Commercial electricity rates are not one number. Your real cost is the total electric bill divided by total kilowatt-hours, then explained by four buckets: energy use, peak demand, time-of-use pricing, and fixed or tariff-specific charges. Until you separate those buckets, you cannot tell whether efficiency, operations, a supply contract, solar, battery storage—or some combination—will produce the best result.
That is the practical answer for building owners. Do not compare a supplier’s cents-per-kWh offer to your all-in bill and call it savings. Start with 12 months of bills, confirm the tariff, obtain interval data, and build a baseline you can defend.
Start with the rate—not the sales pitch
A commercial bill may contain an energy charge measured in kilowatt-hours (kWh), one or more demand charges measured in kilowatts (kW), time-of-use periods, fixed customer charges, delivery charges, riders, taxes, and credits. Two buildings that consume the same monthly kWh can pay very different totals because one sets a sharp afternoon peak or uses more power during expensive hours.
Geography matters too. The U.S. Energy Information Administration’s Electric Power Monthly Table 5.6.A, released September 24, 2026 with July 2026 data, reported a national commercial average of 14.53 cents per kWh. State averages ranged far above and below that figure; California’s commercial average was 30.56 cents per kWh. Those are useful market benchmarks, not substitutes for your utility tariff or actual bill.
The EIA also notes that utilities may classify commercial and industrial customers by industry code, demand, usage, or rate schedule. In plain English: the right comparison is not “What does the business next door pay?” It is “What tariff am I on, what creates my charges, and what alternatives am I actually eligible for?”
Calculate your effective commercial electricity rate
The fastest diagnostic is the effective rate:
Effective electricity rate = total electric bill ÷ total kWh
This captures the entire bill in one number. It does not explain the cause, but it exposes the gap between a quoted energy rate and the amount the property actually pays.
Illustrative example — run your own numbers
| Bill component | Illustrative input | Illustrative cost |
|---|---|---|
| Energy | 100,000 kWh × $0.12 | $12,000 |
| Demand | 250 kW × $18 | $4,500 |
| Delivery, fixed charges and riders | Bill total | $1,500 |
| Total bill | $18,000 | |
| Effective rate | $18,000 ÷ 100,000 kWh | $0.18/kWh |
A supplier promising $0.105 per kWh has not necessarily cut this building’s 18-cent effective rate. The proposal may address only the energy commodity while demand, delivery, riders, and taxes remain. Ask for a line-by-line “before and after” using your actual tariff and load profile.
Match each bill component to the right cost lever
| Cost driver | Evidence to review | Best first questions |
|---|---|---|
| High monthly kWh | 12–24 months of bills; building benchmark | Can controls, HVAC, lighting, process loads or solar reduce purchased energy? |
| High peak kW | 15-minute interval data; demand timestamps | Can loads be staggered, controlled or served by storage during peaks? |
| Expensive time-of-use periods | Hourly or interval load mapped to tariff periods | Can operations shift, or can solar/storage cover those hours? |
| Supply price | Eligible supplier offers, terms and pass-throughs | Is the market competitive, and what charges remain with the utility? |
| Fixed charges and riders | Tariff sheets and bill line items | Which charges are avoidable, and which remain after a project? |
Benchmarking should come before capital spending. EPA’s ENERGY STAR Portfolio Manager guidance says benchmarking turns utility-bill information into actionable knowledge and lets owners compare a building with its history, peers, or a reference level. The Department of Energy’s Energy Data Management Guide likewise identifies monthly utility-bill analysis and benchmarking tools as foundations for tracking performance and validating bills.
Interval data is where the diagnosis gets sharper. DOE’s Green Button guidance explains that many utilities let customers download their own energy-consumption data in standardized formats. That data can reveal whether your peak lasts 15 minutes, repeats every weekday, or coincides with the hours solar produces.
Where solar and battery storage fit
Solar is strongest when the building has durable daytime load, usable roof or parking area, and enough control over the meter and property to support a long-lived project. It can reduce grid-purchased kWh and may reduce some demand charges when production reliably overlaps the building’s billing peak. It does not automatically eliminate every demand charge, fixed charge, or evening time-of-use cost.
Battery storage is different. It can discharge during short peaks, shift energy across time-of-use periods, and support resilience objectives when engineered for those jobs. But the economics depend on the tariff, load shape, controls, usable battery capacity, cycling plan, and project costs. A National Renewable Energy Laboratory study on solar-plus-storage for commercial demand charges found that savings opportunity depends heavily on the customer’s demand-charge design and how well the system manages the applicable peak.
That is why we model the meter before recommending equipment. Use the commercial solar savings calculator for an initial screen, then compare the result with a tariff-based model. If demand charges are material, our commercial solar battery storage guide explains the additional sizing and controls questions. Warehouse owners can also see how these issues affect roof strategy and net operating income in our warehouse solar benefits guide.
Use this commercial electricity-rates comparison checklist
- Collect 12–24 months of complete electric bills for every meter.
- Record the exact utility, tariff name, service voltage and account class.
- Download interval data—preferably 15-minute data—covering the same period.
- Calculate monthly and annual effective cost per kWh.
- Separate energy, demand, time-of-use, delivery, fixed, rider and tax charges.
- Identify when the highest demand occurs and what equipment is operating.
- Confirm lease, tenant-metering, roof, electrical-service and ownership constraints.
- Model efficiency, operations, supplier, solar and storage options against the same baseline.
- Require proposals to disclose escalation, degradation, replacement, maintenance and financing assumptions.
- Compare net cash flow and risk—not just a headline cents-per-kWh figure.
Our commercial solar assessment process starts with this evidence, not a guessed system size. The commercial solar case study shows how we frame owner decisions, while Village Redevelopment reflects the developer/operator perspective behind our recommendations. Operating a solar-powered San Diego four-plex reinforced a simple lesson: ownership structure and real load behavior matter as much as the equipment brochure.
Who this approach is not for—and common limitations
This process is not a promise that every building should add solar or batteries. A short remaining lease, uncertain ownership, a failing roof, low daytime load, small avoidable charges, shaded site, poor credit, or major electrical upgrades can weaken the case. In a tenant-paid or triple-net structure, the party funding the project may not receive the utility savings unless the lease and allocation method are addressed.
Rate shopping is also market-specific. Some states allow competitive electricity supply; others do not. Even in competitive markets, utility delivery and tariff charges may remain. Battery savings can be volatile when peaks move, tariffs change, or controls miss the billing window. Solar production varies by site and season. Treat every result as a scenario until it is tied to current tariff rules, field conditions, engineering, and a financeable contract.
Commercial electricity rates FAQ
What is the average commercial electricity rate?
EIA reported a U.S. commercial average of 14.53 cents per kWh for July 2026, but state averages, utilities, tariffs and individual bills vary widely. Use that figure as context, not as a project assumption.
Why is my effective rate higher than the listed energy rate?
Your total may include demand, delivery, time-of-use, fixed, rider, tax and other charges. Divide the total bill by total kWh, then reconcile the difference line by line.
Can solar reduce commercial demand charges?
Sometimes. Solar must produce during the interval that establishes the billing demand. A tariff and interval-data analysis is required; do not assume demand savings from annual kWh production alone.
What should I send for a commercial energy assessment?
Send 12–24 months of full bills, interval data, the current tariff, meter list, roof and electrical information, operating schedule, lease constraints, and any planned load changes such as EV charging or electrification.
Turn the bill into an owner-grade decision
Send us your bills and interval data. We’ll help separate rate, demand, timing and fixed-cost issues, then test whether efficiency, solar, storage, financing, or a combined strategy deserves the next dollar of diligence.