Texas Commercial Electricity Rates 2026: Action Guide

The News: National Rates Are Up 9%, but Texas Commercial Electricity Rates 2026 Are Moving Differently

The U.S. Energy Information Administration just reported that national commercial electricity prices rose 9% year-over-year in February 2026, reaching 9.54 cents per kilowatt-hour on average. For commercial electricity buyers in regulated states, that increase flows directly through utility rate filings. For Texas commercial electricity rates 2026, the deregulated Electric Reliability Council of Texas (ERCOT) market tells a different story.

In the week of April 14 through April 20, 2026, average Texas commercial electricity rates moved 2.1% in the opposite direction as 358 commercial plans exited the market and surviving providers competed harder on price. That divergence between the national trend and the Texas trend is the most important signal commercial buyers can use to evaluate their next contract decision, especially with summer peak demand approaching.

What the EIA Data Actually Shows

The EIA's February 2026 Electric Power Monthly release puts U.S. commercial electricity at 9.54 cents per kilowatt-hour, up from 8.75 cents per kilowatt-hour in February 2025. Across all customer classes, total average retail revenues rose 9.0% year-over-year to 14.36 cents per kilowatt-hour, with residential at 17 cents and industrial at 8.66 cents.

The U.S. Chamber of Commerce summary of the EIA data emphasizes a critical point: state-by-state variance is enormous. Most of the national increase is attributed to wholesale generation fuel costs, transmission and distribution infrastructure investments, and persistent demand growth from data centers. The 9% national figure is an average that obscures very different realities in regulated and deregulated markets.

For a 500-kilowatt commercial account using 200,000 kilowatt-hours per month, a 9% rate increase translates to roughly $1,580 in additional energy cost per month, or about $19,000 per year, before demand and delivery charges. That dollar figure is what should drive the analysis behind your next contract renewal.

Why Texas Is Different

The Texas commercial electricity rates 2026 picture diverges from the national average for three structural reasons that buyers in regulated markets do not have to think about.

First, ERCOT is a competitive retail market. When wholesale costs rise, regulated utilities pass the increase through to commercial customers via rate filings. Retail Electric Providers (REPs) in ERCOT cannot. They have to absorb margin compression or lose customers to competitors who price more aggressively. The 358 plans that exited the Texas market in mid-April 2026 reflect that competitive pressure, and the surviving plans are competing harder on price as a result.

Second, ERCOT wholesale prices have been suppressed by record West Texas wind generation through spring 2026. When wind output surges, real-time prices on the ERCOT grid drop, sometimes into negative territory during overnight hours. Index-priced commercial contracts pass that wholesale benefit through to buyers. Fixed-rate contracts do not. The real-time ERCOT grid conditions are publicly available and are worth monitoring before any contract decision.

Third, Texas commercial buyers face 4CP risk that national rate comparisons miss entirely. The four coincident peak (4CP) is the four highest hours of ERCOT system demand each summer (June through September). Your facility's demand during those four hours sets the transmission cost allocation you pay for the following 12 months. A 9% increase in national commercial rates says nothing about your 4CP exposure, which can easily dwarf the energy rate component of your bill if you have large summer afternoon load.

The historical Texas electricity rate trends also help anchor where current pricing sits in context. The combination of competitive REP pricing, wind-suppressed wholesale costs, and 4CP exposure means Texas commercial buyers face a strategic choice that buyers in regulated states do not.

The Texas Rate Divergence Decision: 4 Questions Before You Lock In a Fixed Rate

The right answer to "fixed or index" depends on your facility's load profile, your contract timing, and the spread between today's fixed quotes and current wholesale prices. Run through these four questions before you commit.

