Commercial Electricity Contracts in Texas: What to Check Before You Sign

One number decides who writes most of a Texas business electricity contract: 50 kW. If your account's peak demand stays under 50 kilowatts, the Public Utility Commission of Texas (PUCT) counts you as a "small commercial" customer, and its rules limit what a "fixed" price can pass through, require renewal notices, and let you leave without a fee if you move. At 50 kW or more, you can agree in writing to lower protections than the rules give, and published provider forms often do exactly that. From there, the clauses in the contract are what protect you.

This guide goes through those clauses one by one, with the Texas rule where one applies and real wording from published Texas business contracts where it doesn't. It covers the retail-choice areas of ERCOT, not Austin Energy, CPS Energy, electric co-op territory or other areas without retail choice. The rules cited are the PUCT's customer protection rules (16 TAC Chapter 25, Subchapter R) as last amended effective January 6, 2022, checked at source in September 2026.

Quick Answer: The Clauses to Check Before You Sign

The rest of this article explains each row and shows the wording to look for.

First, Find Out Which Side of 50 kW You're On

The PUCT defines a small commercial customer as a non-residential customer with "a peak demand of less than 50 kilowatts during any 12-month period, unless the customer's load is part of an aggregation program whose peak demand is in excess of 50 kilowatts" (16 TAC §25.471(d)(11)). Your bill shows your peak demand in kW (or kVA in CenterPoint territory). Check the highest month of the last twelve, not a typical month. If you're unsure which number is which, see kW vs. kWh and what a demand charge is.

The same rule says that a customer other than residential or small commercial "may agree to terms of service that reflect either a higher or lower level of customer protections than would otherwise apply," as long as the agreement is in writing. Published forms use this plainly. Reliant's business terms say that for accounts with annual peak demand of 50 kW or more, "the Customer Protection Rules (PUC Substantive Rules §25.471, et seq.) do not apply." A few protections survive for every customer: the ban on switching your provider without authorization, the ban on unauthorized charges, your right to complain to the PUCT, and the signed risk acknowledgement covered below.

For a small commercial account, the contract is legally four documents: the Terms of Service, the Electricity Facts Label (EFL), the "Your Rights as a Customer" disclosure and your enrollment record. The rules require plain language and 10-point type, and "any vagueness, obscurity, or ambiguity in the contract will be construed in favor of the customer" (§25.475). Larger accounts get no EFL by right. Their price usually sits in a pricing confirmation or exhibit, and that document typically controls over the general terms. One small commercial form says it outright: "the terms and conditions in Exhibit A shall prevail." Check the confirmation against the quote line by line, because it is the deal.

What "Fixed" Actually Fixes: Pass-Throughs and Change in Law

For a small commercial fixed-rate product, the price, "including all recurring charges and ancillary service charges," must stay the same for the whole term. There are three exceptions: actual changes in TDU delivery charges, changes to ERCOT or Texas Regional Entity administrative fees, and changes from federal, state or local laws "that impose new or modified fees or costs on a REP that are beyond the REP's control." Ancillary service costs can pass through only if the PUCT expressly designates a specific service (§25.475(b)(5)).

In practice a "fixed" business rate fixes the energy price, not the whole bill. NRG's small business form builds the price as an energy charge plus a base charge plus "TDSP Pass-Through Charges," which are "passed through on the invoice without markup." Your delivery charges move whenever your utility's tariff does. Our guide to TDU delivery charges shows where they sit on the bill.

Some forms reach further than the rule. A 2019 Pulse Power small commercial agreement lets the price change for material changes in ERCOT protocols, "load zone boundary or hub definitions" and "electricity market structure." ENGIE's small commercial EFL dated September 2026 carries similar "market structure, congestion zone design, or protocols" language. For an account under 50 kW, the rule controls over inconsistent provider terms (§25.471(a)(4)). For an account over 50 kW, that clause is the contract.

