How Much Do Commercial Electricity Rates Really Cost? Here’s What You Should Know!

Are you wondering how much electricity costs for a business? You’re not alone. Electricity is one of the biggest bills for many companies.

This guide will help you understand commercial electricity rates in a simple way.

What Are Commercial Electricity Rates?

Commercial electricity rates are the prices businesses pay for using electricity. They are usually different from what you pay at home.

Homes and businesses pay different prices because they use electricity in different ways. A house might only need power for lights, a fridge, and TV.

A business might run big machines, computers, or cold storage. That means businesses usually use more electricity.

But more usage doesn’t always mean cheaper power. In fact, rates can go up if businesses use power at busy times, like during the day.

Let’s break it down in easy steps.

Why Do Commercial Electricity Rates Matter?

Electricity is a big part of running a business. For restaurants, stores, warehouses, and factories, it powers almost everything. If rates go up, it means higher bills and lower profits.

In 2023, the average commercial electricity rate in the U.S. was about 13.39 cents per kilowatt-hour (kWh). But that number can change a lot depending on where you are.

For example:

In Hawaii, rates can be 29.6 cents/kWh.
In Louisiana, it may be as low as 9.5 cents/kWh.

So yes, your business’s location really matters!

What Factors Affect Commercial Electricity Rates?

There isn’t one simple price for everyone. Rates change based on many factors. Here are the most common ones:

1. Location

Some places have more natural energy sources or better infrastructure. This helps keep prices lower. Others rely on fuel that costs more, like oil or gas.

For example, Texas has lower rates because of wind and solar energy. California has higher rates due to regulations and demand.

2. Time of Use

Electricity costs more during peak hours (like 9 AM to 5 PM). If your business runs mostly during those hours, you may pay more.

Some utility companies offer deals for using power at night or weekends.

3. Amount of Power Used

Big businesses often use thousands of kilowatt-hours a month. Some power companies give discounts for higher use. Others charge more if the usage spikes quickly.

4. Type of Rate Plan

There are different kinds of plans. Some are fixed-rate, where you pay the same price all year. Others are variable, where prices change each month.

Fixed plans give you peace of mind. Variable plans might save money during low-demand seasons, like spring or fall.

5. Demand Charges

Besides just paying for how much electricity is used, many businesses also pay a “demand charge.” This is based on the highest amount of power used at one time.

Let’s say your bakery turns on ovens, refrigerators, and mixers all at once. That sudden demand means you’ll be charged more—even if it only lasts a short time!

Real Life Case: One Business Saved Thousands

Take for example “Tina’s Ice Cream Shop” in Arizona. She was paying $2,000 monthly. She didn’t realize she was on a variable rate plan and her demand charges were through the roof.

After talking to her electric supplier and switching to a time-of-use plan, she moved heavy freezer use to nighttime.

Now she pays $1,200 monthly. That’s $9,600 saved in one year. Same business, same size—but smarter plan.

How Do You Check If You’re Overpaying?

This part is crucial. You might be paying more than you should and not even know it. Here’s how to check:

Look at your electric bill. It shows what rate you’re on and how much energy you’re using.
Check if your plan is fixed or variable.
Call your electric company and ask if better plans are available.
Compare what you pay with the average rate in your state.

Tip: Websites like the U.S. Energy Information Administration (EIA) post average rates by state every month.

How Small Businesses Can Lower Electricity Costs

You don’t need to own a giant factory to save. Even small changes can make a big difference.

Simple Ways to Save:

Turn off lights when not in use.
Use LED bulbs—they use 75% less power than old bulbs.
Get a smart thermostat to control heating and cooling.
Shift power-heavy work to off-peak hours.
Ask your energy company for a free audit.

Example: A small print shop in Ohio saved $500/month by switching lighting, unplugging idle machines, and using power at mid-day instead of mornings.

What’s the Difference Between Commercial and Residential Rates?

You may wonder why your home bill is cheaper per kWh than your business.

That’s mostly because commercial rates include more fees, like:

Demand charges
Infrastructure and delivery costs
Power factor penalties (for complex equipment)

Also, residential users are protected by more government rules. Businesses, on the other hand, often have to shop around and negotiate.

It’s a bit like buying in bulk—you can save money or lose money, depending on how smart you shop.

Should You Switch Providers?

In many states, businesses can pick their electricity supplier. This is called an “open market.”

If your business is in Texas, New York, or Pennsylvania, you may have this option. You can shop for the best plan—just like you shop for phones or internet.

One Texas office building saved 20% by switching from one supplier to another. All they did was compare plans online and lock in a low rate for 2 years.

So yes, switching might be worth your time.

Conclusion: Take Control of Your Power Bill

Commercial electricity rates don’t have to be confusing or scary. Here’s what to do:

Read your bill. Know your rate, charges, and peak hours.
Compare plans. See if a cheaper supplier or plan exists in your area.
Change habits. Use energy at smart times, and cut wasteful use.

Start now, and your business could save hundreds—or even thousands—every year. After all, running a business is hard enough. Your power bill shouldn’t make it harder.