Key pointsYour business price has three main parts: the power itself, a flat monthly fee, and a delivery fee from the company that owns the power lines.Small meters usually pay delivery by the kWh only. Bigger meters also pay a "demand charge" based on their busiest 15 minutes of the month.Business fact sheets show prices at 1,500, 2,500, and 3,500 kWh. Use the one closest to your usage.Moving your business? You usually won't owe a cancellation fee. Closing for good is different, so read your contract.
If you run a shop, you probably know your rent and payroll to the dollar. The electric bill is harder to pick apart.
Business electricity works a lot like home electricity, with a few twists. On bigger meters, that includes a charge most homes never see: the demand charge.
How a business rate differs from a home rate
On a business meter, fact sheets use bigger usage levels, delivery rates are grouped by meter size, and deposit rules are different. Bigger meters also pay demand charges.
The state has a category called "small commercial customers." That's a business whose peak use stays under 50 kW in any 12-month period (kW is explained below). These businesses get many of the same protections homes get, and most shops, salons, and small offices fall into this group.
Bigger businesses can agree to different contract protections. If that's you, see our commercial and industrial page.
Who does what
Three organizations are involved in getting power to your door.
Your provider sells you a plan, sets your price, and sends your bill. The official name is "retail electric provider."
The company that owns the power lines owns the poles, wires, and meter, and fixes outages. Your address decides which one you get. The official name is "TDU" (transmission and distribution utility). The big ones are Oncor, CenterPoint, AEP Texas, and TNMP.
ERCOT runs most of the Texas grid and handles the paperwork when you switch.
The state approves delivery fees, but not your provider's price. And no provider can claim you'll get better delivery by picking them. The lines are the same whichever provider you choose.
What's inside a business electricity price
The energy charge. This is the price of the power itself, for each kilowatt-hour (kWh) you use. A kWh is a unit of electricity. A 1,000-watt coffee maker running for an hour uses about 1 kWh. Providers compete on this part most.
The base charge. Some plans add a flat monthly fee that's the same no matter how much you use.
The delivery charges. Your provider pays the company that owns the power lines, then passes that cost along. Everyone in your area with the same size meter pays the same delivery rates, no matter which provider they pick.
Delivery charges are really a stack of pieces. There's a flat monthly fee and a meter fee, a charge per kWh or per kW (or both), and small add-on fees for things like power line upgrades and energy-saving programs. Many bills roll all of that into one line, but your provider has to give you an itemized list if you ask.
Demand charges and what kW means
Business bills can measure power two ways:
- kWh (kilowatt-hours) is how much power you used all month, like the miles on your odometer.
- kW (kilowatts) is how fast you were using power at one moment, like your speedometer.
A demand charge is based on kW. The power line company looks at your busiest 15 minutes of the month, which is your "peak demand." The reason is that the lines and equipment have to be big enough to handle your busiest moment.
Picture a restaurant at 6 p.m. on a Friday in July. The ovens, fryers, dish machine, and AC are all running at once. That 15-minute stretch can set the demand charge for the whole month.
Demand ratchets
A "ratchet" can keep charging you for an old peak. Your bill uses whichever is higher: this month's peak, or a set share of your highest peak from earlier months.
Oncor's tariff, for example, uses 80% of your highest peak from the past 11 months for some charges. Say your shop hit 40 kW last August. In a quiet month, you could still be billed for at least 32 kW.
Many small shops get a break, though:
- State rules don't allow a ratchet on the main delivery charge for a business with very spiky use. The test is "load factor," which compares your average use to your peak. At 25% or less for the year, there's no ratchet.
- Oncor and TNMP skip the ratchet on their main delivery charge if your peak has stayed at 20 kW or less.
- CenterPoint and AEP Texas currently bill their main delivery demand charge on this month's peak.
- If you move into a space someone else used, the power line company generally resets the ratchet. You don't inherit the last tenant's peak.
Some smaller add-on fees can still use a ratchet, so check your bill. And if you can, stagger big equipment. Start the AC before you fire up the ovens.
Where the demand charge starts
Power line companies sort business meters by size. Small meters pay delivery by the kWh only. Go over a set size and you move to a bigger group that pays for kW too. This is where each company draws the line, from its current tariff:
| Power line company | Small meter (no demand charge) | What moves you up |
|---|---|---|
| Oncor | 10 kW or less | Over 10 kW three times in 12 months, or over 12 kW once. Back down after 12 straight months at 10 kW or less. |
| CenterPoint | 10 kVA or less | Over 10 kVA. You stay up at least 12 months. |
| AEP Texas | 10 kW or less | Over 10 kW. You stay up at least 12 months. |
| TNMP | 5 kW or less | Demand over 5 kW. |
CenterPoint measures in kVA, a close cousin of kW. For a small shop, think of them as the same idea.
A small office with lights and computers may stay under the line. A restaurant or convenience store with coolers and cooking gear is more likely to go over.
If your provider adds its own demand charge, your contract must explain it.
