Advertised energy rates vs what you pay

Four layers sit on one bill, and only one of them is shoppable

A commercial electricity bill is a stack of charges with different owners. The retail energy charge is the supplier's price for the electricity itself, and it is the only layer that changes when you shop. The delivery charge per kilowatt-hour is the utility's, set by tariff and identical whichever supplier you choose. A demand charge, where the account's rate class has one, is also the utility's and is calculated from your peak. The monthly customer charge, taxes and regulatory fees are fixed or passed through. A comparison that puts one supplier's rate beside another's is comparing one layer to one layer; a comparison that puts a supplier's rate beside your total bill is comparing a layer to a stack. Knowing which layer a number describes is the first step, and the second is knowing what basis the supplier measured it on.

• Retail energy charge — the supplier's, and the only shoppable layer.
• Delivery charge per kilowatt-hour — the utility's, by tariff.
• Demand charge — the utility's, calculated from your peak where applicable.
• Monthly customer charge, taxes and regulatory fees — fixed or passed through.

The disclosure label is where a comparison starts

In Texas a retail electric provider must publish an Electricity Facts Label for each product, and the label is standardised precisely so that offers can be compared. Under 16 TAC §25.475 the label states whether the product is a fixed-rate or a variable-price product, sets out the term and any early-termination penalty, and reports the total average price for electric service — all recurring charges, before state and local sales taxes — expressed in cents per kilowatt-hour. That average price is not one number but three, because the rule requires it at mandated monthly usage levels: 500, 1,000 and 2,000 kilowatt-hours for residential products, and 1,500, 2,500 and 3,500 for small commercial products, where demand charges apply on an assumed thirty per cent load factor. Those levels are comparison points fixed by the rule, not tiers in the plan and not a forecast of your own usage. A quote without the label's basis is a number without its edge.

• The EFL is required for each product and is standardised for comparison.
• It states fixed versus variable, the term, and any early-termination penalty.
• The average price is reported in cents per kilowatt-hour at mandated usage levels.
• Small-commercial figures assume a thirty per cent load factor where demand applies.

A quoted rate carries a usage assumption

Advertised and comparison figures are quoted at a stated usage level, because the same offer produces a different price per kilowatt-hour at different volumes. Fixed charges and demand charges do not scale with consumption, so as volume rises they are spread across more units and the effective price falls; as volume falls, the same charges concentrate and the effective price climbs. That is why a supplier's headline figure is stated at a usage level rather than offered as a flat price, and why the label reports three figures instead of one. A number quoted at a usage level unlike yours describes a business unlike yours. Commercial accounts therefore need a quote built on their own profile, at their own volumes, rather than the headline intended for another size of account.

• Quoted rates are stated at a specific usage level.
• Fixed and demand charges spread across volume, so effective price falls as usage rises.
• A figure quoted at one usage level does not describe another.
• Commercial accounts need a quote built on their own profile, not a headline.

Your load factor is where the gap comes from

The gap between a headline figure and your bill usually traces to load shape. A supplier's advertised number is computed on a stated usage level and an assumed shape; where the figure is a small-commercial average price on an Electricity Facts Label, the shape it assumes is a thirty per cent load factor. Your own load factor is the ratio of what you used to what you would have used had your peak run the whole period: kilowatt-hours divided by the product of peak demand and hours. A site that runs well below the label's assumed shape concentrates its fixed and demand costs into fewer units, so its effective price lands above the advertised one — not because the offer changed, but because the assumption did not describe it. Working out your own load factor tells you which way, and roughly how far, the advertised figure will move when it meets your meter.

• An advertised figure is computed at a stated usage level and an assumed shape.
• The small-commercial EFL assumes a thirty per cent load factor.
• Load factor = kWh ÷ (peak kW × hours), expressed as a percentage.
• A shape below the assumption pushes your effective price above the advertised figure.

Compute your own effective price before judging any quote

The only figure that can be checked against a quote is your effective price: the total amount billed for a period divided by the kilowatt-hours used in that same period. Do that over several months rather than one, since a single month is easily distorted by weather or a one-off event. You then know what you are actually paying per unit, all layers included. Now compare that with what a quote covers: if the offer is energy-only, put it beside the energy line of your own bill rather than the total, and add whichever pass-through components the contract leaves outside its figure. Only once both sides describe the same layers and the same period can the difference between them mean anything.

