State-to-state differences in commercial power pricing are substantial. Businesses wishing to cut energy prices and save money must comprehend the factors affecting those rates.
With time-of-use rate plans, businesses can lower their energy charges by reducing usage during expensive peak demand periods. But there are many other ways businesses can lower their electricity costs.
Location
Your billing rate schedule could fluctuate depending on where you are. Different business locations have access to multiple rate plans, and choosing the right one can save you hundreds or even thousands on your energy costs.
This is because electricity suppliers have to factor in the cost of generation and the infrastructure necessary to supply power to your specific area when setting prices. Power rates are also typically higher during the summer as air conditioning demand spikes. If you’re looking to work with an IDNO, click here to learn about IDNOs.
Energy Efficiency
Businesses use energy to regulate temperatures, heat, and light their premises. This can lead to substantial Demand Charges in some areas.
In addition, the cost of electricity can vary based on the season due to extreme weather events. Summer heat waves, freezing temperatures, and droughts increase the energy cost to generate and deliver to businesses.
Business owners need to understand commercial electricity rates and the factors that affect them. This knowledge of business electricity rates in Texas can help businesses lower their costs by taking advantage of local energy efficiency programs and incentives, changing the timing of their energy consumption with time-of-use rate plans, or investing in renewable energy sources to replace their electricity costs completely. Energy efficiency is also a key strategy for lowering overall energy usage to reduce the impact of climate change. It also reduces consumer utility bills and helps defer the need to invest in new generation facilities and transmission infrastructure.
Electricity Sources
Commercial electricity rates can depend on a variety of factors and variables. Some of these factors include taxes, transportation costs, and availability. The fuel price, such as natural gas, can also influence the cost of producing electricity. High consumer demand can increase the rate per kWh, particularly in summer when temperatures keep people indoors and running their air conditioners.
Business owners can save money by analyzing their interval data, changing their billing rate schedule, and investing in renewable energy sources. However, these options only go so far in reducing energy expenses.
The best way to reduce your business’s electricity rate is by shopping for the most competitive supplier. This can be done by understanding how your business is billed for energy usage and selecting the right rate plan for your company. Choosing the right commercial energy rate could save your company hundreds of dollars annually. This is a win for your bottom line and the environment.
Energy Consumption
Commercial electricity rates are based on complex factors, including fuel costs, infrastructure expenses, regulatory policies, and business-specific considerations. Understanding these factors can help businesses make informed decisions about energy efficiency, renewable energy, and time-of-use pricing strategies to manage their electric costs.
Energy consumption peaks for many reasons, such as hot days in summer when air conditioning usage is at its highest. The higher demand for electricity increases the amount of energy companies need to deliver, pushing up prices through the kilowatt-hour (kWh) Demand charges on your bill.
The industry and size of a business also influence commercial electricity rates. For example, a steel manufacturing plant may have more energy demands than a small retail store and, as a result, pay higher rates. This is because larger businesses have the economies of scale to negotiate better pricing agreements with their electricity providers. Small and medium-sized enterprises typically prefer to avoid this advantage.
Business Size
Your business size greatly impacts the rates you pay for power. Normally the smaller your business is, the lower the rate will be. However, it’s also important to know that your business type also plays a role. For example, a restaurant will use much more energy than a hair salon, so it won’t be able to benefit from the same low rates as a 1-person office.
There are multiple ways to measure business size, but revenue, employees, and production are the most common. A small business is typically defined as a company with less than $10 million in annual revenues and fewer than 250 employees. A medium business is typically defined as a company with over $10 million in annual revenues and over 250 employees.
Business electricity prices depend on how much electricity your business uses, the unit rate you pay per kilowatt hour, the standing charge (the daily cost to deliver power to your premises), and VAT and Climate Change Levy. Other factors that affect business electricity rates include your contract length, the meter type you have, and whether you choose single or dual fuel. It’s important to understand the different factors that affect business electricity prices to compare electric suppliers and get the best deal for your business.