Texas business electricity rates

How the Texas commercial electricity market works

Since January 1, 2002, businesses in the competitive parts of the ERCOT grid have chosen who supplies their electricity. Two companies are involved in every account. The delivery utility (a TDSP, or TDU) owns the poles, wires and meter, restores outages and charges regulated delivery rates set by the Public Utility Commission of Texas (PUCT). The Retail Electric Provider (REP) sells you the energy itself, sets the contract terms and sends the bill.

Delivery charges are the same whichever REP you pick, because they come from the utility's approved tariff and are passed through on your bill. Shopping therefore changes the supply portion: the energy price per kWh, how long it is fixed, and which market costs are included or passed through. On a typical business bill that supply portion is the largest line you can influence.

Choice is not statewide. Municipal utilities and electric cooperatives are exempt unless they opt in, so businesses served by Austin Energy, CPS Energy in San Antonio, and most co-ops buy from their local utility. El Paso Electric sits outside ERCOT and remains a regulated monopoly. If you are not sure which side you are on, the utility name on your bill answers it — see TDSP vs TDU and what ERCOT does.

The six Texas delivery territories

Oncor is the largest delivery utility in Texas. It serves the Dallas–Fort Worth metroplex — Dallas, Fort Worth, Arlington, Plano, Irving, Frisco and Garland — plus Waco, Killeen, Tyler, Wichita Falls and the Permian Basin cities of Midland and Odessa.

CenterPoint Energy delivers power across the Houston metro area, including Pasadena, Baytown, Katy and Sugar Land — the densest concentration of commercial and industrial load in the state.

AEP Texas Central covers South Texas and the Coastal Bend: Corpus Christi, Laredo, Victoria and the Rio Grande Valley around McAllen and Harlingen. AEP Texas North serves West-Central Texas, including Abilene and San Angelo.

TNMP (Texas-New Mexico Power) has three separate pockets: the Gulf Coast around League City, Friendswood, Texas City and Dickinson; North-Central Texas near Lewisville; and far West Texas around Pecos and Fort Stockton.

Lubbock Power & Light is the newest competitive territory. After Lubbock moved onto the ERCOT grid, its customers gained retail choice, so Lubbock businesses can now shop suppliers like the rest of competitive Texas.

ERCOT prices wholesale power by load zone — Houston, North, South and West — so the same supplier can quote different rates in different territories, and a utility whose footprint spans more than one zone can price differently within its own service area. That is why a quote needs your ZIP code and, where two utilities share a ZIP, which one serves your meter.

What sets a business electricity rate

Annual usage. Suppliers price commercial accounts in usage bands, and larger accounts generally get lower per-kWh rates because the cost of acquiring and serving them is spread over more energy. Very large accounts are priced individually rather than from a published matrix.

Load profile. ERCOT assigns every business meter a load profile that describes when it uses power — for example low, medium or high load factor (BUSLOLF, BUSMEDLF, BUSHILF). A flat, around-the-clock user is cheaper to serve than one that peaks on summer afternoons, when wholesale prices are highest, and suppliers price accordingly.

Term and start date. A fixed price is built from the forward wholesale market for the months you are buying. Terms commonly run from six months to four years, and two quotes for the same term can differ simply because they start in different seasons.

What is bundled in. Some prices include ancillary costs such as ERCOT Contingency Reserve Service (ECRS); others pass them through at cost. A lower headline rate with pass-throughs is not directly comparable to an all-in fixed rate, so compare like with like.

Demand charges and taxes. Demand-metered accounts pay part of their delivery charges per kW of peak demand under the utility's tariff; those pass through regardless of supplier. Businesses that use electricity predominantly in manufacturing or processing may qualify for a Texas sales tax exemption on that usage, documented with a predominant-use study.

Fixed, index and pass-through plans

Fixed-rate plans lock the energy price for the whole term. They are the default choice for most small and mid-size businesses because the bill moves only with usage and delivery charges, not with the wholesale market.

Fixed with pass-through fixes the energy price but bills certain market costs — ancillary services, transmission-related charges — at actual cost. It can produce a lower starting price in exchange for some variability.

Index plans track the ERCOT wholesale price plus a fixed adder. They suit businesses that can shift or curtail load, but they carry real risk: during Winter Storm Uri in February 2021 wholesale prices sat at the $9,000/MWh cap for days, and index customers paid those prices. Renewable options add renewable energy certificates (RECs) to any of these structures to match some or all of your usage.

Small business electricity in Texas

A small business on a single meter shops the same market as a large one, just in a smaller usage band. The practical questions are usually credit, timing and paperwork rather than price structure.

Deposits. A REP may ask for a deposit or other security based on your business credit. An established payment history with your current provider often reduces or removes it, and some suppliers accept alternatives such as a letter of credit. New businesses without history should ask about requirements before choosing on price alone.

Contract expiration. Watch the end date. When a fixed-term contract expires without a new one in place, the account typically rolls onto the provider's month-to-month rate, which is usually higher than a shopped fixed price. Shopping two to three months before expiration gives you time to compare without paying a holdover rate.

No interruption. Switching suppliers does not interrupt service or require new equipment. The delivery utility keeps reading the meter and restoring outages; only the supplier and the price on the bill change.

How to switch your business electricity provider

1. Gather your details: a recent bill for each location, the ESI ID for each meter, your last twelve months of usage, and your current contract end date and any early termination fee.

2. Get quotes on the same basis: same term, same start date, and the same treatment of pass-through charges, so the numbers are comparable.

3. Read the contract, not just the rate: check the Electricity Facts Label and the terms for auto-renewal, early termination fees, pass-through clauses and, on larger accounts, usage bandwidth limits. Our guide to reading an EFL covers what each line means.

4. Sign and let the REP handle the switch. The new provider submits the enrollment through ERCOT. The switch takes effect on a meter read date, or sooner as an off-cycle switch on a smart meter, and your first bill from the new REP follows the next read.

Can every Texas business choose its electricity provider?

No. Businesses in the competitive ERCOT territories — Oncor, CenterPoint, AEP Texas Central, AEP Texas North, TNMP and Lubbock Power & Light — can choose a Retail Electric Provider. Businesses served by municipal utilities such as Austin Energy and CPS Energy, by most electric cooperatives, or by El Paso Electric cannot.

Does switching change who restores power in an outage?

No. Your delivery utility keeps the poles, wires and meter and still handles outages and repairs. Only the supplier, contract and supply price change.

Why do two quotes for the same business differ?

Quotes differ by term length, start date, load profile and what is bundled in. A price that passes through ancillary or transmission costs is not directly comparable to an all-in fixed price, so compare quotes on the same basis.

What happens when my business electricity contract expires?

If no new contract is in place, the account usually moves to the provider's month-to-month rate, which is typically higher than a shopped fixed rate. Start comparing two to three months before the end date.

Do I need a deposit for commercial electricity in Texas?

It depends on the provider and your business credit. Some REPs waive deposits for businesses with an established payment history or accept alternatives such as a letter of credit; newer businesses may be asked for security.

How do I get a current business electricity quote?

Enter your ZIP code and annual usage on the FindEnergyRates commercial quote page. It prices fixed-rate terms from the current supplier matrix for your delivery utility and usage; very large accounts are priced individually.