Texas Business Electricity Rates

The average all-in commercial electricity rate in Texas is 9.12¢/kWh as of March 2026, which is 35% below the national commercial average of 14.12¢/kWh. Energy-only rates from competitive retail providers currently average 6.80¢/kWh before TDU delivery charges. Your total cost depends on your TDU territory, usage volume, contract length, and load profile.

Texas benefits from several factors: abundant, low-cost natural gas (the state produces ~30% of U.S. supply), a deregulated market with 100+ competing providers driving prices down, massive wind and solar capacity reducing wholesale energy costs, no state income tax subsidies embedded in utility rates, and a relatively modern grid with lower legacy infrastructure costs. Competition alone drives commercial rates 15–30% lower than regulated markets.

Approximately 85% of Texas has a deregulated electricity market, covering the areas served by ERCOT and the five major TDUs: Oncor (Dallas-Fort Worth, Waco, Tyler, Midland), CenterPoint (Houston, Galveston), AEP Texas Central (Corpus Christi, McAllen), AEP Texas North (Abilene, San Angelo), and TNMP (various regions). Notable exceptions include San Antonio (CPS Energy), Austin (Austin Energy), El Paso (El Paso Electric), Beaumont (Entergy Texas), and Amarillo (Xcel Energy).

Your TDU (Transmission and Distribution Utility) — such as Oncor, CenterPoint, or AEP Texas — owns and maintains the physical grid infrastructure: poles, wires, transformers, and meters. They deliver electricity to your business regardless of which provider you choose. Your REP (Retail Electric Provider) is the company you buy electricity from — they set your energy rate, send your bill, and handle customer service. You choose your REP; your TDU is determined by your physical location.

Demand charges are based on your peak demand — the highest amount of electricity your business consumes at any single point during a billing cycle, measured in kilowatts (kW) over 15- or 30-minute intervals. Your TDU charges this fee to ensure the grid can meet your maximum power needs at any moment. Demand charges can represent 30–70% of a commercial electricity bill, making peak management a critical cost-control strategy for businesses.

Load factor measures how consistently your business uses electricity (total consumption ÷ peak demand × hours in period). A high load factor (steady, predictable usage — like data centers or 24/7 manufacturing) is more efficient and often results in a lower per-kWh rate. A low load factor (sporadic, high-peak usage — like seasonal retail) typically means higher rates because you require more grid capacity relative to total consumption.

Your provider will notify you before your contract ends. If you take no action, they will move your account to a variable “holdover” or month-to-month rate, which is almost always significantly higher than your fixed contract rate — sometimes 2–3x higher. It’s critical to start shopping for a new plan 60–90 days before your current contract expires to ensure uninterrupted savings and avoid costly rollover rates.

Yes. Texas is the #1 wind energy producer in the U.S. and a top-five solar state. Many REPs offer competitive 100% renewable commercial plans, allowing your business to meet ESG and sustainability goals with little to no price premium over conventional energy. Options include wind-sourced fixed-rate plans, solar buyback programs, and plans backed by Renewable Energy Certificates (RECs).

Possibly. Texas businesses predominantly engaged in manufacturing, processing, or fabrication may qualify for a sales tax exemption on electricity. You must complete a Predominant Use Study and submit a Texas Comptroller exemption certificate (Form 01-339) to your electricity provider. This can reduce your total electricity cost by 6–8%, which adds up quickly for high-usage commercial accounts.

The best times to shop are during the “shoulder months” of spring (March–May) and fall (September–November). Energy demand is lower during these mild-weather periods, which leads to more competitive wholesale prices and lower contract rates. Avoid signing new contracts during peak summer months (June–August) when Texas heat drives electricity demand — and prices — to their highest levels.

An ETF is a penalty charged if you break your electricity contract before its end date. Unlike residential ETFs (often a flat $150–$200 fee), commercial ETFs are calculated based on the remaining contract term, usage volume, and current market conditions. They can be very substantial — sometimes tens of thousands of dollars for large accounts. Always review the ETF terms carefully before signing any commercial electricity contract.

Several areas opted out of deregulation or are outside of ERCOT: San Antonio (CPS Energy — municipal), Austin (Austin Energy — municipal), parts of East Texas (Entergy Texas), El Paso (El Paso Electric — not in ERCOT), the Amarillo area (Xcel Energy / Southwestern Public Service — not in ERCOT), and many rural electric cooperatives. Businesses in these areas cannot choose their electricity provider and pay rates set by their utility or cooperative.