How long should a commercial fixed contract be?

12 months is the standard. 24-36 month contracts price 0.5-1.5¢/kWh below 12-month rates but require longer-term wholesale market views. Most mid-market accounts split 24-month and 36-month tranches to ladder renewal risk.

What's the worst-case scenario on indexed?

A scarcity-pricing event (ERCOT emergency, like Winter Storm Uri) can spike wholesale prices to $9,000/MWh ($9/kWh) for hours. Indexed contracts pass that through to your bill. Always confirm whether your contract has a price cap or pass-through clause.

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Business · Fixed vs variable

Fixed vs. Variable Electricity Rates for Texas Business

For residential, fixed beats variable in 8 out of 10 markets. For commercial, the answer depends on your load profile, risk tolerance, and how big a chunk electricity is in your operating budget.

Updated May 2026 Enri Zhulati 2 min read

Enri Zhulati 2 min read 250 words

When fixed wins

Predictable load profile, electricity is more than 5% of operating costs, you're a single-budget-cycle entity (school, government, regulated industry), or you can't absorb a 50% bill swing. 12-36 month fixed contracts at the right wholesale moment can lock in 1-3¢/kWh below market for the full term.

When indexed/variable wins

Operating in a market with declining wholesale prices, you have load flexibility (can shift production to off-peak hours), or you're a sophisticated buyer with hedge instruments outside the retail contract. Mid-market accounts on indexed rates with a wholesale price floor often beat fixed by 0.5-1.5¢/kWh in soft markets.

The hybrid

Many commercial REPs offer block-and-index — you fix a percentage of your forecasted usage at a known rate and float the rest. Common ratios: 60/40, 70/30, 80/20 fixed/index. Lets you cap downside while still benefiting from price drops on the floating portion.

The Bottom Line

For residential, fixed beats variable in 8 out of 10 markets. For commercial, the answer depends on your load profile, risk tolerance, and how big a chunk electricity is in your operating budget.

Talk to a commercial advisor

Frequently asked.

How long should a commercial fixed contract be?: 12 months is the standard. 24-36 month contracts price 0.5-1.5¢/kWh below 12-month rates but require longer-term wholesale market views. Most mid-market accounts split 24-month and 36-month tranches to ladder renewal risk.
What's the worst-case scenario on indexed?: A scarcity-pricing event (ERCOT emergency, like Winter Storm Uri) can spike wholesale prices to $9,000/MWh ($9/kWh) for hours. Indexed contracts pass that through to your bill. Always confirm whether your contract has a price cap or pass-through clause.

Editorial Standards

How we research and review.

Independently researched. Every claim is verified against primary sources (PUCT, ERCOT, EFLs).
No paid placement. Rankings are never influenced by advertising or referral compensation.
Reviewed by Enri Zhulati, Consumer Advocate. Plan data is pulled live from the electricrates.org API on every build and cross-checked against the EFL each REP publishes.

Read our full standards

Enri Zhulati

Consumer Advocate

Enri knows the regulations, the fine print, and the tricks some retail electricity providers use. He's spent nearly a decade learning how to spot hidden fees, misleading teaser rates, and contracts that sound good but cost more. He writes the guides that show you what they're hiding — his goal is to help Texans avoid the traps and find plans that actually save money.

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Sources

Public Utility Commission of Texas (PUCT) — Commercial Rate Filings
Electric Reliability Council of Texas (ERCOT) — Wholesale Market Reports
U.S. Energy Information Administration (EIA) — Texas Industrial Electricity Data
ComparePower.com — Real-Time Plan & Rate Database

Sources are cited for informational purposes. Data may have been updated since publication.

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