Business electricity in Texas: how to buy power for your company

Where Texas has electricity choice, your business picks a retail electric provider to sell it power. The local utility owns the wires and delivers that power. You can switch sellers, but not utilities.

The seller is called a retail electric provider, or REP. It sets your energy price and sends the bill. The utility, also called the TDU, bills your REP for delivery, and your REP passes that on. Regulators set those charges, so they are the same no matter which REP you pick.

Oncor serves Dallas–Fort Worth, and CenterPoint serves Houston. AEP Texas, TNMP and Lubbock Power & Light serve other areas. Unsure which utility serves your site? Our utility finder checks by meter ID or city. Some places can't shop at all, such as Austin Energy, CPS Energy and El Paso Electric areas.

A business bill has four main parts: energy, delivery, a demand charge and sales tax. In most areas, the demand charge shows up only once your peak tops 10 kW.

Look at the orange slice. In this example, the demand charge is a third of the bill, and it comes from one number: the 18 kW peak. The energy you shop for is only about half.

Your utility sets the delivery part. Here are each utility's business rates as of October 4, 2026. Small accounts pay more per kWh but no demand charge.

A demand charge bills your highest rate of use in the month, in kilowatts (kW). Oncor measures it over your busiest 15 minutes. Think of it as paying for the widest pipe you needed, even once.

Here is the difference. A kWh is how much power you used. A kW is how fast you used it. When a café runs its AC, ovens and espresso machine at the same time, the meter sees a high kW for that 15-minute block.

That one block at 7:00 sets the demand charge for the whole month. The other blocks, almost 3,000 of them, don't change it. The rate per kW depends on your utility.

Sites with interval meters, called IDR meters, pay the transmission part of delivery on a different peak, called 4CP. It is your average use at the four moments the ERCOT grid peaked, one each in June, July, August and September of the year before. Our ERCOT guide explains those grid peaks.

To lower a demand charge, don't run big equipment all at once. Each kW you cut is worth $10.82 to $15.55 a month before tax, depending on your utility.

For a low-use shop, crossing the 10 kW line is the big jump. In this example, a shop that peaks at 11 kW instead of 9 kW pays $81.52 more a month for delivery. Once you are over, Oncor says your site must stay at or under 10 kW for 12 months to move back.

The demand class isn't always worse. A site that runs steady all day can pay less in it, because its per-kWh charge is tiny. The estimator below shows which way your numbers go.

1. 1
   Find your peak

   Your bill shows your kW. In Oncor's area, Smart Meter Texas and the Powered by Oncor tool show daily and monthly kW.

2. 2
   Stagger start-ups

   Don't fire up every AC unit and oven at opening. Spread them out so fewer run hard in the same 15 minutes.

3. 3
   Guard hot afternoons

   With the 80% rule, one summer spike can raise your bills for the next 11 months.

4. 4
   Use utility programs

   Utilities must offer energy-saving incentives to businesses, not just homes. Our utility rebates guide explains how they work. Our demand response guide covers pay for cutting use at peak times.

Yes, most do. Texas treats electricity sales as taxable unless the use is exempt. Home use is exempt from state tax, but most business use is not. Shops, offices and restaurants usually pay the state rate plus local tax.

Your provider adds the tax to your bill. The local part depends on where your business is.

Paid tax you didn't owe? You can ask for a refund within four years of when the tax was due (34 TAC §3.325). One provider's business terms say it won't refund tax charged before it gets your certificate, so send yours when you sign up.

Your bill depends on three numbers: your kWh, your peak kW and your energy price. Enter them below. The estimator adds your utility's charges and sales tax.

Try it with your own bill. Then cut the peak by 3 kW and watch the demand charge drop. At Oncor's rate, that saves $40.86 a month before tax.

Get every quote on the same terms, then compare the total cost at your real use. The lowest energy rate isn't always the lowest bill.

1. 1
   Gather 12 months of data

   Pull your kWh and kW for each month, plus your ESI ID. By state rule, smart meter data is ready for you by the next day.

2. 2
   Ask what the price covers

   Is it energy only, or energy plus delivery? Can it change if utility charges change?

3. 3
   Get the facts label and terms

   Under 50 kW, every plan comes with three papers. You get an Electricity Facts Label, terms of service and a "Your Rights as a Customer" page.

4. 4
   Read the label's prices right

   Small business labels show average prices at 1,500, 2,500 and 3,500 kWh. They assume a 30% load factor if demand charges apply, and they leave out sales tax.

5. 5
   Line up the dates

   Start the new deal when your current one ends, so you don't pay an exit fee to leave early.

6. 6
   Get the exit fee in writing

   Ask how it is figured, with an example at your own usage.

Run each quote through the estimator above with the same kWh and kW. For a small account with no demand charge, our plan cost calculator can line up three plans at once. Then pick the plan with the  lowest total cost, not just the lowest rate.

New to shopping? Our guides to the Electricity Facts Label, fixed and variable rates and Power to Choose explain the basics. Power to Choose is the PUCT's site for comparing rates in choice areas. Our company scores rate 25 providers with a 100-point public-records method.

You can, but check the broker first. In Texas, anyone paid to help you pick a provider must register with the PUCT. They must also tell you how they get paid and by whom.

Brokers and energy consultants gather quotes and handle paperwork, which can save time. But a broker can't sell you power itself. And providers can't knowingly send offers to a paid broker that isn't registered.

We sugest getting the pay details in writing before you sign anything. Keep a copy with your contract.

Three terms cost businesses the most: the exit fee, the price after the contract ends, and clauses that let the price change. Here is how each one works.

Ask how your exit fee is figured before you sign. The same terms waive the fee if a small business moves and gives proof and a forwarding address.

1. Last third of the termYour provider must send at least three written notices of the end date.
2. 14 days before the endFor a small business, the last notice must be sent by now. From here on, no exit fee can apply.
3. End dateDo nothing, and you move to a month-to-month plan. You can leave it any time with no fee.
4. After thatThe month-to-month price can change. Gexa Energy's posted default price for small businesses in Oncor's area was 25.26¢ per kWh at 2,500 kWh, effective Dec 8, 2024. Its energy charge alone was 18.5¢.

Our guide to a contract that's ending walks through each notice. When you're ready to move, see how to switch providers with no gap in service.

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