Commercial Electricity Rates by State 2026
EIA Electric Power Monthly, May 2026. Commercial sector averages. Actual business rates include demand charges not reflected in per-kWh averages.
US commercial avg
13.54c
per kWh, May 2026
vs residential
-20%
vs 18.44c res avg
Cheapest state
8.12c
Louisiana
Most expensive
32.18c
Hawaii
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Demand charges are 20-40% of your bill. Calculate what your peak kW actually costs you.
Enter monthly kWh + peak kW + state. Get a full bill breakdown, peak-reduction savings, and battery payback math.
Residential vs Commercial vs Industrial: Why the Rate Drops
The EIA reports three sector rates. Each tier reflects lower per-kWh costs as volume and voltage increase.
Residential
18.44c
US average, May 2026
Household accounts. Single-phase 120/240V. Tiered or flat rate. No demand charge for most.
Commercial
13.54c
US average, May 2026
Businesses under ~1 MW. Three-phase service. Demand charge applies. TOU rates common.
Industrial
8.71c
US average, May 2026
Heavy users above 1 MW. Often takes primary or transmission voltage. Lowest distribution costs.
The demand charge: the hidden commercial cost
Most commercial accounts above ~20 kW peak demand pay a demand charge in addition to per-kWh energy costs. The demand charge is based on your highest 15-minute power draw during the billing period, measured in kilowatts (kW).
Typical commercial demand charge rates: $5-$30/kW-month. PG&E commercial rates include a $24/kW demand charge. A business with 100 kW peak demand pays $2,400/month in demand charges before touching the per-kWh rate.
Sample commercial bill: Medium office
Energy charge (12,000 kWh × 13.54c)$1,625
Demand charge (85 kW × $15/kW)$1,275
Fixed customer charge$25
Taxes and surcharges (~8%)$234
Total monthly bill$3,159
Commercial Rate by State, Cheapest to Most Expensive
EIA commercial sector average, May 2026. Does not include demand charges.
| State | Commercial (c/kWh) |
|---|---|
| North Dakota | 7.38 |
| Oklahoma | 8.10 |
| Texas | 8.26 |
| Nebraska | 8.36 |
| Nevada | 9.06 |
| Idaho | 9.34 |
| Wyoming | 9.54 |
| New Mexico | 10.18 |
| Missouri | 10.25 |
| North Carolina | 10.44 |
| Utah | 10.57 |
| Iowa | 10.58 |
| Oregon | 10.61 |
| Virginia | 10.84 |
| Georgia | 10.88 |
| Kansas | 11.19 |
| Florida | 11.49 |
| South Carolina | 11.57 |
| Washington | 11.72 |
| South Dakota | 11.78 |
| Arkansas | 11.90 |
| Louisiana | 11.98 |
| West Virginia | 12.11 |
| Arizona | 12.15 |
| Minnesota | 12.88 |
| Kentucky | 13.09 |
| Colorado | 13.13 |
| Montana | 13.24 |
| Delaware | 13.39 |
| Tennessee | 13.52 |
| Pennsylvania | 13.56 |
| Wisconsin | 13.68 |
| Mississippi | 13.82 |
| Indiana | 13.88 |
| Ohio | 13.89 |
| Alabama | 14.51 |
| Illinois | 15.36 |
| Michigan | 16.09 |
| Maryland | 16.40 |
| New Jersey | 17.86 |
| New Hampshire | 20.59 |
| Connecticut | 21.08 |
| Vermont | 21.47 |
| New York | 22.40 |
| Maine | 23.05 |
| District of Columbia | 23.42 |
| Alaska | 23.71 |
| Massachusetts | 24.07 |
| California | 24.10 |
| Rhode Island | 25.41 |
| Hawaii | 46.19 |
Typical Commercial Bills by Business Type (US Average Rate)
Sample bills at the 13.54c US commercial average (May 2026) plus a $15/kW demand charge. Actual bills vary by utility.
Small retail (2,500 sq ft)
Monthly kWh
3,200
Peak demand
28 kW
Energy (3,200 kWh × 13.54c)$433
Demand (28 kW × $15)$420
Fixed + taxes$25
Estimated total$878/month
Lighting, refrigeration, HVAC dominant. Demand peaks at 2-4pm on summer weekdays.
