Want to cut your business’s power bill? Learn how Commercial electricity Rates work, why they matter, and how you can save money today.
Commercial electricity rates are the prices that businesses pay for electricity. Unlike homes, businesses often use more power. Because of that, electricity companies charge them at different rates.
These rates depend on a few things:
Understanding these rates helps you control your power bills. Knowing what affects the cost is the first step to saving money.
Homes and businesses don’t use electricity the same way. A house might run a fridge, lights, and a TV. But a business could use large machines or powerful lights all day.
Because of this, electricity companies create special plans called commercial rates. Here’s how they differ:
Let’s say a bakery turns on all its ovens at once in the morning. That can create a spike in usage. This spike can raise the bakery’s energy bill for the whole month.
This is what you pay for the actual electricity you use. It’s measured in kilowatt-hours (kWh). For example, using 1,000 kWh at $0.10 per kWh costs $100.
This is based on the highest amount of energy used at one time. Even if it’s just for 15 minutes, this can drive up your bill. For some businesses, this charge is 30%-50% of their total bill.
Example: A small business uses 50 kilowatts at once. The demand charge is $15 per kilowatt. That’s $750 added to the bill, even if it’s only for that short time.
Some utilities charge more during peak hours, like 1 PM to 6 PM. Using energy during non-peak hours can be cheaper. This type of rate plan rewards smart energy use.
Let’s look at real numbers from two businesses in Texas:
| Business Type | kWh Used Monthly | Demand (kW) | Monthly Bill |
| Office (9–5) | 10,000 | 30 | $1,200 |
| Warehouse (24/7) | 15,000 | 25 | $1,100 |
Even though the warehouse used more power, its demand was lower because usage was spread out. The office, with a sharper spike in the daytime, ended up paying more!
Different states have different average rates for business electricity. Here’s a snapshot from the U.S. Energy Information Administration (2023 data):
| State | Average Rate (cents/kWh) |
| California | 19.0 |
| Texas | 8.5 |
| New York | 16.7 |
| Florida | 11.2 |
| Illinois | 10.4 |
Rates are lowest in states like Texas and highest in states like California.
Why? Weather, demand, fuel costs, local power companies, and renewable energy use all play a part.
You can’t always change the rate, but you can control your usage. Here are smart ways to cut down:
Use smart meters or energy dashboards. These tools help you see exactly when and where you’re using the most power.
Example: A small gym in Chicago reduced electricity costs by 25% just by turning off lights in unused rooms and staggering the use of treadmills and heating units.
Try to run machines earlier or later in the day. If your plan uses TOU rates, this can save tons of money.
Example: A laundromat moved its water-heater use to 10 PM. It saved over $200 per month.
Some utility companies offer plans that pay you to reduce power at peak times. It helps the grid and lowers your bill.
Old lights, ACs, and machines waste energy. Try LED lighting, Energy Star appliances, or smart thermostats.
Case Study: A restaurant in Florida replaced old kitchen fridges with new models. Their power bill dropped by 18% in only three months.
In some states like Texas, Pennsylvania, and Ohio, you can choose your electricity provider. This gives you the power to shop for better rates.
Here’s how to pick the best plan:
Tip: Some energy brokers can help you compare options for free.
You don’t need to fear your electricity bill anymore. Here’s what to do:
The power to save is in your hands. Every dollar counts.
