Market Data

Why Factories Pay 8.7¢/kWh While Businesses Pay 13.5¢/kWh: The Industrial Electricity Discount, Explained

Industrial users get the cheapest power in the U.S. system. Here's what volume, voltage, and rate structure have to do with the gap.

Industrial electricity averages 8.7¢/kWh versus 13.5¢/kWh for commercial customers as of Apr 2026, according to the Energy Information Administration, because factories buy power at high voltage in enormous volume, avoiding most of the distribution costs baked into smaller users' bills. That 4.8¢ gap means the average commercial customer pays about 56% more per kilowatt-hour than the factory down the road, for the same electrons off the same grid.

One grid, three prices

The EIA splits retail electricity into residential, commercial, and industrial rate classes, and the industrial class sits at the bottom of the price ladder in nearly every state, nearly every month. The industrial figure, currently 8.7¢/kWh, up about 5.5% from a year ago, is a delivered price: it blends generation, transmission, and distribution into what actually shows up on a plant's bill, averaged across all 50 states. The commercial average sits at 13.5¢/kWh as of Apr 2026. The spread is not a subsidy and it is not a negotiating trophy. It is mostly cost-of-service arithmetic, and understanding the three components tells you which parts of it a given plant can actually capture.

Voltage, volume, and load factor

First, voltage. Large industrial customers take service at transmission or primary-distribution voltage and own their own step-down transformers, so the utility skips most of the poles-and-wires infrastructure that a strip-mall storefront requires. Distribution is the most expensive layer of the delivery stack per kilowatt-hour, and industrial buyers largely bypass it. Second, volume: metering, billing, and customer service cost the utility roughly the same for a 2,000 kWh customer as for a 2,000,000 kWh one, so fixed costs shrink toward rounding error at industrial scale. Third, and least appreciated, load factor. A factory running two or three shifts draws power steadily around the clock, which lets the utility serve it from cheap baseload capacity. An office building that peaks hard at 2 p.m. and empties at 6 forces the utility to hold expensive peaking capacity in reserve, and commercial demand charges are priced accordingly.

U.S. industrial electricity price, Apr 2026 (EIA): 8.7¢/kWh. The archived series has ranged from 8.2¢ in Apr 2025 to 9.3¢ in Jul 2025. Commercial customers currently pay 13.5¢/kWh, a +56.0% premium over the industrial rate.

The industrial discount is not a subsidy. It is cost-of-service arithmetic, voltage, volume, and load factor, and parts of it are capturable.

What the gap is worth: a worked example

Take a mid-size plant drawing 100,000 kWh a month. Billed at the industrial average of 8.7¢/kWh, the energy line runs about $8,660 a month. The same load billed at the commercial average of 13.5¢/kWh costs about $13,510, a difference of roughly $4,850 a month, or $58,200 a year. That is the stakes of rate classification. Many small and mid-size manufacturers sit on commercial tariffs by default, simply because nobody asked the utility about primary-service or high-load-factor rate schedules when the shop moved in. If your load is large and steady, a rate-class review is one of the few energy savings that requires no capital at all, the industrial class pays about 36% less per kilowatt-hour than the commercial class right now.

Use the utility demand charge calculator to see how much of your bill is capacity-driven rather than energy-driven, the first step in a rate-class review. Decode your demand charges

Published 2026-07-13.