Understanding Your Energy Bill
Commercial electricity bills are comprised of several components. Understanding these can help businesses identify areas for potential savings.
Supply (Generation)
This is the cost of the actual electricity consumed. It's often tied to wholesale market prices for fuels like natural gas, coal, nuclear, and renewables. In deregulated markets, this is the component you might be able to negotiate with different suppliers.
Distribution
These are fees charged by your local utility company to deliver electricity from the high-voltage transmission system over local power lines directly to your business. This covers the maintenance, operation, and necessary upgrades to the local grid infrastructure.
Capacity
This component represents payments made to power plants and other energy resources to ensure they are available to generate electricity when needed. It's crucial for grid reliability, making sure there's always enough supply to meet demand, especially during peak times. Recent auction surges have significantly impacted this portion of bills.
Transmission
These are charges for transporting high-voltage electricity over long distances from where it's generated (power plants) to your local distribution network. It covers the costs associated with the large transmission lines and associated infrastructure that form the backbone of the power grid.
Taxes & Other Fees
Your bill will also include various federal, state, and local taxes, as well as specific regulatory and administrative fees imposed on utility services. The exact composition and amount of these can vary significantly depending on your specific location and local regulations.
Projected Commercial State-by-State Bill Impacts
This chart visualizes the *expected percentage increase in commercial electricity bills* from June 2025 onwards, primarily driven by new capacity auction prices. Click on a state's bar to see more detailed projections and strategic implications for businesses.
Select a State
Click a bar on the chart to view projected commercial details.
Complete Commercial Data: Historical Trends
For a detailed view of commercial electricity rates and historical changes, explore the full dataset below. Click on table headers to sort the data. Note: 5-Year and 10-Year Change data are illustrative long-term cost trends, informed by analyses from the U.S. Energy Information Administration (EIA) and various industry outlooks.
| State | Current Rate (¢/kWh) | Proj. Annual Change (%) | 5-Year Change (%) | 10-Year Change (%) |
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Request a Free Energy AssessmentCapacity Market Outlook: 2025 Onwards
Understanding the projected trends from major grid operators like PJM and MISO is crucial for businesses planning their future energy budgets.
PJM Outlook
For the 2026-2027 and 2027-2028 delivery years, PJM has implemented a price cap of $325/MW-day and a floor of $175/MW-day for its capacity auctions. While this aims to limit volatility, these prices are still significantly higher than historical rates, ensuring elevated capacity costs through at least 2028. Businesses in the PJM footprint (covering 13 states and D.C.) can expect these higher costs to persist.
MISO Outlook
MISO's 2025 summer capacity auction cleared at an unprecedented $666.50/MW-day across all zones, which is 22 times higher than the previous year. This historic surge is largely due to tighter supply-demand balances and a new reliability demand curve. Although MISO separates capacity costs by season, indicating a drop in fall, this summer spike will profoundly impact commercial energy bills across the 15 states served by MISO, with some small businesses potentially seeing increases of $60-$170 monthly.
Other Factors Impacting Energy Costs
Beyond capacity market dynamics and deregulation, several other critical elements contribute to the rising trajectory of your commercial electricity bill:
Natural Gas Prices
As natural gas is the primary fuel source for a significant portion of electricity generation, its price volatility directly impacts wholesale power costs. Forecasts indicate continued upward pressure on natural gas prices through 2026, influencing electricity rates across all regions.
Increased Demand
Electricity demand is experiencing robust growth after years of stagnation, driven by factors like the rapid expansion of data centers, increased EV charging, and broad electrification trends across industries and buildings. This rising demand puts additional strain on the grid and upward pressure on prices.
Infrastructure & Climate
Utilities are making significant investments to upgrade aging grid infrastructure, enhance reliability, and harden systems against increasingly frequent and severe weather events driven by climate change. The costs of these essential capital investments are typically passed on to consumers through higher rates.
Strategies to Manage Energy Costs
Businesses can implement various strategies to mitigate the impact of rising utility costs and achieve long-term savings.
Energy Efficiency Upgrades
Invest in LED lighting retrofits, HVAC system optimization, improved insulation, and upgrading to more energy-efficient machinery and equipment to significantly reduce overall energy consumption.
Demand Response Programs
Enroll in programs offered by grid operators or utilities that provide financial incentives for voluntarily reducing electricity usage during peak demand periods. This not only earns revenue but directly lowers capacity charges.
Fixed-Rate Plans
In deregulated energy markets, businesses can explore and lock in a long-term, fixed-rate electricity supply contract with a competitive supplier. This protects against market volatility, unpredictable price spikes, and provides budget certainty.
Peak Load Management
Actively monitor and manage your business's electricity consumption during critical peak demand hours (which determine your "capacity tag"). By reducing usage during these specific periods, you can lower your overall capacity charges for the following year.
On-Site Generation (Solar/Storage)
Consider investing in on-site renewable energy solutions such as rooftop solar panels or battery storage systems. These technologies can generate your own power, reduce reliance on the grid (especially during peak pricing), and offer long-term cost stability.
Smart Energy Management Systems
Implement intelligent building management systems or specialized energy management software. These systems monitor real-time energy consumption, identify inefficiencies, automate controls, and provide data-driven insights for continuous optimization and significant cost reduction.
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