Texas Commercial Electricity Rates for Cannabis Facilities: ERCOT Pricing, TDU Demand, and 4CP Transmission

Texas vs. U.S. average commercial rates

Sector	Texas, June 2026	U.S. average, June 2026	Difference
Commercial	8.66 cents/kWh	14.19 cents/kWh	-39%
Industrial	6.58 cents/kWh	not in state file	n/a

Source: EIA Electric Power Monthly, Table 5.6.A [eia-epm-5-6-a].

The EIA average bundles REP energy and TDU delivery across the state [eia-epm-5-6-a]. A peaky cultivation load with ratchet demand and 4CP transmission can bill well above 8.66 cents per kWh all-in.

ERCOT market structure

Senate Bill 7 (1999) opened retail competition on January 1, 2002 [tlo-sb7-analysis]. About 85% of Texas electricity consumers have retail choice [ercot-retail-market]. ERCOT serves about 90% of the state's electric load [ercot-retail-market].

Component	Provider	Notes
Energy supply	Retail Electric Provider (customer choice)	No default supply [ercot-retail-market]
Delivery	TDU (Oncor, CenterPoint, AEP, TNMP)	Regulated pass-through [ercot-retail-market]
Wholesale market	ERCOT	Real-time and day-ahead [ercot-retail-market]
Transmission allocation	4CP (June-September peaks)	Sets next year's transmission kW [oncor-tariff]

Non-choice areas (Austin Energy, CPS Energy, cooperatives, non-ERCOT IOUs) follow bundled regulated rates instead [ercot-retail-market].

Major TDU territories and delivery classes

TDU	Territory	Demand structure
Oncor	DFW, Midland-Odessa, north and west-central Texas	Secondary ≤10 kW energy-only; >10 kW with 80% ratchet; 4CP transmission [oncor-tariff]
CenterPoint	Houston metro	Similar secondary/primary structure with NCP ratchet and 4CP [ercot-retail-market]
AEP Texas Central	Corpus Christi, Valley, Laredo	Separate tariff; mirrors Oncor class breakpoints [ercot-retail-market]
AEP Texas North	Abilene, San Angelo	Separate tariff; same competitive REP market [ercot-retail-market]
TNMP	Scattered ERCOT pockets	Smallest IOU TDU in choice areas [ercot-retail-market]

Oncor commercial delivery classes (detail)

Tariff for Retail Delivery Service effective June 1, 2026 [oncor-tariff]:

Schedule	Threshold	Billing demand
Secondary ≤ 10 kW	Small commercial, dispensaries	Energy-only
Secondary > 10 kW	Cultivation, processing	Greater of current NCP or 80% of highest prior 11-month NCP
Primary > 10 kW (distribution line)	Larger campuses	Same ratchet; lower $/kW
Primary > 10 kW (substation)	Largest loads	Same ratchet; lowest $/kW
Transmission Service	4CP-billed classes	4CP kW updated January 1

Pull current $/kW from Section 6.1.1.1 before quoting specific figures [oncor-tariff]. A premise stays on the greater-than-10 kW schedule until it has 12 consecutive months below 10 kW [oncor-tariff].

CenterPoint Houston Electric uses a similar secondary and primary structure with NCP billing demand, an 80% ratchet, and 4CP transmission allocation [ercot-retail-market].

Climate and seasonality

Texas averages 2,809 cooling degree days and 1,818 heating degree days [noaa-cag-texas]. Cooling and dehumidification dominate indoor grow energy. Gulf Coast humidity drives latent load; Dallas and west Texas are drier [noaa-cag-texas].

4CP peak intervals fall in June through September, aligning with maximum cultivation HVAC and lighting coincidence [oncor-tariff]. A TCUP grow peaking during ERCOT system-peak afternoons pays higher transmission for the following calendar year [oncor-tariff].

How to read a Texas commercial bill

1. REP energy charge. Cents per kWh from your Retail Electric Provider contract.
2. TDU delivery energy. Regulated pass-through cents per kWh.
3. TDU distribution demand. $/kW on billing kW (after ratchet).
4. TDU transmission (4CP). $/kW on 4CP kW assigned January 1.
5. Metering and ancillary. Fixed and variable TDU fees.

REP and TDU charges may appear on one consolidated bill or separately depending on the REP [ercot-retail-market]. See understanding your commercial utility bill.

Industrial vs. commercial average gap

The 2.08 cent gap between Texas commercial (8.66) and industrial (6.58) averages in June 2026 reflects voltage level, load factor, and delivery class more than a supply discount [eia-epm-5-6-a]. TCUP cultivation campuses that take primary service at substation voltage with high load factor may approach industrial pricing on the REP energy line while still paying TDU demand charges on billing kW [oncor-tariff].