Reading a business fact sheet
Every plan has a fact sheet called the Electricity Facts Label, or EFL, which the state compares to a nutrition label. For small businesses, it shows a price per kWh at three usage levels: 1,500, 2,500, and 3,500 kWh a month.
That price rolls in the regular charges, meaning the power, your provider's flat fees, and the delivery charges. It doesn't include sales tax or the gross receipts tax reimbursement.
Bigger meters have one catch. If demand charges apply, the EFL assumes a 30% load factor, which is a guess about how steady your use is. If your shop runs in big bursts, your real price can come in higher.
The EFL also lists the plan type, contract length, cancellation fee, and other fees. You'll also get a Terms of Service (your actual contract) and Your Rights as a Customer, free anytime you ask.
Example: delivery charges for an Oncor-area shop
Take a shop in the Oncor area. These are only the delivery charges, using the state's posted numbers as of October 1, 2026. Your provider's charges come on top.
On a small meter (10 kW or less), it's $2.34 a month, plus $4.36 for the meter, plus about 5.1¢ per kWh:
| Monthly use | Delivery charges only | Works out to |
|---|---|---|
| 1,500 kWh | $83.54 | about 5.6¢ per kWh |
| 2,500 kWh | $134.77 | about 5.4¢ per kWh |
| 3,500 kWh | $185.99 | about 5.3¢ per kWh |
On a bigger meter (over 10 kW, standard meter), it's $24.00 a month, plus $20.99 for the meter, plus about $12.97 per kW of peak demand, plus a tiny per-kWh charge:
| Monthly use | Busiest 15 minutes | Delivery charges only | Works out to |
|---|---|---|---|
| 3,500 kWh | 15 kW | $241.43 | about 6.9¢ per kWh |
| 3,500 kWh | 20 kW | $306.28 | about 8.8¢ per kWh |
Both of those shops used 3,500 kWh. The one with the bigger burst paid about $65 more for delivery.
These charges change a few times a year. Oncor had an update take effect October 4, 2026, so today's numbers may differ a bit.
Plan types a business can get
Fixed rate. Your price stays the same for the whole contract, which lasts at least three months. It can only change for things outside the provider's control, like delivery charge changes, certain grid fees, or new laws.
Variable rate. The price can change based on a method the provider sets. The month-to-month-only limit is written for homes, so a business variable plan could have a longer term. Check the term and the cancellation fee.
Indexed rate. These follow a market price formula. Texas hasn't allowed them for small businesses since 2022, and plans passing through real-time wholesale prices have been off-limits since 2021.
Contract length and cancellation fees
Longer contracts lock in your price longer, but many fixed plans charge an early termination fee if you leave early. It's on the EFL.
Moving is the main exception. Your contract only covers the location listed in it, so you don't have to take it with you. There's no cancellation fee if you give a forwarding address and, if asked, proof you've left.
Closing for good is different. That protection is written for moving, so if you simply close, you may still owe the fee your contract lists. Your Terms of Service must explain how to end service and any penalties, and it's worth reading before you sign.
Two other rules help. There's no cancellation fee in the 14 days before your contract ends. And after you switch, you get three business days to cancel for free, though that doesn't apply when you're moving into a new space.
Deposits
Each provider sets its own fair credit rules for businesses. If you can't meet them, it can ask for a deposit.
The state's dollar limit on deposits is written for homes. For a business, the Terms of Service must explain when a deposit is required and how the amount is figured.
Some protections still apply:
- If the provider holds your deposit more than 30 days, it earns interest.
- You get it back after 24 bills in a row with no late payments.
- When you switch, your deposit (plus interest) is refunded or moved to your new provider, minus anything you still owe.
Businesses with more than one location
Each location has its own meter, its own ID number on the bill, and its own rate group. One store might be on a small meter while another pays demand charges. A Dallas shop and a Houston shop also have different power line companies, with different delivery charges.
Keep a list of each location's usage, peak, and contract end date, and try to line up the end dates so you can shop once. If locations are grouped into a deal topping 50 kW, different rules can apply, so ask. Our multi-location business page has more.
Taxes and fees on a business bill
- Gross receipts tax reimbursement. This covers a state tax on providers operating in cities or towns with more than 1,000 people.
- PUC assessment. A small fee that helps fund the state agency that oversees electricity.
- Sales tax. The state, cities, and special districts may collect it. Ask your accountant how it applies to you.
- Late fee. If you pay late, a provider can charge a one-time penalty of up to 5% on that bill.
When to shop
On a fixed plan, your contract end date is printed on every bill. Your provider must also send at least three written notices before a fixed contract ends, the last one at least 14 days before the end date.
If you do nothing, you'll roll onto a month-to-month plan. You can leave it anytime without a fee, but its price can change monthly.
Prices move with natural gas costs, summer heat, and grid demand, so it pays to start comparing two or three months before your end date. When you pick a new plan, you can ask for a start date that lines up with your old contract ending. Check your current cancellation fee first.
Quick answers
What is a demand charge?
