Residential vs. Commercial Electricity Rates

December 7, 2023
8 minutes


Have you ever wondered how residential electricity plans compare to commercial plans? Why is there a difference in price anyway? Can you enroll your residence into a commercial electricity plan? We're covering all that and more in today's blog post!

We'll delve into the reasons behind their pricing structures and uncover the factors that set them apart. It's not just about the cost per kilowatt-hour; there's a whole world of considerations that influence these rates, from usage patterns to contract terms. So without any further delay, let's jump right in!

Understanding Residential Electricity Rates

Let's start with the basics. Residential electricity plans, as the name suggests, are plans specifically tailored for houses, apartments, single and multi-family residences, etc. They're the plans you see when you browse our platform.

The electricity rates for these types of plans typically sit between 13 to 16 cents per kWh, though this number can vary greatly depending on your location and the plan you've chosen, as well as how much energy you actually consume.

Understanding Commercial Electricity Rates

Commercial electricity plans, on the other hand, are designed with businesses and industries in mind. They're special plans, usually tailored to each individual business, store, factory, warehouse or shopping center.

These commercial rates are much lower, found between 6 and 9 cents per kWh. But again, this figure varies depending on the location of the business and its consumption.

Comparative Analysis

We know what each type of plan is for, and that the commercial rates are generally lower than residential rates. But how else do these plans differ, and why? Let's summarize:

  • Rates: As mentioned earlier, commercial rates are typically much cheaper than residential rates. This difference is mainly due to the larger volume of electricity that businesses consume, which often allows for economies of scale. Additionally, businesses have more consistent usage patterns, making it easier for providers to forecast demand and manage supply efficiently.
  • Term Length: Commercial plans often come with longer contract terms, sometimes extending up to 5 years or more. This long-term commitment is advantageous for businesses as it provides price stability and predictability in budgeting. For electricity providers, longer contracts mean secured revenue over an extended period, allowing them to offer more competitive rates.
  • Demand Charges: Unlike residential plans, commercial electricity bills often include demand charges, which are based on the highest rate of electricity usage in a billing cycle. This reflects the cost of maintaining the capacity to supply electricity to meet peak demand, which is crucial for businesses with fluctuating or high-power needs.
  • Time-of-Use Rates: Commercial plans are more likely to include time-of-use rates, which charge different rates based on the time of day electricity is used. This system encourages businesses to shift their high-energy activities to off-peak hours, helping to balance the grid's load and potentially lowering their energy costs.
  • Customization and Incentives: Commercial electricity plans often offer more customization options to cater to specific business needs. This can include tailored pricing structures, energy management services, and incentives for energy efficiency or renewable energy use.

Choosing the Right Plan

Between residential and commercial plans — if you're setting up electricity for your home or apartment, you'll be going for a residential plan. Conversely, for your store, office, or business, you'll need a commercial plan. The real choice lies in selecting the right plan within these two categories!

For residential customers, the process is simpler. You can easily browse through a wide variety of residential plans available on our platform. Consider factors like rate per kWh, contract length, and any additional fees or benefits each plan offers. Our platform provides all the information you need to make an informed decision for your home, contained within the Electricity Facts Label.

Commercial customers, on the other hand, have more complex needs and often require a tailored approach. That's where our specialized team comes in. If you're seeking a commercial electricity plan, we recommend reaching out to us directly for a personalized quote. Our team will work with you to understand your business's specific energy requirements, usage patterns, and financial objectives. We then provide customized options that align with your business goals, whether it's minimizing costs, managing demand charges, or optimizing for sustainability.


The key takeaway from today's discussion is pretty straightforward: residential and commercial electricity plans differ fundamentally in rates and structure, due to the differing energy needs and consumption patterns of homes and businesses.

For residential plans, you'll find a variety of options on our platform to suit your home energy needs. These plans are designed for the typical household usage and offer a range of rates and terms to match your lifestyle.

Commercial plans, tailored for business use, offer lower rates and more customization due to the consistent and higher volume usage of commercial entities.

And before wrapping up this blog post — you should know you cannot enroll into a commercial plan if you do not own a business at the address in question!

Additional Resources and Links

Here are some valuable resources for those looking to know more. These links will take you to external sites, offering extensive information from regulatory bodies and educational content on electricity rates:

These resources can provide you with more detailed information on how electricity rates work, helping you make more informed decisions about your electricity plan.

Ready to get started?

If you're looking for plans for your home or apartment, give our search tool a try — simply enter your zip code and discover the plans available for your location.

If you are a business owner or representative looking for the best commercial deals, reach out to us! We'll get you a plan that fits your business like a glove.

Do you still have a burning question, comment or feedback regarding today's topic? We'd love to hear from you!