• Effective price = total billed ÷ kWh used, over the same period.
• Use several months; a single month is easily distorted.
• Establish whether a quote is energy-only or covers the whole supply side.
• An all-in claim can be tested against your own effective price.

What a state average is, and what it is not

Rate context often comes from a state average, and it is worth being precise about what that number is. The Energy Information Administration computes its average retail price as the retail sales revenue for a state, sector and period divided by the kilowatt-hours sold in the same period. The numerator carries supply, transmission, distribution, customer charges, taxes and included fees — it is an all-in revenue-per-kilowatt-hour measure, not a generation rate. Because it aggregates every account in the sector, it is volume-weighted: large users pull the figure more than small ones do. And the commercial sector is a statistical category rather than a tariff class, so it sits across many rate schedules, demand structures and load shapes. That is why a state commercial average is useful as context and misleading as a quote for a named business: it describes the sector, not your account.

• EIA average price = retail revenue ÷ kilowatt-hours sold, for a state, sector and period.
• It includes supply, delivery, customer charges and included taxes and fees.
• It is volume-weighted, so large users move it more than small ones.
• The sector is a statistical category, not a single rate schedule.

Fixed, variable and indexed are settled differently

The same rule that defines the disclosure label also defines the product types, and the definitions decide what a comparison is actually comparing. A fixed-rate product holds the price — recurring and ancillary charges — the same for every billing period of its term, with narrow exceptions for actual changes in utility charges, market administrative fees, and new costs imposed by law. A variable-price product may move at the provider's discretion, tightening or relaxing from month to month without a formula tied to a published index. An indexed product moves according to a pre-defined pricing formula based on publicly available information and disclosed to the customer before signing. Texas draws a hard line here: an indexed product may not be offered to a residential or small commercial customer, nor may a wholesale indexed product tied directly to real-time settlement prices, so above those classes the choice of formula is itself a regulated question rather than a purely commercial one. Comparing a fixed offer with an indexed one by their headline figures measures a commitment against a formula, which is not a comparison at all.

• Fixed: the price is the same each billing period of the term, with narrow pass-throughs.
• Variable: the provider may change the price, without a published index.
• Indexed: the price follows a disclosed, pre-defined formula on public information.
• Texas bars indexed and wholesale-indexed products for residential and small commercial customers.

Rate class, meter and territory move the answer too

Two sites in the same city on the same supplier can still be billed differently, because the delivery side is set by the account's rate class and metered demand. A different peak, a different service voltage or a different meter type can place an account in a different class with a different delivery schedule and different demand treatment. Delivery is also territory-specific: the utility serving the address sets the delivery charges, and the tariff that applies to your class is not the one that applies to the site across the street if a different utility serves it. A quote for one site therefore does not describe another site's cost, and a multi-site portfolio still needs per-site quoting even when one supplier serves the whole portfolio.

• Rate class follows the account's metered demand, service voltage and meter type.
• The serving utility sets delivery charges for the address.
• A quote for one site does not describe another site's cost.
• Multi-site portfolios still need per-site quoting.

What a fair comparison requires

Bring the offers onto common ground before comparing them. Same term length. Same start month, because the price of a forward commitment moves with the season it begins in. Same usage profile, taken from interval data rather than a monthly total. And a written statement of which charges sit inside the figure, with the rest billed alongside it. The Electricity Facts Label is the standardised artifact built for exactly this, which is why an offer without one is harder to compare than an offer with one. If the terms are not matched — the same usage basis, the same start month, the same included charges — the comparison is measuring assumptions rather than offers, and whichever figure looks lower may simply have assumed more.

• Match term length, start month and usage basis.
• Use the disclosure label's figures where both offers have one.
• Get the included charges stated in writing.
• If terms are not matched, the comparison is measuring assumptions.

Why we do not publish rates

Published rates go stale, describe a usage level that is not yours, and cannot reflect your rate class or your peak. A number printed on a page cannot be checked against a real quote, and a figure that is wrong for your account is worse than no figure at all — it produces a false expectation, and the disappointment arrives on the first bill. So this site describes how the layers work and how to compute your own effective price, and stops there. Eligibility still depends on the service address, the meter and the utility territory, and municipal utilities, cooperatives and some jurisdictions offer no choice at all. HighGround Exchange may receive compensation from providers on completed purchases, and an inquiry places no order and switches no supplier.

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