Above 50 kW, you'll see two ways of drafting it. Some contracts fold market costs (ancillary services, congestion, losses, ERCOT fees) into the energy price and pass through only delivery charges, taxes and changes in law. Others fix part of the price and list the rest as pass-throughs. One Texas public-sector contract signed in 2024 says its "Congestion and Ancillary Services Charge, are estimated and shall be subject to adjustment," with true-ups that "may be either a charge or a credit." Neither approach is wrong, but they aren't the same price. Ask for a list of every pass-through, billed at cost, and confirm that decreases flow back to you as well. The Texas General Land Office's buying guide for public entities makes the same point, calling unbundled pass-throughs "an unquantifiable and unverifiable cost."

A Risk Acknowledgement Means the Price Isn't All-In

Before a customer that is not small commercial is enrolled in a wholesale-indexed product "or a product that contains a separate assessment of ancillary service charges," the provider or broker must get a signed Acknowledgement of Risk. It warns in bold that the bill "may be multiple times higher in a month in which ancillary services charges are high" (§25.499). If that form is in your signing packet, part of your price floats. That can be the right choice for a large, flexible load, and our index-rate electricity guide explains when. Indexed products have not been available to small commercial customers since February 1, 2022.

Market Changes a 2026 Contract Should Already Account For

Since Winter Storm Uri in 2021, several new ERCOT costs have been added. Most are now ordinary costs, and a contract signed today either includes them in the price or lists them as separate lines. For each one, ask: is it included, or passed through, and at cost?

Sources: ERCOT HB 4492 securitization; PUCT Docket 55959 order; ERCOT RTC+B go-live; ERCOT market notice M-A111125-01; PUCT Project 54445 staff memo; PUCT Project 58000 staff memo.

When the uplift charges started in 2022, NRG told its business customers it was passing them through under its "regulatory change" clause, and it named the dates after which new contracts already had those costs built in. That's the pattern to expect when a new cost arrives mid-term: the change-in-law clause decides who pays. For background on the ancillary services themselves, see ERCOT ancillary services explained.

Usage Bands and "Material Change"

Standard small commercial fixed-rate products in the forms we reviewed have no usage band: you pay the fixed rate on whatever you use. Bandwidth, or swing, is a feature of negotiated contracts for larger accounts. Usage outside a set percentage of the contracted quantity is settled at the market price instead of your contract price. The General Land Office guide calls annual settlement "the more forgiving, and therefore less costly" option. We haven't found a published Texas contract that states a standard percentage, and broker estimates conflict, so treat any "typical" figure with suspicion. Get the band and the settlement period in writing for your own offer, and compare them against your load profile and your plans for the term.

"Material change" means two different things depending on the document:

• In small commercial terms of service, it is the provider's right to change non-price terms on 14 days' written notice. That notice starts a 14-day window in which you can leave with no termination penalty (§25.475(d)).
• In larger supply agreements, it is something you do. STAT Energy's 2022 form defines it as "any change in Customer's operations that adversely affects Customer's Retail Delivery Class… or usage pattern," which lets the provider end the contract and charge the termination fee. A Texas public-sector form uses an objective demand threshold instead, above which the provider sets an "incremental charge or credit."

If you plan to add solar, batteries, a demand response program or a major expansion during the term, raise it before you sign. Those are exactly the changes these clauses are written to catch.

Adding and Dropping Locations

Small commercial forms say little about sites. One tells customers to "contact us immediately to discuss the various options." Negotiated contracts usually allow new sites at the contract price and site deletions without penalty up to a limit. Beyond that limit, the provider reprices new sites or charges a termination payment on the dropped ones. Before you sign, get three answers in writing:

1. What price does a new location join at: your contract price, or the market price on the day it's added?
2. How much usage can you drop, in total, without a termination charge?
3. Do closed or sold locations count against that allowance?

Each meter is a separate ESI ID, so list every one you're signing for. Our ESI ID lookup guide shows where to find them. If you're opening a site, the new-location electricity checklist covers setup. If you run several locations, see our guide to multi-location business electricity in Texas.

Start Date, Expiration Notices and Holdover Pricing

Service under a new contract starts on the first regular meter read on or after your requested date, once enrollment is complete. That's how the Reliant, NRG and Gexa forms we reviewed word it. Ask for the new contract to start on the read date when the old one ends. That avoids both an overlap, which can trigger the old contract's termination fee, and a gap, which puts you on holdover pricing.