What is your effective per-kilowatt-hour cost today, and what is the spread to a fixed quote? Pull your last 12 months of bills, calculate your effective per-kilowatt-hour rate including demand and Transmission and Distribution Utility (TDU) delivery, then ask your REP or broker for current 12-month and 24-month fixed quotes. The spread is your insurance cost for locking in.
What does your summer afternoon demand profile look like? If your facility runs heavy load between 3 p.m. and 7 p.m. during June through September, your 4CP demand charges are likely the largest single cost driver in your bill. A fixed-rate contract that includes 4CP hedging may be worth a premium. A fixed-rate contract that does not include 4CP hedging is incomplete protection.
Do you have demand response or curtailment capability? If you can shift or curtail load during ERCOT emergency events, an index contract with curtailment rights can produce lower total cost than a fixed rate. If you cannot curtail without operational impact, the fixed-rate premium is buying you certainty you actually need.
When does your current contract expire? If your contract renews in the next 90 days, lock in now. Waiting until summer to shop means buying during peak demand season, when fixed rates are highest. If your contract renews in late fall or winter, you have room to monitor the market through summer before deciding.

What You Should Do

Pull 12 months of bills and calculate your effective rate, peak demand, and 4CP exposure for the prior summer.
Request fixed-rate quotes from at least three REPs for 12-month and 24-month terms.
Compare the fixed-to-index spread against historical summer wholesale price volatility, not just the headline rate.
Model your 4CP cost separately. Demand charges are billed separately from energy in most contracts.
Ask about block-and-index pricing if you want partial certainty without committing to a full fixed rate.
Verify TDU delivery charges for Oncor, CenterPoint, AEP North, AEP Central, or TNMP. These pass through and do not vary by REP.
Confirm contract end date and auto-renewal terms before signing. Holdover rates are usually well above market.
If your contract expires before September, close the renewal now rather than waiting through peak season.

Questions to Ask Your REP or Broker

What is the current fixed-rate premium over today's index price, and how does that compare to historical summer peak wholesale price risk in ERCOT?
With national commercial rates up 9% per the EIA, how are Texas wholesale prices expected to track through summer 2026, and what is your pricing desk's view?
If I stay on index pricing, what load curtailment or demand response programs do you offer for ERCOT emergency events?
How will my 4CP demand charges be calculated this summer, and does a fixed rate protect me from those charges, or are they billed separately?
Is block-and-index pricing available for my account size, and what percentage of my load should be fixed versus floating?
How does my TDU delivery charge exposure differ between fixed and index plans, and what pass-through caps exist in the contract?

Frequently Asked Questions

Why are U.S. commercial electricity prices rising 9% while Texas rates moved differently?

ERCOT deregulation creates real retail price competition that regulated markets lack. In regulated states, utilities pass rising fuel and infrastructure costs directly through to commercial customers via rate filings. In Texas, retail competition forces REPs to absorb margin compression or lose customers, which is why 358 plans exited the market in mid-April 2026. Surviving REPs are competing harder on price, which is why average Texas commercial rates moved 2.1% lower in the same week the national EIA data showed a 9% year-over-year increase.

What is 4CP pricing and why does it matter for Texas commercial electricity contracts?

The four coincident peak (4CP) is the four highest hours of ERCOT system demand each summer (June through September). Your facility's demand during those four hours sets your transmission cost allocation for the following 12 months. Some fixed-rate commercial contracts include 4CP hedging in the energy rate. Others bill 4CP demand charges separately as a pass-through. Asking how 4CP is treated in any quoted contract is one of the most important questions a Texas commercial buyer can ask before signing.

Should I switch from index to fixed pricing now given the national rate environment?

The right answer depends on your facility's summer load profile, your demand response capability, and the current fixed-to-index spread. If your contract renews before summer and you have high afternoon demand, a fixed rate locks in today's competitive Texas pricing before peak season arrives. If your load is flexible and you can curtail during ERCOT emergencies, index pricing with demand response can produce lower total cost. Block-and-index pricing splits the difference for buyers who want partial certainty without full commitment.

How can I see what other Texas commercial REPs are charging?

Texas does not publish a centralized commercial rate database the way Power to Choose works for residential customers. Use a published rate comparison resource for small to mid-size commercial accounts (under 50 kilowatts demand), and request Electricity Facts Labels (EFLs) from at least three REPs for any account size. Compare total cost (energy plus base charges plus demand) within your TDU territory rather than headline energy rate alone. The Texas Commercial Plans rate comparison tool is a useful starting point for benchmarking before you negotiate.