Market Data

Why Commercial Businesses Pay About 56% More for Power Than Factories Do

At 13.5¢/kWh, commercial customers pay a steep premium over industrial rates. We break down the rate-structure reasons and what small manufacturers on commercial tariffs can do about it.

U.S. commercial electricity averages 13.5¢/kWh versus 8.7¢/kWh for industrial customers as of Apr 2026, according to the Energy Information Administration, meaning commercial buyers pay about 56% more per kilowatt-hour, largely because of lower-voltage delivery and demand-charge structures. For a small manufacturer sitting on a commercial tariff, that 4.8¢ gap is not trivia. It may be the cheapest rate reduction the business will ever find.

Where the premium comes from

The gap is built from three layers of cost-of-service. Delivery voltage is the biggest: commercial customers take power at secondary voltage through the full distribution chain, substations, feeders, pole transformers, while large industrial users connect at primary or transmission voltage and shoulder their own step-down equipment, skipping the most expensive wires in the system. Load shape is second: commercial demand peaks sharply with business hours and air conditioning, forcing utilities to carry peaking capacity that gets billed back through demand charges; industrial loads run flatter around the clock and are cheaper to serve per kilowatt-hour. Scale is third: the fixed costs of metering, billing, and service spread over vastly more energy at industrial volumes. None of this is arbitrary, but the boundary between the classes is, and that is where the opportunity sits.

Commercial premium over the industrial rate, Apr 2026 (13.5¢/kWh vs 8.7¢/kWh): 4.8¢/kWh. Computed from the live EIA series. The commercial series has ranged from 12.9¢ (Apr 2025) to 14.4¢ (Feb 2026) in the archived history.

The classification question small manufacturers should ask

Rate class is assigned, not chosen, but the assignment is reviewable. Utilities classify customers by service voltage, demand level, and sometimes SIC/NAICS activity codes, and a machine shop that moved into its building a decade ago may have inherited a general-service commercial schedule that no longer fits its load. The trigger points worth checking: monthly demand consistently above the utility's large-general-service threshold (often 50 to 500 kW, tariff by tariff); the ability to take primary-voltage service if the transformer economics work; and load factor, a shop running two shifts with steady compressors and furnaces has exactly the flat profile industrial schedules are priced for. The ask costs a phone call and a copy of twelve months of bills. The answer is written in the utility's published tariff book, not in a negotiation.

Rate class is assigned, not chosen, but the assignment is reviewable, and the answer is written in the tariff book.

What the gap is worth to one shop

Take a job shop drawing 60,000 kWh a month. On the commercial average of 13.5¢/kWh, the energy line runs about $8,106 a month; at the industrial average of 8.7¢/kWh, about $5,196. The difference, roughly $34,920 a year, is what full reclassification would be worth at national-average rates, and even partial moves (a time-of-use industrial schedule, a primary-service discount, demand-charge management) capture meaningful fractions of it. Not every shop qualifies, and transformer ownership carries real maintenance obligations. But a savings of this size with zero process change earns the afternoon it takes to investigate, and both series move monthly, so the arithmetic should be rerun at the live rates, not remembered ones.

Use the utility demand charge calculator to separate energy cost from capacity cost on your bill, the split that decides whether reclassification pays. Start with your demand charges

Published 2026-07-13.