Understanding Your Commercial Electricity Bill in Texas: Hidden Fees and How to Lower Costs in 2026

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Opening your monthly commercial electricity bill can feel overwhelming. Between confusing line items, fluctuating charges, and industry jargon like "TDSP fees" and "pass-through charges," many Texas business owners aren't sure if they're getting a fair deal—or leaving money on the table.

If you've noticed your electricity costs creeping up despite unchanged usage patterns, you're not alone. As we head into 2026, Texas businesses face a unique set of market conditions that are driving costs higher. But understanding exactly what you're paying for is the first step toward meaningful savings.

In this comprehensive guide, we'll break down the anatomy of your commercial electricity bill, explain the fees you can't avoid (and the ones you can negotiate), and share actionable strategies to reduce your energy costs by 15-30% or more.

The Anatomy of Your Texas Commercial Electricity Bill

Unlike residential customers who typically see just two or three line items, commercial electricity bills in Texas are far more detailed—and often more confusing. Let's decode what you're actually paying for.

Energy Charges (The Controllable Portion)

This is the cost per kilowatt-hour (kWh) for the actual electricity you consume. This rate is set by your Retail Electric Provider (REP) and varies based on:

• Your contract terms (fixed vs. variable rate)
• Contract length (12-month, 24-month, 36-month, or longer)
• Market conditions when you signed
• Your provider's pricing structure

The good news? This is the portion of your bill where you have negotiating power. The average business electricity rate in Texas is approximately 8.6 cents per kWh, but rates can range from 6.5 cents to over 12 cents depending on your contract and provider.

By working with a commercial energy broker, Texas businesses can leverage competitive bidding to secure rates significantly below market average. Our clients typically save 15-30% on their energy charges alone through our reverse auction process.

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TDSP Delivery Charges (The Fixed Portion)

TDSP stands for Transmission and Distribution Service Provider—the utility company that physically delivers electricity to your business through power lines, transformers, and meters. In Texas, the major TDSPs include:

• Oncor (Dallas-Fort Worth and surrounding areas)
• CenterPoint Energy (Houston and surrounding counties)
• AEP Texas (South and West Texas)
• Texas-New Mexico Power (TNMP) (various rural areas)

These delivery charges are regulated by the Public Utility Commission of Texas (PUCT) and include multiple line items on your bill:

• Customer Charge – Fixed monthly fee per meter
• Metering Charge – Cost to read and maintain your meter
• Distribution System Charge – Local infrastructure maintenance
• Transmission System Charge – Regional power grid maintenance
• Nuclear Decommissioning Charge – Legacy cleanup costs
• Transmission Cost Recovery Factor – Infrastructure upgrades

Important: TDSP charges are identical across all retail providers. Switching your REP won't change these fees—they're pass-through costs that every business pays regardless of which commercial electricity provider they choose.

As of September 2025, TDSP rates increased across Texas. For example, Oncor's charges rose to $4.23 per month plus 5.60 cents per kWh, while CenterPoint increased to $4.90 per month plus 5.90 cents per kWh. These adjustments happen twice annually (March and September) to fund grid improvements and infrastructure investments.

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Why Your Bill Fluctuates (Even with Fixed Rates)

Many Texas business owners are surprised when their monthly bill varies despite having a "fixed-rate" contract. Here's why:

1. Usage variations – Your kWh consumption changes month to month based on weather, operations, and business activity
2. TDSP rate adjustments – These delivery charges update twice per year
3. Demand charges – Some commercial rate classes pay additional fees based on peak usage
4. Seasonal load patterns – Summer cooling and winter heating drive higher consumption

Understanding this variability is crucial. While you can't control TDSP charges, you can strategically manage your energy procurement and consumption to minimize total costs.

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The Texas Electricity Market in 2026: What's Driving Costs Higher

Several market forces are converging to push electricity costs upward for Texas businesses in 2026. Here's what you need to know:

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Unprecedented Demand Growth

Texas is experiencing explosive electricity demand growth unlike anything seen in decades. The Electric Reliability Council of Texas (ERCOT) projects demand to increase by 7% in 2025 and 14% in 2026—driven primarily by:

• Data center expansion – Major tech companies are building AI and cloud computing facilities across Texas
• Cryptocurrency mining operations – Energy-intensive mining facilities cluster in areas with competitive rates
• Industrial growth – Manufacturing and oil & gas expansion, particularly in West Texas
• Population and economic growth – Continued migration to major metros like Dallas, Houston, Fort Worth, Austin, and El Paso

The Energy Information Administration (EIA) estimates that Texas and the broader West South Central region will account for 66% of all U.S. electricity demand growth in 2026.

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Wholesale Price Increases

ERCOT wholesale electricity prices are projected to rise significantly in 2026, with the load-weighted average expected to reach $51/MWh—an 8.5% increase over 2025 and 23% higher than 2024 levels.

