How to Buy Business Electricity in Texas: A Guide for New Locations and Renewals
Opening a restaurant on South Lamar, moving a salon into a strip center, or renewing power at a warehouse you have run for a decade all raise the same question: how to buy electricity for a business in Texas without overpaying or missing a contract deadline. In most of the state, you are not buying electrons from the company that owns the poles. You choose a retail electric provider (REP) for the supply contract and billing relationship, while a transmission and distribution utility (TDU)—the regulated wires company—delivers power, reads the meter, and restores outages. That split is the foundation of Texas electric choice, and it shapes every quote, renewal, and move-in you will manage as an owner.
This guide is written for Texas small and mid-size businesses: retail shops, offices, auto shops, churches, daycares, medical suites, gyms, and similar loads in ERCOT’s competitive market. It covers new locations, restarts after vacancy, and renewals—not residential apartment shopping.
Who does what: TDSP, retail provider, and brokers
Transmission and distribution (TDU/TDSP). The local wires company maintains lines, handles emergencies, and charges regulated delivery fees. The Public Utility Commission of Texas (PUCT) oversees those delivery rates; they appear on your bill as TDU delivery charges, meter charges, and related surcharges—even when you change REPs. Understanding your bill¹
Retail electric provider (REP). The REP sells you the energy supply contract, sets product terms, bills you, and is typically your first call for account questions. Certified REPs buy wholesale power and pay the TDU for delivery on your behalf. REP overview² REPs do not own the grid; ERCOT coordinates operations across most of Texas. ERCOT profile³
Brokers and consultants. A PUCT-registered broker provides advice or procurement services, or acts on your behalf when you select a REP. Registration is required before offering those services. Broker registration⁴ Separately, an aggregator (another PUCT-registered role) can band customers together, compare offers, and negotiate with REPs—useful for employer groups, associations, or multi-site operators buying in bulk. Aggregator brochure⁵
Who must you call for an outage? Always the TDU listed on your bill—not your REP. Power to Choose FAQ⁶
Is choice available everywhere in Texas? No. Customer choice depends on location. Municipally owned utilities and electric cooperatives may opt into competition; other areas remain outside the competitive market by law until conditions change. Muni and co-op FAQ⁷ You can check whether offers exist for a ZIP code on the PUCT’s comparison site. Power to Choose user guide⁸
When to shop for a new location—and what to gather
Start early. For a new business location, begin 30–60 days before your target open or move-in date. Texas switching mechanics can move quickly once you sign—often within about seven business days after ERCOT confirms a switch—but commercial accounts still need time for credit review, deposits, quote comparison, and coordination with landlords or contractors. Changing providers FAQ⁶ Build slack for holidays, meter issues, or a prior tenant’s account that must be closed first.
Core information to have ready:
- Service address and ESI ID (Electric Service Identifier)—the unique ID for the meter at that premise, usually 17 or 22 digits in competitive areas. Glossary: ESI ID⁹
- Desired start date (first day you need power for build-out, equipment, or opening).
- Business legal name and contact details; many REPs request tax ID/EIN and authorized signers for commercial credit.
- Load class context: small commercial accounts are generally those with peak demand under 50 kW in any 12-month period; at 50 kW and above you are treated as commercial in common industry classifications used on the PUCT site. Glossary: small commercial and commercial⁹
Deposits and credit. REPs may require a security deposit for new customers; payment history or credit can reduce or waive it, and deposits are refundable when you close in good standing. Plan options: deposits¹⁰
Switch vs. move-in. A switch changes REPs at the same address; a move-in establishes service when the customer of record changes at a premise—typical for a new tenant. Customer protection rules distinguish those processes; your REP initiates registration with ERCOT using the ESI ID and service ZIP. Customer protection rules excerpt via PUC broker rule cross-reference on move-in/switch definitions in 25.471¹¹
Right to cancel a new enrollment. After you enroll, you generally have three business days to cancel the switch from the time you receive your Terms of Service, including online enrollments. FAQ: right to cancel⁶
Why move-in usage estimates can be wrong—and why quotes care
Commercial pricing is sensitive to how much you use (kWh), when you use it, and how high your peak demand (kW) runs—especially once cooling, kitchen equipment, or shop machinery loads the meter. A quote based on the prior tenant’s history can mislead:
- A restaurant replacing a medical office will not match the old load shape.
