TDU Territory or Contract Term: Which Choice Actually Sets Your Texas Commercial Electricity Rate in 2026
For most Texas commercial buyers, contract term moves the energy line of the bill more than TDU territory does. Delivery is the opposite story: the TDU sets that charge and it is not shoppable.
For most Texas commercial buyers, contract term length moves the energy line of the bill more than TDU territory does. Across 7,334 active commercial plans in the Texas Commercial Plans catalog as of August 26, 2026, term-length averages spread about 21% while TDU-territory medians spread only about 4.5%. Delivery is a different story, because the TDU sets that charge and it is not shoppable, so a Houston buyer and a Rio Grande Valley buyer live in different delivery-cost worlds before the energy rate is even picked.
Key takeaways
- The Texas commercial market has two rate levers, your TDU territory (set by geography, not shoppable) and your contract term length (fully shoppable).
- On the energy portion of the bill, term length shows a wider spread than TDU territory. Mid-term contracts (24 to 36 months) currently sit at the tightest median.
- On the delivery portion of the bill, TDU territory is decisive. TNMP customers pay roughly 7.44 cents per kWh in delivery, while CenterPoint customers pay roughly 3.90 cents per kWh, per ElectricityPlans (2026).
- The lever that matters more depends on your annual kWh. Low-usage buyers feel delivery more, and high-usage buyers feel the shopped energy rate more.
- Use the TxCP TDU-vs-Term Impact Matrix below to estimate which lever moves more dollars on your bill before you sign a renewal.
The two levers on your Texas commercial electricity bill
Every commercial electric bill in the deregulated Texas market has two decisions embedded in it, and each one sits on a different side of what a buyer can actually control. The Texas Commercial Plans overview of how commercial rates work covers the full bill anatomy; this piece drills into the two decisions that actually move the number.
The first decision is your TDU territory. It is set by the physical address of your meter. If the meter sits inside Oncor's footprint, which covers much of the Dallas-Fort Worth metro plus a large slice of North and West Texas, Oncor delivers your power and charges you a regulated delivery rate. If it sits inside CenterPoint's footprint, which covers much of the Houston metro, CenterPoint does the same. AEP Texas Central, AEP Texas North and TNMP cover the other three deregulated service areas. Your TDU is not shoppable. You cannot pay Oncor for delivery if your meter is in a CenterPoint zip code.
The second decision is the contract term you sign with your Retail Electric Provider (REP). Terms in the current commercial market run from as short as 3 months to as long as 60 months. Contract term is fully within your control, and the length you pick changes both your energy price and the market risk you carry between now and your next renewal date.
These two decisions interact. TDU territory is a fixed input, and contract term shifts around it. Understanding which one moves your rate more decides where a small-commercial buyer should spend their negotiating attention at renewal time.
How much does TDU territory actually move your rate?
Across the TxCP live plan catalog on August 26, 2026, the per-TDU medians for the all-in commercial energy rate look like this:
| TDU territory | Active commercial plans | Median all-in rate (per kWh) |
|---|---|---|
| Oncor | 1,823 | $0.0649 |
| TNMP | 1,561 | $0.0661 |
| AEP Texas North | 1,155 | $0.0671 |
| CenterPoint | 1,258 | $0.0673 |
| AEP Texas Central | 1,537 | $0.0678 |
The spread from the cheapest median (Oncor) to the most expensive median (AEP Texas Central) is $0.0029 per kWh, or roughly 4.5% off Oncor's baseline. Put in dollar terms, a small-commercial site using 250,000 kWh per year would see roughly $725 in annual energy-cost variation from TDU territory alone.
That is a real number. It is not, however, the largest number on this bill for most buyers. The term-length spread does more work.
How much does contract term actually move your rate?