The primary driver? More frequent price spikes during summer peak hours when high demand collides with tight supply margins. Even if natural gas prices remain moderate, the strain on the grid during extreme weather events creates volatility that ultimately affects retail rates.

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Infrastructure Investment Costs

Texas utilities are investing billions of dollars to modernize the grid, expand transmission capacity, and improve reliability following Winter Storm Uri and subsequent extreme weather events. While these improvements are necessary, the costs are passed through to commercial customers via higher TDSP delivery charges.

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What This Means for Your Business

If you're locked into a favorable rate that expires in 2026 or beyond, you're in a strong position—for now. But businesses coming off contract in 2026 should expect renewal quotes 5-15% higher than their current rates, depending on timing and market conditions.

The critical takeaway: Proactive energy procurement strategy is more important than ever. The businesses that will fare best are those working with experienced energy advisors to time their contracts strategically and secure rates before further market tightening.

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Strategies to Reduce Your Commercial Electricity Costs

Despite rising market pressures, Texas businesses have multiple opportunities to control and reduce electricity expenses. Here are the most effective strategies:

1. Leverage Competitive Procurement Through Reverse Auctions

Texas's deregulated electricity market gives you the power to choose from over 25 retail providers competing for your business. But most companies don't have the time or expertise to solicit quotes, compare complex contract terms, and negotiate favorable rates.

This is where professional an energy brokerage delivers measurable ROI. At EnergyBrokerTx, we use a reverse auction strategy that puts your business needs out to bid across our entire provider network. This competitive process typically yields rates 15-30% below what businesses secure on their own.

Why it works:

• Providers compete directly for your business
• You receive side-by-side comparisons with transparent pricing
• We handle all paperwork and transition logistics
• No cost to you—providers compensate us, and we keep commissions low to pass savings to clients

Whether you operate a restaurant, healthcare facility, manufacturing plant, retail store, or apartments or multifamily properties, our process is designed to secure the most competitive rates available for your specific usage profile and industry.

Ready to see what you could save? Request your free, no-obligation energy audit today.

2. Time Your Contract Renewal Strategically

One of the most overlooked opportunities for savings is contract timing. Electricity rates fluctuate based on wholesale market conditions, seasonal demand, and natural gas prices. Signing a new contract during a rate spike can lock you into higher costs for years.

Best practices for contract timing:

• Start shopping 90-120 days before expiration – This gives you time to monitor market trends and strike when rates dip
• Avoid summer renewal – Rates typically peak during Texas's hottest months (July-August) when demand is highest
• Consider market forecasts – Energy market experts can help you understand if current rates are favorable or if waiting might yield better options
• Don't auto-renew – Provider auto-renewal rates are almost always higher than competitively bid contracts

Many businesses miss their optimal renewal window simply because they don't start the process early enough. We proactively monitor our clients' contract expiration dates and provide renewal recommendations 4-6 months in advance, ensuring they lock in favorable rates before market conditions change.

3. Evaluate Contract Length Based on Market Conditions

Should you sign a 12-month, 24-month, or longer-term contract? The answer depends on current market conditions and your business's risk tolerance.

When to consider shorter-term contracts (12-18 months):

• Rates are currently high, and you expect them to decrease
• Your business is growing or changing, and you want flexibility
• You prefer to reassess options more frequently

When to consider longer-term contracts (36-60 months):

• Rates are favorable compared to historical averages
• You want budget certainty and protection from market volatility
• Your business has stable, predictable operations

Given the rising rate environment forecasted for 2026, businesses with the opportunity to lock in competitive rates now—especially below 8 cents per kWh—should seriously consider longer-term contracts to hedge against further increases.

4. Reduce Peak Demand Charges (For Larger Commercial Accounts)

If your business has a commercial meter that records interval data, you may be paying demand charges based on your peak electricity usage during specific periods. In Texas, the "4CP" (Four Coincident Peaks) program means your annual transmission costs are determined by your usage during the four highest-demand hours across the ERCOT system each summer (June-September).

How demand charge management works:

• Energy experts predict when peak periods are likely to occur
• You receive alerts to reduce consumption during these critical hours
• Successful curtailment during all four peaks can save $40,000-$50,000 per megawatt annually

Demand reduction strategies:

• Shift energy-intensive operations to off-peak hours (before 3 PM or after 7 PM)
• Temporarily curtail manufacturing processes
• Reduce HVAC load by pre-cooling facilities
• Use on-site generation during peak windows

For businesses with significant electricity demand—particularly restaurant, healthcare facility, manufacturing plant, retail store, or apartments or multifamily properties operations—working with an advisor who provides 4CP alerts and demand management strategy can deliver substantial savings beyond just competitive rate procurement.

