Independent resource. Not affiliated with any utility or energy provider.
Business Electricity Rates: Commercial vs Residential Costs by State (2026)
Commercial electricity averages 14.12 cents per kWh nationally, 22% less than the residential average of 18.05 cents. But commercial bills include demand charges that residential bills do not. Here is what business owners need to know.
Commercial Avg
14.12cents/kWh
Residential Avg
18.05cents/kWh
Business Discount
22%
Lower per-kWh rate
Business vs Residential Rates by State
| State | Residential (cents) | Commercial (cents) | Savings |
|---|---|---|---|
| Idaho | 10.65 | 8.31 | 22% |
| North Dakota | 10.92 | 8.52 | 22% |
| Washington | 11.20 | 8.74 | 22% |
| Utah | 11.45 | 8.93 | 22% |
| Wyoming | 11.85 | 9.24 | 22% |
| Kentucky | 12.10 | 9.44 | 22% |
| Louisiana | 12.18 | 9.50 | 22% |
| Tennessee | 12.20 | 9.52 | 22% |
| Arkansas | 12.35 | 9.63 | 22% |
| Oklahoma | 12.40 | 9.67 | 22% |
| Nebraska | 12.80 | 9.98 | 22% |
| North Carolina | 12.85 | 10.02 | 22% |
| Oregon | 12.90 | 10.06 | 22% |
| West Virginia | 12.95 | 10.10 | 22% |
| Mississippi | 13.10 | 10.22 | 22% |
| Montana | 13.15 | 10.26 | 22% |
| Georgia | 13.20 | 10.30 | 22% |
| South Dakota | 13.25 | 10.34 | 22% |
| Missouri | 13.40 | 10.45 | 22% |
| Virginia | 13.90 | 10.84 | 22% |
| Iowa | 14.05 | 10.96 | 22% |
| Alabama | 14.08 | 10.98 | 22% |
| South Carolina | 14.10 | 11.00 | 22% |
| Nevada | 14.20 | 11.08 | 22% |
| Texas | 14.20 | 11.08 | 22% |
| Kansas | 14.30 | 11.15 | 22% |
| Arizona | 14.40 | 11.23 | 22% |
| Indiana | 14.50 | 11.31 | 22% |
| New Mexico | 14.55 | 11.35 | 22% |
| Ohio | 14.80 | 11.54 | 22% |
| Minnesota | 15.05 | 11.74 | 22% |
| Colorado | 15.10 | 11.78 | 22% |
| Florida | 15.50 | 12.09 | 22% |
| Wisconsin | 16.10 | 12.56 | 22% |
| Delaware | 16.25 | 12.68 | 22% |
| Pennsylvania | 16.40 | 12.79 | 22% |
| Maryland | 16.80 | 13.10 | 22% |
| Illinois | 17.10 | 13.34 | 22% |
| New Jersey | 18.45 | 14.39 | 22% |
| Michigan | 19.20 | 14.98 | 22% |
| Vermont | 21.20 | 16.54 | 22% |
| Alaska | 22.75 | 17.75 | 22% |
| New York | 23.20 | 18.10 | 22% |
| Maine | 24.10 | 18.80 | 22% |
| Rhode Island | 26.80 | 20.90 | 22% |
| New Hampshire | 27.03 | 21.08 | 22% |
| California | 27.30 | 21.29 | 22% |
| Massachusetts | 28.55 | 22.27 | 22% |
| Connecticut | 29.92 | 23.34 | 22% |
| Hawaii | 43.18 | 33.68 | 22% |
Commercial rates estimated at 78% of residential rates based on national average ratio. Actual commercial rates vary by utility and usage level.
Demand Charges Explained
Unlike residential bills that only charge for consumption (kWh), commercial bills include demand charges based on your highest rate of electricity draw (kW) during the billing period. The demand charge compensates the utility for maintaining enough grid capacity to handle your peak load.
Example
A small office using 5,000 kWh per month with a peak demand of 25 kW at a demand charge of $12/kW pays $300 per month just for the demand charge, on top of the per-kWh consumption charges. If you can reduce your peak demand to 18 kW by staggering equipment start-up times, you save $84 per month ($1,008 per year) on demand charges alone.
Strategies to reduce peak demand include staggering HVAC and equipment start times, installing battery storage to shave peaks, using smart building management systems, and shifting large loads (EV fleet charging, water heating) to off-peak periods.
Energy Audits for Businesses
| Business Size | Audit Cost | Typical Savings Found | Payback Period |
|---|---|---|---|
| Small office (under 5,000 sq ft) | $300 - $800 | 10 - 20% | 3 - 6 months |
| Medium business (5,000 - 25,000 sq ft) | $800 - $2,000 | 15 - 25% | 4 - 8 months |
| Large facility (25,000+ sq ft) | $2,000 - $5,000 | 10 - 30% | 3 - 8 months |
Quick Wins for Small Businesses
LED Retrofit
$500 - $3,000/yrReplace fluorescent and halogen fixtures with LED. Typical savings: 40 to 60% on lighting costs. Payback: 6 to 18 months. Many utilities offer rebates that reduce the upfront cost.
Programmable Thermostats
$300 - $1,500/yrSet HVAC to reduce heating/cooling during closed hours, weekends, and holidays. Savings of 10 to 20% on HVAC costs with zero capital investment beyond the thermostat.
Smart Power Management
$200 - $800/yrUse timers and smart plugs to power down computers, printers, displays, and kitchen equipment during closed hours. Commercial phantom loads can be 10 to 15% of total usage.
Load Shifting
$400 - $2,000/yrRun EV fleet charging, water heating, and industrial equipment during off-peak hours to reduce both the per-kWh rate (on TOU plans) and peak demand charges.