For a small commercial fixed-rate contract, the provider must send at least three written expiration notices in the last third of the term, and "the final notice must be provided at least 14 days before the fixed rate contract will expire." If you do nothing, you roll onto a month-to-month product "that the customer may cancel at any time without a fee," though its price can change. If the provider fails to send the notices, it must keep serving you at your fixed price until it does (§25.475(e)). Some widely read guides say the notice period is 30 or 45 days. For small commercial accounts, the rule's final-notice minimum is 14 days.

None of that applies by right at 50 kW and above, and holdover prices can be steep. A Texas public-sector aggregation contract prices holdover at the greater of the contract price or "135% of the load-weighted average of the hourly LMPs" in the load zone, serves it for at least 60 days, and then may disconnect. Another provider's template uses "a monthly variable rate set by [the provider] plus a post-term charge." Put your end date in your calendar and read what happens when a commercial contract expires and when to renew.

Getting Out: Cancelling, Moving, Closing or Selling

No PUCT rule caps early termination fees for any business customer. For small commercial accounts the fee must be disclosed on the EFL and at sign-up, and leaving is free in these cases:

• You move and give a forwarding address (§25.475(c)(2)(C)).
• You leave in the last 14 days before the contract expires.
• You leave within 14 days of a notice changing your contract terms.
• You're on a month-to-month product, which may not carry a termination fee.
• You rescind a switch within three federal business days of receiving the terms of service. This doesn't apply to a move-in at a new location (§25.474(j)).

Otherwise, the size of the fee depends on the formula. The published Texas forms we reviewed fall into four types:

• A flat or tiered fee per month remaining. NRG's 2022 small business form charges "$250 multiplied by the lesser of" the months remaining or 12.
• Usage times a rate. STAT's 2022 form charges "the greater… of either (a) $500 or (b) $0.01 multiplied by the most recently billed monthly usage… multiplied by the number of months remaining."
• Mark-to-market. ENGIE's September 2026 small commercial EFL charges the contract price less the "Current Market Price," times the energy you didn't use, with the market price "determined by ENGIE in a commercially reasonable manner." It applies even if you cancel before the start date.
• A two-way settlement. In some negotiated agreements the termination payment is calculated against the market and can run either way. One Texas public-sector form says that if the result is positive, the provider pays the customer.

These form versions date from 2019 to 2026 and may since have been updated. The point is the type of formula, not the dollar amount. A flat fee caps what you owe. A mark-to-market fee can be close to zero when prices have risen since you signed and large when they've fallen. If you're offered one, ask which market price it uses and whether it works in both directions. The worked math is in our guide to switching commercial electricity providers.

Selling the business is where forms differ most. We didn't find a Texas form that lets you end the contract without charge just because the business is sold. The usual route is assigning it to the buyer, and the consent standard varies: NRG and Reliant require the provider's prior written consent, a Pulse form lets the provider withhold it "in Company's sole discretion," and a Gexa public-sector form says consent "shall not be unreasonably withheld" but can be refused if the buyer is less creditworthy. If a sale is possible during the term, negotiate assignment to a creditworthy buyer up front.

Credit, Deposits and Billing

For business customers, the provider sets its own nondiscriminatory credit criteria and may require a deposit if you don't meet them. Government entities can't be required to pay one, and a non-residential deposit must be refunded after 24 consecutive bills with no late payment (§25.478). The deposit cap in that rule applies to residential customers only, so no rule caps a commercial deposit. Larger contracts often add "adequate assurance" rights that let the provider demand more collateral mid-term. One provider template requires a deposit of "3 times the average amount invoiced" within "3 Business Days." A fairer model makes the right mutual and ties it to objective triggers, such as a credit rating downgrade or repeated late payments, with a set date to return the collateral.

For small commercial accounts, the bill's due date must be at least 16 days after it's issued, the one-time late penalty can't exceed 5%, and backbilling is generally limited to 180 days (§25.480). Negotiated contracts set their own terms. Check the dispute clause in particular: some require you to pay "the undisputed amount," while one template says "the entire invoice shall be paid when due" even when you dispute it. If you run several sites, ask whether the provider offers summary billing across all your ESI IDs.