5. Implement Operational Energy Efficiency Measures

While negotiating better rates addresses the price side of the equation, reducing consumption tackles the volume component. Even modest efficiency improvements compound into significant savings over time.

High-impact efficiency investments for Texas businesses:

Upgrade to LED Lighting
LED bulbs use up to 75% less energy than traditional incandescent lighting and last significantly longer. For businesses with extensive lighting needs—retail stores, warehouses, restaurants, office buildings—this single upgrade can reduce electricity consumption by 20-30%.

Optimize HVAC Systems
Heating and cooling typically represent 40-50% of commercial energy use in Texas. Regular maintenance, programmable thermostats, and modern, efficient systems can dramatically reduce consumption. Consider:

• Smart thermostats that adjust based on occupancy
• Regular filter changes and system maintenance
• Zoned climate control to avoid cooling unused spaces
• Proper insulation and sealing to prevent energy loss

Install Energy Management Systems
Smart meters and energy monitoring systems provide real-time visibility into consumption patterns, helping you identify waste and optimize usage. Some systems can automatically adjust lighting, HVAC, and equipment based on occupancy and demand.

Shift Operations to Off-Peak Hours
If your business operations allow flexibility, running energy-intensive equipment during off-peak periods (typically 10 PM to 6 AM) can reduce both demand charges and energy costs on time-of-use rate structures.

Conduct a Professional Energy Audit
Many utilities and energy consultants offer comprehensive audits that identify specific opportunities for efficiency improvements tailored to your facility and industry.

6. Explore Renewable Energy Options

Texas is the nation's leader in wind energy production and rapidly expanding solar capacity. Many commercial electricity contracts now offer renewable energy options—some at competitive or even lower rates than traditional fossil fuel plans.

Benefits of renewable energy contracts:

• Demonstrate corporate sustainability commitments
• Potential cost savings as renewable capacity expands
• Hedge against fossil fuel price volatility
• Enhance brand reputation with environmentally conscious customers

Whether you're interested in 100% renewable plans or mixed portfolios, working with an experienced commercial energy broker ensures you understand the true costs and benefits of green energy options for your specific business needs.

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Don't Leave Money on the Table: Take Action Now

The Texas commercial electricity market is becoming increasingly complex and competitive. With demand surging, prices rising, and regulatory changes on the horizon, businesses that take a proactive, strategic approach to energy procurement will be best positioned to control costs and maintain competitive advantage.

Here's your action plan:

If your contract expires in the next 6 months:
Start your competitive bidding process now. Don't wait until the last minute—early action gives you leverage to secure the best rates before market conditions change.

If you're locked into a contract for another year or more:
Use this time to implement efficiency improvements and develop your demand management strategy. When renewal time comes, you'll have lower consumption and a strong position to negotiate.

If you're unsure whether you're paying too much:
Request a free bill analysis. We'll review your current rate, contract terms, and usage patterns to identify potential savings opportunities—with zero obligation.

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Why Work with EnergyBrokerTx?

Unlike going direct to providers or working with high-commission brokers, our approach is built around your success:

• Truly competitive bidding – We solicit quotes from 25+ providers to ensure you see the full market
• Low commission structure – We intentionally keep our fees low so providers pass maximum savings to you
• Same-day contracting – Once you select your preferred plan, we handle all paperwork and get you enrolled quickly
• Ongoing support – We don't disappear after the sale; we monitor your account and assist with renewals to maximize long-term savings
• Industry expertise – We understand the specific energy needs of restaurants, healthcare facilities, manufacturing operations, apartments or multifamily properties, and other commercial sectors across Texas

Our clients across Dallas, Frisco, Houston, Fort Worth, Corpus Christi, Austin, San Antonio, Waco, and El Paso, and throughout Texas consistently save 15-30% on their electricity costs. More importantly, they gain peace of mind knowing they have an experienced advisor managing this critical business expense.

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Take Control of Your Energy Costs Today

Understanding your commercial electricity bill is the foundation for making informed decisions that impact your bottom line. But knowledge alone won't reduce your costs—action will.

Whether you're frustrated by rising rates, confused by complex bills, or simply want to ensure you're getting the best deal available, we're here to help.

Schedule your free consultation today and discover how much your business could save. There's no cost, no obligation, and no pressure—just straightforward analysis and transparent recommendations from Texas energy experts who work for you.

Let's put the power of Texas's deregulated electricity market to work for your business.

About EnergyBrokerTx: We're a Texas-based commercial energy brokerage specializing in helping businesses across all industries secure the most competitive electricity rates through strategic procurement and competitive bidding. Our low-commission approach and reverse auction process consistently deliver 15-30% savings compared to direct provider relationships or auto-renewals. Contact us today to start saving.