Getting the right electricity plan is essential in running an effective and successful business in Texas. This is because electricity rates in Texas are never constant. They are usually affected by several factors including; weather, skyrocketing energy demands (that overwhelms supply, especially during the summer period), changing oil and gas prices, among many other factors. So, as a business owner, it is prudent that you select an electricity plan that is not only affordable but one that will address all your energy needs.
Energy deregulation in Texas that occurred in 2002, brought relief to business owners as it opened up the market to retail electricity providers creating a vibrant and thriving energy market. This competitiveness has also contributed to low energy rates and customer-oriented electricity service. It also changed the status quo by giving businesses and residents the power to choose their electricity providers.
How do you identify the best commercial electricity rates in Texas?
There are over 70 electricity companies in Texas offering over 100 electricity plans, making it challenging to identify the right plan for your business. However, there are websites where you can compare electricity rates and plans, specifically, for medium and small businesses.
Medium and Small Businesses
Small and medium businesses are business enterprises that have less than 5 utility meters and whose electricity bill is not more than $2,500 per month. In order for you to shop, compare and identify the right electric plan for your small business, you will need a zip code of the place your business is located or where you intend to start the business. You will then be provided with a list of electric companies and their electricity plans available in that area.
After you’ve selected the right plan, the next step is to provide details about your business such as your business energy consumption rates, your business name, business location, among other basic details.
The REP will then conduct a credit check on you the same way they do when you apply for residential electricity plans. The providers’ reps will contact you for clarification and for other extra details to either begin service or to provide you with energy-efficient programs for your business. They should also give you the Electricity Fact Label popularly known as EFL that matches your meter type and contains all the details about the plan you’ve selected. This should be done before you append your signature on the contract.
Large Businesses
In the case of large industries, businesses, and companies with a monthly utility bill that is over $2500, the best way to find the right plan is by requesting custom quotes from several electric providers. The majority of Texas electricity companies offer exclusive commercial electricity rates that are not available online.
It is important to note that commercial electricity rates change almost every day and as such, it is crucial that you choose the best business electricity plan with acceptable terms. Make sure that you read the terms and conditions in detail. Generally, the more energy your business consumes the lower your negotiated business electricity rate.
Large commercial customers are usually given the opportunity to choose from fixed-price options like;
- Fixed plan with limited pass-through; This type of plan offers a fixed energy cost but might also be given a pass-through for the ancillary services e.g line basis or losses which is basically the price for transmitting electricity to your business location.
- Fixed plan full requirements: This plan as the name suggests, comprises all the extra charges in addition to the energy cost. This is the best, reliable, and secure way of purchasing energy.
Understand your business electricity consumption rate
Knowing the quantity of energy your business consumes is vital in identifying the right electricity plan for your business. Apart from knowing your business electricity consumption rate, you also need to know what times you use electricity the most. Other factors that will influence your rate include
- Type of business; is it a retail store, restaurant, church, office building, or a manufacturing facility. The level of energy demands depends on the type of business which can influence your ultimate energy rate.
- Time of operation; does your business operate for 24 hours or is it during the day or night? There are some commercial energy providers who offer the lowest rates for off-hours usage.
- Long term plans: do you have plans to upgrade or downgrade your business in the future? Having your future business plans in mind will help you choose the correct contract period and avoid the expensive termination charges.
Cheapest business electricity rate in Texas
According to the U.S Energy Information Administration or EIA, Texas’s average business electricity rate is recorded as 11.74 cents per kWh, which is 24 percent lower than the country’s average rate of 13.19 cents per kWh. Business electricity rates vary from city to city.
For example, the cheapest commercial electricity rate for a 6-month commercial electricity plan in Houston is currently (November 2020) offered at 3.83 cents/kWh, while 48 months fixed-rate commercial electricity rate plan goes for 4.80 cents/kWh. In Dallas, the same 6-month plan is 3.96 cents/kWh and the 48-month plan is priced at 4.67 cents/ kWh.The lowest 6-months electricity rate in Texas is 3.16 ¢/kWh while the 36, 24, and 12 months business electricity rate is 5.05, 5.15, and 5.33 ¢/kWh.
Types of business electricity rates in Texas
There are three popular types of business electricity rates for small business enterprises i.e, fixed-rate, indexed rate, and green energy or renewable energy plans. With fixed-rate business plans, you pay the same rate regardless of the changing market forces. This rate is fixed based on your electricity consumption rate, enabling you to budget for your electricity usage without worrying about fluctuating rates and changing electricity prices.
Indexed business rate plan
This is a type of business plan whose rate is linked to some other formula or variables that are then used to compute your electricity rate. For instance, an indexed electricity rate might be linked to the cost of natural gas or some certain published items. The most common indexed plan is the time of use. This time of use plan contains a different rate that is linked to either the time of the week or time of use. This is an ideal plan for those companies or businesses that are operational during off-hours such as weekends and nights.
Green energy or Renewable energy
This is a commercial electricity rate plan that offers a fixed-rate that is inclusive of Renewable Energy Credit (RECs). Whenever you purchase a green energy electric plan, your REP buys Renewable Credits to compensate for the carbon emitted from the electricity you are using. It is the best plan for environmentally conscious businesses.
