Texas Short-Term Commercial Electricity Plans Now Cost 43% More Than Mid-Term Contracts: The July 2026 Data
As of <strong>July 29, 2026</strong>, our commercial rate scrape across all five Texas TDU territories shows short-term plans (1 to 11 months) averaging <strong>11.7 cents per kWh</strong>, while 12 to 23 month mid-term plans average <strong>8.2 cents per kWh</strong>, a 43 percent premium for flexibility. For Texas commercial electricity buyers renewing this summer, that gap has widened enough to reshape the standard 12 versus 24 month decision, and it hides a second story that is even more useful: mid-term plans now price nearly identically to 24 plus month long-term plans.
What Happened
We track every active commercial fixed-price plan in the ERCOT retail market across Oncor, CenterPoint, AEP Texas Central, AEP Texas North, and TNMP. As of July 29, 2026, the catalog includes 769 active plans, split into 461 short-term contracts (1 to 11 months), 119 mid-term contracts (12 to 23 months), and 70 long-term contracts (24 to 36 months). The averages tell the story: short-term averages 11.7 cents per kWh, mid-term averages 8.2 cents, and long-term averages 7.8 cents.
Two structural forces are driving the gap. First, Retail Electric Providers price short-term products with a heavier risk premium because they can only hedge the underlying wholesale power for a shorter window, and current ERCOT forward curves are pricing summer scarcity into every near-term month. Second, the ERCOT peak forecast at ercot.com, together with the federal Short-Term Energy Outlook at eia.gov, is projecting continued load growth from data center and industrial buildout, which pulls forward curves for 2027 and 2028 into the range where longer contracts look attractive. The Public Utility Commission of Texas at puc.texas.gov codifies the contract term definitions and disclosure obligations that shape every commercial offer under Subchapter R.
Impact on Commercial Electricity Buyers in Texas
The 43 percent premium for short-term flexibility is not just a spread on the Electricity Facts Label, it maps directly to three impact channels that reach the monthly bill for every Texas commercial account, and each one is measurable against the plans we track.
Flexibility tax. A Texas business consuming 20,000 kWh per month pays roughly 2,340 dollars per month on a short-term plan at 11.7 cents versus 1,640 dollars per month on a mid-term plan at 8.2 cents, a difference of about 700 dollars per month or 8,400 dollars per year on a mid-sized account. The premium is real cash out the door, and it grows with usage.
Term-curve parity. In the current market, mid-term and long-term contracts price within about 5 percent of each other (8.2 cents versus 7.8 cents), which means the traditional trade-off of paying more for a longer lock has narrowed to a rounding error. A 24 to 36 month term now saves roughly 0.4 cents per kWh over a 12 to 23 month term, a much smaller step down than the 3.5 cent gap between short-term and mid-term.
Supply distortion. Short-term plans dominate the active catalog at 60 percent of listed products, but they are the most expensive tier. That means the plan you see first on a broker page or a comparison site is statistically likely to be the priciest option, and buyers who default to what is visible pay the flexibility tax without realizing they are inside a distorted supply mix.
The TxCP Term Curve Test: Three Questions Before You Sign
Before you accept a commercial offer in a market where short-term plans carry a 43 percent premium and mid-term prices match long-term, run every quote through the same three questions we use when we read the term curve, so a familiar 12 month default does not cost you 8,400 dollars a year on a mid-sized account.
1. Which tier am I actually shopping in?
Confirm the contract length in months on the Electricity Facts Label. If it is between 1 and 11 months, you are in the short-term tier and paying the flexibility premium. Ask the provider whether a 12 month equivalent is available for the same meter and load profile.
2. Does mid-term or long-term win for my meter today?
Request quotes for a 12 month, a 24 month, and a 36 month term against the same usage. If the 24 to 36 month rate is within about 0.5 cents per kWh of the 12 month rate, the added lock has minimal cost and it hedges out one full renewal cycle of ERCOT summer volatility.
3. What is the break-even on my early termination fee?
The Public Utility Commission of Texas requires the early termination fee to be disclosed on the Electricity Facts Label. Divide that fee by your monthly savings to know how many months a mid-term or long-term lock needs to run to break even if you exit early.
What You Should Do
Turn the 43 percent short-term premium into three moves you can make this week, whether your contract renews soon or you are shopping the market for a better entry point.
- Pull your current Electricity Facts Label and confirm your contract length in months, your all-in price per kWh, and your term end date.
- Request quotes for a 12 month and a 24 month fixed rate for your specific TDU territory and load size, and compare both against your current rate.
- If your term ends within 90 days, lock in a mid-term or long-term rate now rather than auto-renewing into a month-to-month rate that inherits the short-term premium.
Questions to Ask Your REP or Broker
When you call a provider this week, these questions separate a genuinely competitive offer from a rate that is banking on your default to a short-term plan, and each one maps to a line item on the Electricity Facts Label.
- What is the current spread between your 12 month, 24 month, and 36 month fixed rates for my meter, expressed in cents per kWh?
- What is the total early termination fee on each term, and how is it calculated (flat, per remaining month, or percentage of remaining value)?
- Are TDU delivery charges pass-through or bundled into the quoted rate, and what happens at TDU tariff adjustments during the term?
- What renewal treatment applies if I do nothing at the end of the term (month-to-month rollover, automatic re-lock, or holdover rate)?
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For the full picture, see our Texas commercial electricity rates overview. See every commercial plan we track in our data download.
Frequently Asked Questions
Why do short-term commercial electricity plans cost more than mid-term plans in Texas right now?
As of July 29, 2026, short-term commercial plans (1 to 11 months) average 11.7 cents per kWh across our tracked catalog, versus 8.2 cents for mid-term plans (12 to 23 months), a 43 percent premium. The gap reflects the higher hedging cost REPs carry on short-window products in a market where ERCOT forward curves are pricing in summer scarcity through 2028.
Do longer-term Texas commercial electricity contracts always save money?
No. In the July 29, 2026 catalog, 24 plus month long-term contracts average 7.8 cents per kWh, only about 5 percent below the 8.2 cent mid-term average. The much larger savings step comes from moving out of the short-term tier into any 12 plus month contract. A longer term still hedges renewal-cycle risk, but the per-kWh savings versus mid-term are modest.
How much does the short-term commercial electricity premium cost a mid-sized Texas business?
A commercial account using 20,000 kWh per month pays about 700 dollars per month more on the current short-term average (11.7 cents) than on the mid-term average (8.2 cents), or roughly 8,400 dollars per year. The math scales linearly with usage, so a 40,000 kWh per month account pays about 16,800 dollars per year in the flexibility premium.
Where can I see current commercial electricity plans for my Texas TDU territory?
Our data download covers every commercial plan we track across all five Texas TDU territories (Oncor, CenterPoint, AEP Texas Central, AEP Texas North, and TNMP), updated daily, so you can compare offers by term length, load size, and price for your specific meter.