Restaurant (3,000 sq ft)
Monthly kWh
8,500
Peak demand
65 kW
Energy (8,500 kWh × 13.54c)$1151
Demand (65 kW × $15)$975
Fixed + taxes$25
Estimated total$2151/month
Kitchen equipment, exhaust hoods, walk-ins dominate. Highest demand at 11am-2pm.
Office building (10,000 sq ft)
Monthly kWh
12,000
Peak demand
85 kW
Energy (12,000 kWh × 13.54c)$1625
Demand (85 kW × $15)$1275
Fixed + taxes$25
Estimated total$2925/month
HVAC, plug loads, lighting. Demand is fairly flat 8am-6pm. Good candidate for demand response.
Warehouse/light industrial (25,000 sq ft)
Monthly kWh
18,000
Peak demand
140 kW
Energy (18,000 kWh × 13.54c)$2437
Demand (140 kW × $15)$2100
Fixed + taxes$25
Estimated total$4562/month
Motors, conveyors, lighting. Demand peaks at equipment startup. Staggered starts reduce peak.
4 Commercial Bill Reduction Strategies
Demand charge reduction
Highest ROIDemand charges can be 20-40% of a commercial bill. Reduce peak demand by: staggering motor startups, pre-cooling buildings before peak windows, installing demand response automation, or adding battery storage to shave peak kW. A 10% demand reduction saves $150-500/month for mid-size businesses.
Shop supply rates (deregulated states)
Quick winTexas, Pennsylvania, New York, Illinois, Ohio, Massachusetts, and 13 other states allow commercial customers to shop competitive supply rates. Fixed 12-24 month contracts often run 2-4c/kWh below the utility default. For a business using 20,000 kWh/month, saving 3c/kWh = $600/month.
Time-of-use optimization
OperationalMost commercial TOU rates have off-peak windows 10pm-8am on weekdays and all weekend. Shifting flexible loads (ice storage, water heating, EV fleet charging, batch processing) to off-peak can save 15-25% on energy charges. TOU optimization requires no capital investment.
LED + controls retrofit
Capital projectCommercial lighting retrofits typically cut lighting energy use 60-70%. A 10,000 sq ft office with T8 fluorescents uses ~15,000 kWh/year for lighting. LED retrofit reduces this to ~5,000 kWh/year. At 14c commercial rate: $1,400/year savings. Typical payback with rebates: 2-3 years.
Related Resources
Frequently Asked Questions
What is the average commercial electricity rate in the US in 2026?+
The US average commercial electricity rate is 13.54 cents/kWh as of May 2026 (EIA Electric Power Monthly). This is 27% lower than the 18.44c residential average because commercial customers typically use more electricity in total, have more predictable load profiles, and often take power at higher voltages (primary or transmission voltage), reducing distribution costs.
Why is commercial electricity cheaper per kWh than residential?+
Three factors explain the per-kWh gap: (1) Volume discounts: commercial accounts buy more kWh, giving utilities predictable load and economies of scale in metering and billing. (2) Load factor: businesses use electricity more evenly throughout the day than households, reducing peak demand pressure on the grid. (3) Voltage discount: many commercial customers take power at higher voltages, bypassing expensive distribution equipment,utilities pass the savings on.
What is a demand charge and how does it affect commercial bills?+
A demand charge is a fee based on your peak 15-minute or 30-minute average power draw in kilowatts (kW), separate from your kWh energy usage. Rates range from $5 to $30/kW-month depending on the utility. A business with 100 kW peak demand at $15/kW pays $1,500/month in demand charges alone, regardless of total kWh. Demand charges can be 20-40% of a commercial bill. Peak demand reduction (demand response, battery storage, load scheduling) is the #1 commercial bill reduction lever.
Which states have the cheapest commercial electricity rates?+
The cheapest commercial rates as of May 2026 are: North Dakota (7.38 c/kWh), Oklahoma (8.10 c/kWh), Texas (8.26 c/kWh), Nebraska (8.36 c/kWh), Nevada (9.06 c/kWh). These states benefit from abundant hydro, natural gas, or wind generation. Industrial rates are even lower in several of these states, often below 7 c/kWh.
Can businesses negotiate electricity rates?+
Yes, but it depends on state and size. In deregulated states (TX, PA, NY, IL, OH, and 16 others), all commercial customers can shop competitive supply rates,typically 10-20% below utility default. In regulated states, large commercial customers (typically 500 kW+ demand) can often negotiate custom tariffs or economic development rates. Mid-size businesses in regulated states can still access demand response programs, interruptible service discounts (5-15% bill reduction), and green power programs.