Force Majeure, Disputes and Liability

In the forms we reviewed, force majeure never excused payment. One template suspends obligations "(other than payments)" and says force majeure "shall not include a decision to shut down, sell, relocate." A small commercial customer can't be forced into arbitration: providers "must not require a residential or small commercial customer… to engage in alternative dispute resolution" (§25.485(c)). Larger customers may agree to it and can still file a PUCT complaint. You're more likely to see a Harris County venue clause, a jury waiver, a class-action waiver, or a cap limiting the provider's liability to direct damages. Know what you're agreeing to, and check whether the contract names a venue far from your business.

How Your Broker Is Paid, and What Must Be Disclosed

Anyone brokering electricity in Texas for compensation must be registered with the PUCT, and providers may not knowingly quote an unregistered broker (§25.112). Before starting, a broker must disclose its registration number and "a description of how the broker will be compensated for providing brokerage services and by whom" (§25.486(f)). The rule doesn't require the fee amount to appear in the supply contract. Provider forms usually just say the price "may include" a broker fee. Ask your broker for the adder in writing. Our article on what energy brokers cost in Texas explains how commissions work, and the letter of authorization guide covers what you sign to let a broker pull your usage.

How Elite Reviews a Contract Before You Sign

When a client sends us an offer, we check it against the quote, confirm which side of 50 kW each meter falls on, list every pass-through, and flag any usage band, termination formula, holdover price, credit or assignment term that could cost more than the rate saves. For multi-site clients we line up every ESI ID and end date first. You can compare that against commercial electricity plans in Texas or get a second opinion on an offer you already have.

Frequently Asked Questions

What should I look for before signing a business electricity contract in Texas?

Start with your account size. Under 50 kW of peak demand, PUCT rules limit price changes, require renewal notices and waive the exit fee if you move. At 50 kW or more, those protections can be signed away, so read the pass-through list, the change-in-law clause, any usage band, the early termination formula, the holdover price, the credit terms and the assignment clause before you sign.

Can my electricity rate change during a fixed-rate contract in Texas?

Yes, in limited ways. For a small commercial account (under 50 kW), a fixed price can change only for actual changes in TDU delivery charges, changes in ERCOT or Texas Regional Entity administrative fees, and new or changed costs from federal, state or local law that are beyond the provider's control. Above 50 kW, the contract's own pass-through and change-in-law clauses decide what can move.

What is a bandwidth clause in an electricity contract?

A bandwidth or swing clause sets how far your usage can move from the contracted amount before the difference is settled at market prices instead of your contract price. Standard small commercial fixed-rate products usually have no band. Negotiated contracts for larger accounts often do, and the percentage and settlement period are negotiated, so check both in your own offer.

What is a material change clause?

In a small commercial terms of service it usually means the provider's right to change non-price terms on 14 days' notice, which lets you leave without a termination fee. In larger supply agreements it usually means a change in your operations, such as a big shift in usage, new on-site generation or a new delivery class, that lets the provider reprice or end the contract.

What happens to my electricity contract if my business moves, closes or is sold?

A small commercial customer that moves and gives a forwarding address owes no early termination fee under PUCT rules. Larger contracts decide this themselves, and some published forms charge the termination payment on a closure or relocation. On a sale, the usual route is assigning the contract to the buyer, which most forms allow only with the provider's written consent.

Can I add a location to my commercial energy contract after signing?

Often, if the contract has an add-and-delete provision. Check what price new sites join at (your contract price or the market price on the day you add them) and how much usage you can drop without paying a termination charge. Opening a new site? Our new-location checklist covers the setup side.

Can I cancel a business electricity contract before it starts?

If you are switching providers as a small commercial customer, you can rescind within three federal business days of receiving the terms of service. That right does not cover a move-in at a new location. Outside that window, some contracts charge a termination payment even before service starts, so ask before you sign.

How much notice must a provider give before my contract expires?

For a small commercial fixed-rate contract, the provider must send at least three written expiration notices in the last third of the term, and the final one must arrive at least 14 days before the contract ends. Accounts of 50 kW or more have no rule-based notice requirement; the contract sets it, if it says anything at all.

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