- Vacant space may show abnormally low or zero usage until someone energizes equipment.
- Seasonality matters: a gym or retail store quoted using only winter bills may understate summer kWh.
- New equipment or extended hours (salon chairs, auto lifts, extra refrigeration) shift both energy and demand.
The PUCT notes that usage changes are a primary driver of bill totals, alongside market and delivery rate changes. Understanding your bill¹ For business shopping, the Power to Choose site explains that many commercial purchases are negotiated like other bulk business buys—not a single click like a residential plan card. Business (non-residential)¹²
Practical takeaway: bring your best estimate of annual kWh, expected operating schedule, and any known demand drivers (HVAC tonnage, ovens, compressors). If the REP can use interval data from a prior occupant with your authorization, validate it against your business plan instead of accepting it blindly.
How to read a commercial electricity offer
Think in layers: energy price, contract structure, pass-throughs, and exit/auto-renew terms.
Price format: cents per kWh and beyond
Offers usually center on an energy charge in cents per kWh. Your bill may also show a demand charge based on peak kW during the billing period—common as loads grow. PUCT bill definitions¹
REPs may bundle supply charges into one energy rate or itemize REP charges separately from TDU delivery. Understanding your bill: REP charges¹
Fixed, variable, and indexed products
- Fixed-rate plans hold the energy rate for the contract term except for specified pass-throughs (TDU fee changes, certain ERCOT or administrative fees, and government-imposed charges). Plan options: fixed rate¹⁰
- Variable month-to-month plans can change with market conditions; they may avoid a long cancellation fee but expose you to price spikes. Plan options: variable¹⁰
- Indexed plans tie pricing to a published index; understand the formula and notice requirements before signing. Glossary: indexed plans⁹
Pass-through and delivery charges
Even with a fixed energy rate, TDU delivery charges are set through PUCT-regulated TDU tariffs and updated on schedules that can change your total bill. TDU rate summaries¹³ Bills may also include PUCT assessments, energy efficiency cost recovery, advanced metering surcharges, and other TDU or state line items defined on the PUCT’s bill explainer—not all are controlled by your REP. Understanding your bill¹
Contract term, ETF, and holdover
Read the Terms of Service for:
- Contract length (months or years) and early termination fees if you break a term contract early—residential-style switches may have no switching fee, but breaking a term contract can still carry REP penalties. FAQ: penalties when changing providers⁶
- Expiration behavior: many contracts roll to month-to-month variable pricing if you do not renew or replace service before expiration—often at a higher rate. Plan options: contract length¹⁰
- Auto-renew or holdover language: know whether silence equals renewal and what rate applies after the initial term.
For standardized small commercial products, also check the Electricity Facts Label (EFL) for fees such as minimum usage charges that can bite low-usage months during startup. FAQ: minimum usage fees⁶
Business electricity contract renewal: the 60–90 day window
Renewals reward calendar discipline. A practical rule for owners: start shopping 60–90 days before your contract end date, then work backward to your REP’s notice deadline in the Terms of Service.
Why the lead time matters:
- The PUCT requires REPs, for contracts with three or more months remaining, to send a written notice of contract expiration no sooner than 60 days and no later than 30 days before expiration (or the analogous billing-cycle windows). FAQ: notice of contract expiration⁶ That notice is your official warning—not your first time thinking about renewal.
