings. Office buildings come in next at 17% of all consumption, followed by education (13%), health care (9%), and lodging (8% of consumption).

What types of electric plans offered by providers?

There are two main types of business electricity plans:

  • Fixed-rate plans:  Fixed-rate plans come with an electric rate that is set (“locked in”) for a certain period of time (a term), regardless of the wholesale price of electricity.  Common terms for such agreements are 6 months, 12 months, and 24 months.  The longer the term, the more 
  • Variable-rate plans:  These rates fluctuate based on the wholesale price of electricity. Businesses that choose variable rates may be able to save money if the wholesale price of electricity is low. However, they can also expect higher rates (and in some instances, much higher) if the wholesale price of electricity increases.

What are Energy Choice Programs?
States that are energy deregulated will typically offer energy choice programs or have energy choice organizations (like Electric Choice) that will help businesses to find an energy supplier. It is important to find the energy supplier that best suits the business needs, as in the long run; they can save a company money, time and more.