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Commercial Kilowatt Hour Cost in Texas

Flavia Calina by Flavia Calina
June 26, 2023
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Commercial Kilowatt Hour Cost in Texas
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In 85% of Texas, businesses can choose their electricity provider. Compare business electricity rates online to find the best deal for your company. Electricity prices have fallen due to milder spring weather, reducing energy demand. The best opportunity is to lock in a cheap business electricity rate.

Cost of Energy

Electricity rates in Texas have risen significantly over the past year.  Small business owners in Texas can lower their monthly electricity bills by reducing their consumption or switching to a fixed-rate plan. In addition, they can offset their energy costs entirely by going solar. The cost of commercial kilowatt hours in Texas is based on three different costs: delivery charges, supply charges, and demand charges. The prices of these fees can change throughout the year and vary depending on your business type. For example, a small industrial company will pay a higher price per kilowatt hour than a retail boutique or CPA office. You can find the Texas commercial electricity rates by researching the dozens of providers and hundreds of plans available in your area. Include all the fees and taxes your local utility company charges in your calculations. Also, keep in mind that your rate will depend on your location and the type of power you use.

Cost of Natural Gas

Across the country, energy prices have been on the rise. This summer, electricity prices hit their highest point since 2011. The high temperatures caused a surge in cooling-degree days (a population-adjusted proxy for how hard air conditioners have to work). In addition, natural gas prices also spiked this summer due to decreased supply stemming from foreign conflict. Finding the best commercial electricity rates is a top priority for small businesses. The good news is that Texas offers cheaper electricity rates than many other states. It is due to energy deregulation, which gave Texans the power to choose their own Retail Electricity Provider (REP) and created a competitive marketplace for business owners.

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The cost of commercial electricity in Texas is a combination of supply and delivery charges. The supply portion reflects the costs of creating electricity and includes generation, transmission, and distribution fees. The delivery portion of the commercial electricity rate reflects the price charged to deliver the energy to your business and through your wires. Switching to solar is one way to save your commercial energy rate money. Unlike utility power, solar is a renewable source of energy. In addition, over 25 years, solar has been 3.9 cents per kWh cheaper than utility power.

Cost of Transmission and Distribution

A part of the overall cost of delivering power to your company across wires goes into transmission and distribution. Your local utility company regulates and passes these fees to consumers. These costs can be affected by weather, which puts more strain on the system during sweltering days when people run their ACs for more extended periods. As with the other energy costs, you can lower your commercial kilowatt-hour rate by reducing consumption and choosing a plan with a lower electricity rate. However, it’s also essential to understand why your rates are changing and what other factors can affect them. 

The price of your small business electricity plan in Texas depends on a combination of supply, delivery, and other factors that can influence the cost per kWh. When you look at a plan’s Electricity Facts Label, pay special attention to the Delivery and Service charges. These are a mix of regulated fees that your REP delivers to the transmission and distribution companies to use their network of wires, plus your provider’s reimbursable charges and profit margin. Depending on whether you have a “bundled rate” (one rate for both energy and delivery) or an unbundled rate, these charges may be reflected separately or rolled into your energy rate.

Cost of Demand Charges

In addition to the cost of energy, businesses also pay for transmission and distribution fees. These charges are calculated based on the highest rate of electricity use during 15 minutes in a billing cycle. It is often referred to as demand charges, and they can make up a significant part of your business’s commercial electricity bill in Texas. Demand charges are based on the maximum power your company needs at any given time, as shown on your business’s electric bills in kW or kVA. Turning on large machinery or HVAC units gradually rather than all at once is beneficial to keep your business’s demand costs lower. While it may seem complicated, understanding your business’s commercial electricity rates is essential for making smart business decisions. As deregulation transforms the business electricity market, choosing the right small business energy plan becomes even more critical. To find the right business energy plan, enter your zip code into our Texas business electricity comparison tool. There are many ways to lower your business’s commercial electricity rates in Texas, including implementing an energy efficiency program and shifting usage to cooler times of the day (like evenings). However, solar can offer an even more effective way to save money on electricity costs in the long term. On average, solar power costs 3.9 cents per kilowatt hour in Texas, and it’s a great alternative to utility business electricity prices. Read more interesting articles on Tech new master

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Flavia Calina

Flavia Calina

Hi, I’m Flavia Calina, I am an accomplished writer and content publisher with an extensive background of 5+ years of curating compelling blog posts. I love writing interesting stories that connect with readers. Through employing a singularly distinctive aesthetic in my writing, I strive assiduously to craft impactful and thought-provoking educational content in a lasting manner. Join me on a literary journey and discover the magic of words.

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