Energy and Carbon

Commercial vs Industrial Power: Why Your Rate Class Changes the Bill by a Third

Industrial and commercial electricity are priced differently, and the gap is not small. Knowing which class your facility falls in, and why, is worth real money on the annual power bill.

Electricity is not sold at one price. Industrial customers, currently paying 8.7¢/kWh on average (May 2026), up about 5.1% from a year ago, and commercial customers, at 13.5¢/kWh, up about 4.7% from a year ago, face different rate structures, and the gap between them is typically meaningful. A facility that assumes the wrong class, or does not understand why its class is priced the way it is, can misjudge its energy cost and miss opportunities to lower it. The two series together frame where a given site sits and why.

Why industrial is usually cheaper per kWh

Industrial rates are generally lower per kilowatt-hour than commercial rates for a few structural reasons: industrial users take power at higher voltage, reducing the utility's distribution cost; they consume large, steady loads that are cheaper to serve than variable ones; and they often negotiate demand-based rate structures. Commercial users, offices, retail, smaller facilities, take power at lower voltage with peakier usage, which costs more to serve. The result is the persistent spread between the two series, and it is why a facility's rate class is a real lever, not a fixed fact.

Two buildings on the same street can pay very different rates for the same electron. The difference is the rate class, and it is more negotiable than most facilities assume.

What a facility does with this

A manufacturer should know its rate class, understand the demand charges inside it, and benchmark its effective rate against the industrial series. A facility paying closer to the commercial rate may be able to requalify for an industrial tariff, restructure its demand profile to cut peak charges, or negotiate based on its load factor. Even without changing class, understanding the demand-charge component, often a large share of an industrial bill, points to load-shifting and peak-shaving measures that lower cost without cutting production. The published rates are the benchmark those conversations start from.

The industrial rate, year by year

Over the five-year record industrial power has stayed inside a recognizable band, running 6.7¢ in May 2021 to 9.4¢ in August 2022 and sitting today in the upper third of its five-year range at 8.7¢. The absence of a trend is itself the planning input: in a series this steady, a move that would be noise elsewhere is a real signal, because the base rate of movement is so low.

Use the energy cost calculators to benchmark your effective rate against the industrial series. Cost your power

Published 2026-08-06.