It's a charge based on your busiest 15 minutes of the month, measured in kW. It pays for the size of the lines needed to serve you at your peak.
Why doesn't my small shop pay a demand charge?
Small meters, usually 10 kW or less (5 kW or less in TNMP's area), pay delivery by the kWh only. Bigger meters also pay for peak demand.
Will I owe a cancellation fee if my business moves?
Usually not. Give your provider a forwarding address and proof you moved, if asked. Closing for good is different, so check your contract.
Can a small business get an indexed or wholesale-priced plan in Texas?
No. Texas doesn't allow them for homes or small businesses.
Compare business plans
Compare business plans for your shop. Our small business electricity guide and the industries we serve page go further, and the FAQ covers common questions.
Prices and delivery charges change often. Always read a plan's Electricity Facts Label, Terms of Service, and Your Rights as a Customer before you sign up. WattKarma is run by Symbio Energy Partners, a broker registered with the Public Utility Commission of Texas (PUCT Broker Reg. No. BR220202).
Sources
All sources were checked on October 16, 2026.
- Public Utility Commission of Texas (PUCT), Transmission and Distribution Utility Rates (links to each utility's monthly rate report, as of Oct. 1, 2026): https://www.puc.texas.gov/industry/electric/rates/TDR.aspx
- Oncor's monthly rate report, posted by the PUCT (business delivery charges as of Oct. 1, 2026): https://ftp.puc.texas.gov/public/puct-info/industry/electric/rates/tdr/tdu/Oncor_Rate_Report.pdf
- Oncor's monthly rate report filing to the PUCT (rate update effective Oct. 4, 2026): https://interchange.puc.texas.gov/Documents/58511_62_1683254.PDF
- Oncor, Tariff for Retail Delivery Service (secondary service at or under 10 kW and over 10 kW; class moves; 15-minute peak; 80% ratchet; 20 kW and load factor provisions; ratchet reset for new customers): https://www.oncor.com/content/dam/oncorwww/documents/about-us/regulatory/tariff-and-rate-schedules/Tariff%20for%20Retail%20Delivery%20Service.pdf
- CenterPoint Energy Houston Electric, Tariff for Retail Delivery Service (secondary service at or under 10 kVA and over 10 kVA; 12-month rule; billing on current month's peak): https://assets.centerpointenergy.com/api/public/content/houston-electric-tariff-for-retail-delivery-service.pdf
- AEP Texas, Tariff for Electric Delivery Service, effective Sept. 29, 2026 (secondary service at or under 10 kW and over 10 kW; 12-month rule; ratchet on certain riders): https://www.aeptexas.com/lib/docs/ratesandtariffs/Texas/AEP_TEXAS_TARIFF_Eff_Sept_29_2026v1.pdf
- Texas-New Mexico Power (TNMP), Tariff for Retail Delivery Service, effective Sept. 13, 2026 (secondary service at or under 5 kW and over 5 kW; 80% ratchet and exceptions): https://tnmp.com/sites/default/files/inline-images/TNMP%20Retail%20Tariff%20%2858964%29.pdf
- PUCT Rule 25.244 (demand ratchet definition; no ratchet for secondary customers with an annual load factor of 25% or less): https://ftp.puc.texas.gov/public/puct-info/agency/rulesnlaws/subrules/electric/25.244/25.244.pdf
- PUCT Rule 25.471 (definition of small commercial customer; larger customers may agree to different protections): https://ftp.puc.texas.gov/public/puct-info/agency/rulesnlaws/subrules/electric/25.471/25.471.pdf
- PUCT Rule 25.475 (fact sheet usage levels and 30% load factor; plan types; indexed product ban; moving and early termination; expiration notices; default renewal; demand charge disclosure; no claims of better delivery): https://ftp.puc.texas.gov/public/puct-info/agency/rulesnlaws/subrules/electric/25.475/25.475.pdf
- PUCT Rule 25.474 (three business days to cancel after switching; scheduled switch dates): https://ftp.puc.texas.gov/public/puct-info/agency/rulesnlaws/subrules/electric/25.474/25.474.pdf
- PUCT Rule 25.478 (credit and deposits for non-residential customers; interest; refunds): https://ftp.puc.texas.gov/public/puct-info/agency/rulesnlaws/subrules/electric/25.478/25.478.pdf
- PUCT Rule 25.479 (official names for bill charges, taxes, and fees; itemized list on request; contract end date on bills): https://ftp.puc.texas.gov/public/puct-info/agency/rulesnlaws/subrules/electric/25.479/25.479.pdf
- PUCT Rule 25.480 (one-time late payment penalty of up to 5%): https://ftp.puc.texas.gov/public/puct-info/agency/rulesnlaws/subrules/electric/25.480/25.480.pdf
- PUCT, "Understanding your bill" (what the PUCT regulates; why bills change; bill charge definitions): https://www.puc.texas.gov/consumer-help/electricity/understanding-bill/
- PUCT, Electricity Facts Labels (the "nutrition label" comparison): https://www.puc.texas.gov/industry/electric/rates/facts/Default.aspx