Sorting the same 7,334-plan catalog by contract-term bucket produces a different picture.
| Contract term | Active commercial plans | Median all-in rate (per kWh) | Average all-in rate (per kWh) |
|---|---|---|---|
| Short-term (3 to 12 months) | 2,812 | $0.0612 | $0.0805 |
| Mid-term (24 to 36 months) | 1,858 | $0.0632 | $0.0666 |
| Long-term (48 to 60 months) | 953 | $0.0670 | $0.0710 |
On medians, short-term reads as the cheapest bucket. That effect is real, because REPs use short-term commercial products to fill promotional inventory and match near-term spot-price windows, and a handful of aggressively priced short-term plans pull the median down. But the spread widens sharply on averages. Short-term commercial plans average $0.0805 per kWh in the current catalog, versus $0.0666 per kWh for mid-term plans and $0.0710 per kWh for long-term plans. That is a 21% spread on averages, versus 4.5% on TDU medians.
The gap between short-term median and short-term average tells you something important about how short-term inventory is priced. The long tail of the short-term catalog runs materially higher than the promotional headline plans, so if your account does not match the profile the promotional plans were built for, you are looking at the tail, not the median. Mid-term is where the market sits tightest around its median, which is why mid-term contracts now price competitively against long-term for most SMB buyers.
A June 2026 short-term-vs-long-term analysis from Texas Commercial Plans showed the same pattern in the previous quarter, where short-term promotional pricing floated above a much higher average across 421 short-term plans. This is not a one-week artifact. It is how the deregulated commercial market prices short contracts. For a broader read on where the whole commercial market sat mid-year, the 2026 EMC25 Houston takeaways summarize the buyer-side trends across all five TDUs.
The TxCP TDU-vs-Term impact matrix
The right way to compare these two levers is not "which spread is bigger" in the abstract. It is "which spread moves more dollars on my bill." The TxCP TDU-vs-Term Impact Matrix runs four questions before you sign:
- What is my annual usage in kWh? Multiply your monthly average by 12. Buyers under 100,000 kWh feel delivery charges disproportionately, because the fixed monthly component and the volumetric delivery charge dominate. Buyers over 500,000 kWh feel the shopped energy rate disproportionately, because the energy line dwarfs everything else.
- What is my current TDU delivery-charge stack? Pull it off your last bill (it is broken out as customer, metering, delivery and demand components) or read the current tariff on the PUCT transmission and distribution utility rate summary page.
- What is the median short, mid and long-term all-in rate in my TDU territory right now? The medians move weekly. A live catalog such as Texas Commercial Plans exposes them by TDU and by contract term.
- When does my current contract end? A contract with more than 6 months to run is a different decision than one that ends inside this quarter, because you can time the market rather than react to it.
Once those four numbers are on the page, the term-vs-TDU trade-off usually resolves cleanly. A restaurant in the Rio Grande Valley (TNMP territory, roughly 180,000 kWh a year, high summer demand) is going to feel the delivery-charge stack more than a small manufacturer in Dallas (Oncor territory, roughly 800,000 kWh a year), where the energy line dominates. Both buyers benefit from the same information. They will just weight it differently.
Delivery charges by TDU: the numbers you cannot shop
The delivery-charge stack is set by the PUCT and cannot be negotiated with the REP. For commercial customers under 10 kW of demand, the current rate elements per TDU look like this, according to ElectricityPlans (2026):
- CenterPoint: $4.96 fixed monthly + 3.898 cents per kWh delivery
- AEP Texas Central: $5.66 fixed monthly + 4.452 cents per kWh delivery
- AEP Texas North: $5.66 fixed monthly + 4.316 cents per kWh delivery
- Oncor: $6.87 fixed monthly + 4.587 cents per kWh delivery
- TNMP: $8.36 fixed monthly + 7.441 cents per kWh delivery
For commercial customers over 10 kW, demand-charge components ($/kW) become the largest single line item on many bills. Per SFE Energy (2026), the demand-charge stack shows CenterPoint at roughly $10.10 per kW, Oncor at $11.27, AEP Texas North at $12.30, AEP Texas Central at $12.55 and TNMP at $14.87.
The spread from CenterPoint to TNMP on the volumetric delivery line alone is about 3.54 cents per kWh. That is larger than the entire spread on the shopped energy rate across all five TDUs. Any comparison that skips the delivery stack understates how much geography matters to a Texas commercial bill.