- Markets move with fuel costs, weather, and ERCOT conditions; Texas remains a large producer and consumer of electricity nationally, so regional fundamentals matter even when you are only comparing a few storefront meters. EIA Texas profile¹⁴
- If you miss the window, you risk holdover month-to-month pricing until a new contract is executed. Plan options: contract length¹⁰
Renewal checklist: pull last 12 months of bills (kWh, kW if billed), confirm ESI IDs for each meter, note current ETF end date, and compare at least two structured offers with the same term length and start date.
Matrix pricing vs. custom quotes for larger loads and multi-location businesses
Commercial electricity rates in Texas are not one universal menu. The PUCT’s non-residential provider list shows REPs certified across small, medium, large commercial, and industrial customer types—reflecting how different business sizes shop in practice. Non-residential providers¹⁵
Matrix-style pricing (pre-published rate tables by zone, usage band, load profile, term, and start month) often fits straightforward small commercial accounts—single-location retail, offices, or shops with predictable usage. Enrollment can resemble selecting a defined product rather than a fully bespoke tender.
Custom quotes dominate when:
- Peak demand crosses into commercial territory (commonly 50 kW and above in PUCT customer class definitions), Glossary⁹
- You operate multiple locations or need aligned start dates,
- Load shape is unusual (cold storage, production equipment, 24/7 operations),
- You need specialized structures (block-and-index blends, layered hedges, consolidated billing).
The Power to Choose business resource notes that for many businesses, electricity is a negotiated purchase—closer to sourcing equipment than picking a residential plan from a sortable table. Business (non-residential)¹² Brokers and aggregators can run that process across many REPs; you can also work directly with REPs if you have the bandwidth to compare Terms of Service line by line.
Practical checklist: turn on electricity for business
- Confirm choice for the address (competitive vs. municipal/co-op/non-ERCOT exceptions). Muni/co-op FAQ⁷
- Collect ESI ID, service address, target energize date, and business legal identity.
- Estimate usage honestly; flag new equipment or hours vs. prior tenant data.
- Compare offers on the same term, start date, and pass-through assumptions; read EFL and Terms of Service. User guide⁸
- Plan deposits/credit responses so opening day is not delayed. Deposits¹⁰
- Calendar renewal at 60–90 days out; set a second reminder for the PUCT-mandated expiration notice window. Expiration notice rule⁶
- File TDU outage numbers near breakers; your REP cannot reconnect storm damage on the pole line. Outages FAQ⁶
When you want structured business quotes without juggling a dozen PDFs, you can request pricing through WattKarma’s business portal¹⁶.
FAQ
Do I buy power from Oncor, CenterPoint, or AEP Texas?
You buy the supply contract from a REP. The TDU delivers power and charges regulated delivery fees. REP responsibilities²
How fast can service start when I switch REPs?
After enrollment, ERCOT confirmation typically leads to a switch within about seven business days, without a service gap when changing providers at the same premise. FAQ: switch timing⁶
What is an ESI ID and where do I find it?
It is the unique identifier for electric service at a premise in Texas’s competitive market—on a prior bill or from the landlord/utility account records. Glossary⁹
Will my restaurant pay the same as the previous tenant?
Not necessarily. Rate offers depend on usage, demand, credit, product type, and timing. Prior tenant data is a starting point, not a guarantee—especially if business type or hours changed.
Are commercial rates regulated like delivery rates?
The PUCT regulates TDU delivery charges; it does not set final REP energy prices in competitive areas. Understanding your bill¹
What happens if I do nothing when my contract ends?
Many plans move to month-to-month variable pricing, which can cost more than a renewed fixed term. Plan options¹⁰
Can a consultant shop multiple REPs for me?
Yes—PUCT-registered brokers and aggregators exist for that purpose, with disclosure and authorization rules. Brokers⁴ Aggregators⁵
Is slamming a risk?
Switching without your permission (slamming) and unauthorized bill charges (cramming) are illegal; the PUCT enforces customer protections. Your rights FAQ⁶
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Draft for editorial review—not published. Market rules and tariffs change; verify critical dates and fees in your executed Terms of Service and current PUCT materials.