Worked all-in comparison

Assume a TCUP cultivation site with 250,000 kWh monthly and 650 kW billing demand on Oncor Secondary Service Greater Than 10 kW [oncor-tariff] [eia-epm-5-6-a]:

Component	Rate (assume)	Monthly cost
REP energy	8.66 cents/kWh	$21,650
TDU delivery energy	~2.5 cents/kWh	~$6,250
Distribution demand	~$4/kW x 650 kW	~$2,600
4CP transmission	~$5/kW x 650 kW	~$3,250
All-in effective rate	~13.5 cents/kWh	~$33,750

The EIA 8.66 cent average understates all-in cost for demand-metered cultivation by roughly 55 percent in this example. Delivery and transmission pass-throughs are the gap.

No default supply benchmark

Unlike Ohio's Price to Compare or Illinois's utility supply tariff, Texas offers no default supply rate [ercot-retail-market] [tlo-sb7-analysis]. Every choice-area customer must be with a REP. PowerToChoose.org lists residential and small-commercial offers [ercot-retail-market]. Larger commercial loads are priced individually off ERCOT wholesale.

Use your current all-in cost (total bill divided by kWh) as the comparison baseline when evaluating new REP offers.

CenterPoint Houston latent load and delivery stack

CenterPoint Energy Houston Electric serves the Gulf Coast TCUP and hemp footprint with hot, humid climate: statewide normals average 2,809 cooling degree days, and Houston dew points in the 70s F from May through September drive dehumidification load [noaa-cag-texas] [ercot-retail-market]. Delivery classes mirror Oncor's secondary and primary structure with NCP billing demand, an 80% ratchet, and 4CP transmission allocation [ercot-retail-market].

Houston cultivation sites may run 10 to 20 percent higher HVAC kWh than Dallas at the same canopy because of latent load [noaa-cag-texas]. REP energy price is identical in structure; TDU delivery and 4CP exposure differ by territory [ercot-retail-market] [oncor-tariff].

AEP Texas and TNMP portfolio notes

AEP Texas Central and North divisions serve Corpus Christi, the Rio Grande Valley, Laredo, Abilene, and San Angelo in separate tariffs within ERCOT choice areas [ercot-retail-market]. Texas-New Mexico Power covers scattered pockets around Houston, Dallas-Fort Worth, and west Texas as the smallest IOU TDU in choice areas [ercot-retail-market]. Multi-site operators must maintain separate REP enrollments and TDU account numbers even under one legal entity [ercot-retail-market].

Pull current $/kW from each TDU tariff before quoting a portfolio pro forma; Oncor Section 6.1.1.1 rates do not apply to CenterPoint or AEP bills [oncor-tariff] [ercot-retail-market].

REP product types and TDU pass-through checklist

Contract type	Energy risk	Typical cannabis fit
Fixed all-in	REP bears wholesale swing	Predictable TCUP budget [ercot-retail-market]
Index	Customer bears real-time price	Labs with curtailment capability [ercot-retail-market]
Block-and-index	Hybrid	Grows with flat lighting block [ercot-retail-market]

Every quote should list TDU delivery energy, distribution demand, transmission 4CP, and metering pass-throughs separately from REP energy [oncor-tariff] [ercot-retail-market]. A fixed 7 cent REP offer plus 6 cent TDU stack still beats the 8.66 cent EIA average on an all-in basis [eia-epm-5-6-a] [oncor-tariff].

PowerToChoose.org helps small commercial accounts; TCUP campuses above small-commercial size need individual RFPs with twelve months of interval data and ratchet history [ercot-retail-market] [oncor-tariff].

Seasonal ratchet example on Oncor secondary

Assume a TCUP grow hits 720 kW NCP in August, drops to 500 kW in winter, but billing kW stays at 576 kW (80% of 720) through July of the following year [oncor-tariff]. Distribution demand charges bill on 576 kW even when chillers only need 500 kW [oncor-tariff]. One uncontrolled August peak sets a twelve-month floor [oncor-tariff]. Pre-cooling and partial lighting curtailment during ERCOT peak alerts protect both ratchet and 4CP kW [oncor-tariff].

Lubbool Power and Light and TNMP small-footprint notes

Lubbool Power and Light and Texas-New Mexico Power serve scattered ERCOT pockets with competitive REP markets but smaller customer counts than Oncor or CenterPoint [ercot-retail-market]. Tariff class breakpoints mirror Oncor secondary and primary structure in broad terms; pull each TDU tariff for current $/kW [ercot-retail-market] [oncor-tariff]. TCUP conditional licensees may land in TNMP territory for west Texas buildouts [dps-tcup-phase-2] [ercot-retail-market].

HB 46 product limits and facility load factor

HB 46 replaced the 1% THC-by-weight cap with 10 mg THC per serving and one gram per package for TCUP products [tlo-hb46]. Vertically integrated campuses run cultivation, processing, and retail on linked licenses with predictable baseload rather than batch-heavy adult-use patterns [dps-tcup-phase-2]. High load factor helps REP negotiations even when TDU class remains secondary service [oncor-tariff] [eia-epm-5-6-a].

Where to go next

• How to switch REPs in Texas.
• Texas hub for TCUP overview.
• Demand charges explained.
• State commercial rate comparison tool.
• Demand charge estimator.

Confirm current Oncor tariff $/kW and REP contract terms before signing.