According to the PUCT public transmission and distribution utility rate summary updated August 1, 2026, the current commercial delivery-charge tariffs on file are AEP Central 5.7 cents per kWh, AEP North 5.5 cents, CenterPoint 5.1461 cents, Oncor 6.0295 cents and TNMP 6.4665 cents, before customer-class-specific adjustments. Those tariffs reset each year and are worth pulling before every commercial renewal.
When should term come first, and when should TDU?
If you are choosing a new site, TDU territory matters before contract term. A Houston site (CenterPoint) and a Corpus Christi site (AEP Texas Central) do not just have different weather. They have different delivery-cost floors, and that floor lasts for the life of the meter. Site selection is when the TDU decision is actually live.
If you already own the meter, contract term is the lever you actually pull. Two questions govern the choice.
The first is where the ERCOT wholesale price is likely to move over the window you would be locking. The EIA modeled a 79% higher 2027 ERCOT wholesale price under one high-demand, data-center-heavy scenario in March 2026. That range is wide, but any upward pressure argues for locking a longer term while the shopping window is open. Utility Dive's March 2026 summary of that EIA scenario is the source most commercial buyers can cite quickly to a CFO.
The second question is how much operational stability the business needs across its next 24 months. A restaurant with tight margins and rising labor costs may value the certainty of a 36-month mid-term rate above the possible upside of chasing a shorter contract. A manufacturer with a known expansion in year 2 may want to keep the option to reshop at that milestone and choose a shorter term deliberately.
Answering those two questions typically lands most SMB commercial buyers on a mid-term contract (24 to 36 months) for the current market, because that bucket now sits at the intersection of a competitive median rate, a tight average, and a manageable renewal cycle. Short-term contracts remain a valid choice for accounts that match the promotional-pricing profile, and long-term contracts remain a valid choice for accounts that want to lock through the entire modeled 2027 upside window.
The bottom line
Two decisions set the rate on every Texas commercial electric bill. One is decided by geography and lives on the delivery line. The other is decided by the buyer and lives on the energy line. Neither is decisive on its own, and the right answer starts with the annual usage number on your last bill and the live medians in your bucket the day you sign a renewal.
Frequently Asked Questions
Which matters more for my Texas commercial electricity rate, TDU territory or contract term?
For most commercial buyers, contract term moves the energy line of the bill more than TDU territory does. Across 7,334 active commercial plans on August 26, 2026, term-length averages spread about 21% while TDU-territory medians spread only about 4.5%. Delivery charges are the opposite story: the TDU sets those and you cannot shop them.
Which Texas TDU territory has the cheapest commercial electricity rate right now?
On the shopped energy portion of the rate, Oncor has the cheapest median at $0.0649 per kWh across 1,823 active plans, followed by TNMP at $0.0661 and AEP Texas North at $0.0671. On the delivery portion, CenterPoint has the lowest volumetric delivery charge at 3.898 cents per kWh; TNMP has the highest at 7.441 cents per kWh (ElectricityPlans, 2026).
Are short-term or long-term commercial electricity contracts cheaper in Texas in 2026?
On medians, short-term reads cheapest at $0.0612 per kWh, but that reflects a small promotional headline set. On averages, mid-term contracts (24 to 36 months) are the tightest and cheapest at $0.0666 per kWh, versus $0.0805 for short-term and $0.0710 for long-term. Most SMB commercial buyers land on a mid-term contract for the current market.
Can I negotiate my TDU delivery charges?
No. TDU delivery charges are regulated tariffs set by the Public Utility Commission of Texas and cannot be negotiated with your Retail Electric Provider. You choose your REP and your contract term; you do not choose your TDU or your delivery rate. The PUCT posts the current tariffs on its transmission and distribution utility rate summary page.
How do I use the TDU-vs-Term Impact Matrix on my own bill?
Pull four numbers: your annual kWh usage, your current TDU delivery-charge stack from your bill, the median short/mid/long-term all-in rates in your TDU territory today, and your current contract end date. Buyers under 100,000 kWh a year feel delivery more; buyers over 500,000 kWh feel the shopped energy rate more. The four numbers together tell you which lever moves more dollars on your bill.