Pricing, procurement, basis, LDC tariffs, and contract strategy for Texas commercial gas buyers.
Texas is one of the largest natural-gas-consuming commercial markets in the United States — and one of the most operationally complex to procure in. The state hosts the U.S. benchmark trading hubs at Houston Ship Channel and Waha, sits upstream of the country's largest LNG export terminals, and delivers commercial gas through four distinct regulated local distribution companies — Atmos Energy, CenterPoint Energy, Texas Gas Service, and CPS Energy. Every Texas commercial gas buyer is buying off the same NYMEX Henry Hub benchmark, but the rate that lands on the bill is a function of LDC tariff, basis assignment, contract structure, and dozens of contract terms that the headline $/MMBtu number does not disclose.
This section is for plant managers, facilities directors, and CFOs running mid-size and large Texas commercial operations — restaurants, hotels, event venues, multi-family operators, manufacturers, healthcare facilities, places of worship, retail chains, and warehouses — that consume enough gas to justify active procurement (typically 5,000+ Mcf annually). The articles below cover what the rate actually is, what drives it, how to shop it, what to negotiate, and how to keep the savings between renewals. The reading is denser than the electricity content because the gas market itself is denser — but the operators who put in the time consistently get materially better outcomes than the ones who stay on default-supply tariffs.
Texas commercial electricity sits on top of the ERCOT wholesale market, where 25+ retail electric providers compete for commercial accounts and every kWh ultimately settles against an ERCOT hub price. Commercial natural gas in Texas has no equivalent of ERCOT — there is no single statewide deregulated gas market, and the rules differ by LDC territory. The delivery side is owned and operated by regulated local distribution companies under tariffs set by the Railroad Commission of Texas (and, for CPS Energy in San Antonio, the municipal utility). The supply side is open to competition for qualifying commercial accounts (transport service), but the marketer landscape is smaller — typically 8 to 15 active commercial marketers across the state versus 25+ retail electric providers on the electric side. Basis differentials are real and material in gas (Houston Ship Channel and Waha both trade meaningfully off Henry Hub), where the analogous concept barely exists in retail electric procurement.
The practical implication: gas procurement requires the same disciplined process as electricity but with additional layers of LDC-tariff complexity, basis assignment, and seasonal nomination management that don't exist on the electric side. A buyer who confidently runs commercial electricity RFPs is not automatically equipped to run commercial gas RFPs at parity.
The all-in $/Mcf or $/MMBtu on a Texas commercial gas bill is the sum of five components: the commodity (priced off NYMEX Henry Hub), the basis (the differential between Henry Hub and the regional delivery hub — Houston Ship Channel for East Texas, Katy for Houston, Waha for West Texas), the LDC delivery charge (fixed customer charge plus per-Mcf delivery rate, set by tariff), pipeline and storage costs (usually bundled into basis or LDC delivery), and a stack of regulatory riders, taxes, and pass-throughs that flow through every commercial bill regardless of supplier.
The commodity is what you can shop. The delivery side is regulated and identical for all customers in the same rate class. The basis is somewhere in between — disclosed in the contract but subject to market dynamics that move basis differentials month to month. The full breakdown — every line, what it actually represents, what's negotiable and what isn't, and how to read your bill — is in our complete guide to commercial natural gas rates in Texas.
Once a Texas commercial buyer is on a transport-rate tariff and shopping the commodity portion, four contract structures cover the practical universe of commercial gas procurement. Fixed-price contracts lock the all-in $/MMBtu for 12, 24, or 36 months — maximum budget certainty, with a 5 to 15% risk premium baked into the rate. NYMEX-indexed contracts float monthly with the Henry Hub settle plus a transparent basis adder — full market exposure on both sides, lower expected cost over multi-year holds but with monthly variance that some businesses cannot absorb. Hybrid (block-and-index) contracts split the load between fixed and indexed components, sized so the fixed portion covers the winter-peak exposure the business cannot afford to overpay for. Trigger and managed-hedge contracts overlay pre-set price targets on an indexed base, executing fixed-price blocks automatically when NYMEX hits the target — the most sophisticated retail structure and well-suited to facilities with structured procurement policies and operational discipline to honor the targets.
The right structure depends on load shape, risk tolerance, and view on the forward NYMEX curve. For most mid-size Texas commercial buyers with seasonal winter loads, 60/40 or 70/30 hybrid contracts with the fixed portion sized to cover essentially all of November-March consumption are the practical middle ground. The full structural analysis and the operational tradeoffs are covered in both rates and pricing and how to buy — read the pricing piece for the why and the buying piece for the how.
The single highest-leverage move available to a Texas commercial gas account is switching from the LDC's default bundled supply tariff onto transport service (Atmos: Rate T programs; CenterPoint: Commercial Transportation Service; Texas Gas Service: Transportation Service; CPS Energy: Industrial Transportation). On transport service, the customer arranges commodity supply through a licensed marketer or broker and the LDC simply delivers the nominated volumes at the regulated delivery rate. The all-in savings versus bundled service are typically 10 to 20%, before any commodity contract negotiation even starts.
The eligibility threshold varies by LDC but is typically 30,000+ Mcf/year for unambiguous qualification. Below that, some marketers will still quote a default-supply replacement structure, but the structural benefit is smaller. The rate-class change itself is a one-page request supported by 12 months of usage history; it takes 30 days to take effect and the LDC has no obligation to move you proactively. Most Texas commercial accounts above the threshold that are still on bundled service have been paying the difference for years without realizing it. We cover the rate-class change process in detail in the step-by-step procurement guide.
Texas commercial gas buyers learned the same lesson twice in the last five years. Winter Storm Uri in February 2021 took the Panhandle Eastern Texas/Oklahoma delivery point from $2.55/MMBtu to $224.56/MMBtu in two weeks; Henry Hub hit $23.86 at the peak. The Texas Public Finance Authority issued bonds to securitize the residential and small-commercial commodity cost spike across 16 years of customer billing — that recovery factor is still on every commercial gas bill in the affected territories — but mid-size and larger commercial customers on indexed contracts without basis caps took the spike directly to the income statement.
Winter Storm Fern in January 2026 was the second iteration of the same pattern. The largest weekly net storage withdrawal in EIA Weekly Natural Gas Storage Report history — 360 Bcf, 89% above the five-year average for the week — drove Henry Hub spot to $9.03/MMBtu and prompted EIA to raise its February-March price forecast by 40% in a single STEO revision. Working storage closed the heating season 8% below the five-year average. Texas commercial buyers on indexed contracts without fixed-price winter protection paid materially more than they budgeted for; buyers with hybrid structures sized for winter exposure paid roughly what they expected to pay. The structural lesson: weather-driven tail events in Texas commercial gas are not statistically rare anymore, and procurement programs that don't carry meaningful fixed-price protection through winter are taking unbounded risk on the operationally most-exposed months of the year.
Both articles below cover the operational implications of this pattern in depth — what to fix, what to leave indexed, and how to size the protection against your specific load shape.
Henry Hub, Houston Ship Channel and Waha basis, LDC delivery tariffs, fixed vs NYMEX-indexed vs hybrid vs trigger contracts, and what actually drives the rate on a Texas commercial gas bill.
The complete procurement playbook — transport service eligibility, LOA, rate-class verification, structure selection, RFP, contract negotiation, swing nominations, bill audit, and the 90-day shopping calendar.