kW vs kWh: What Your Texas Business Electric Bill Is Actually Measuring

kW measures power at an instant; kWh measures energy used over time. kWh = kW × hours. On a Texas commercial bill, kWh drives energy charges, and your highest 15-minute kW (kVA in CenterPoint territory) drives demand charges once the account is large enough.

That is the short version. The longer version matters because the two numbers answer different questions about your business. kWh tells you how much electricity you used. kW tells you how much you used at once. Two businesses with identical kWh can get very different delivery bills, and the kW number is why.

This guide covers what each unit means, how to convert between watts, kilowatts and kilowatt-hours, how a commercial meter turns 15-minute readings into billed demand, and how Texas TDUs price both. Every dollar figure in it comes from a published delivery tariff, not a supply rate.

kW vs kWh at a Glance

Those definitions are not shorthand. They are written into the Texas delivery tariffs. Oncor's Tariff for Retail Delivery Service defines a kilowatt as 1,000 watts and a kilowatt-hour as 1,000 watt-hours, and defines interval data as meter data that reports usage in 15-minute intervals. CenterPoint, AEP Texas and TNMP use the same definitions.

What Does kW Mean in Electricity?

A kilowatt (kW) is a unit of power, and power is a rate: how fast electricity is being used right now. One kilowatt is 1,000 watts. The wattage printed on a piece of equipment is its power draw, so a 1,500-watt unit heater draws 1.5 kW while it runs.

The scale climbs in thousands. A megawatt (MW) is 1,000 kW, and a gigawatt (GW) is 1,000 MW. A single commercial building is usually described in kW, while grid operators such as ERCOT talk about system demand in MW and GW.

What kW does not tell you is how long anything ran. A 1.5 kW heater draws 1.5 kW whether it runs for five minutes or all night. Time is what turns power into energy.

kW vs kVA: The Nuance a Business Bill Adds

Commercial bills sometimes show a second power unit, the kilovolt-ampere (kVA), which is 1,000 volt-amperes. kW is real power, the part that does work. kVA is apparent power, the total the wires have to carry, including current that motors and similar equipment draw without turning it into work. The ratio between them is power factor, which CenterPoint's tariff defines as kW divided by kVA.

A load drawing 200 kW at a 0.90 power factor is pulling about 222 kVA (200 ÷ 0.90). That matters in Houston, because CenterPoint's delivery tariff bills demand in kVA, so a lower power factor means higher billed demand at the same real power. Oncor and TNMP bill demand in kW, but both can raise billed demand when power factor is below 95% lagging. Oncor's tariff (§5.5.5) allows the adjustment when the customer does not correct it, and TNMP's secondary schedule over 5 kW applies it to measured demand. Both use the same formula, actual kW × 0.95 ÷ power factor, so the same 200 kW load would bill at about 211 kW. Our guide to warehouse demand charges and interval data compares power factor treatment by TDU in more depth.

What Is a kWh of Electricity?

A kilowatt-hour (kWh) is a unit of energy: one kilowatt of power used for one hour. It is also 1,000 watt-hours, exactly 3.6 megajoules under NIST's conversion factors, and about 3,412 Btu according to the U.S. Energy Information Administration.

Your meter counts kWh the way an odometer counts miles, adding them up across the billing period. That total drives the supply half of the bill: the energy charge from your REP is your total kWh multiplied by your contracted per-kWh rate. The rate is a contract term that differs from account to account. The kWh figure is the part you can check from your own usage history.

kWh also explains most of what a small account pays for delivery. Below the demand threshold covered later in this guide, a TDU bills its distribution charge per kWh rather than per kW.

How Many Watts in a kWh? Converting W, kW and kWh

Strictly, none. Watts measure power and kilowatt-hours measure energy, so you cannot convert one into the other without a length of time. A kWh is 1,000 watt-hours: the energy a 1,000-watt load uses in one hour, a 500-watt load in two hours, or a 100-watt load in ten.

The formulas you actually need:

• kW = watts ÷ 1,000
• kWh = kW × hours of running time
• Average kW = kWh ÷ hours
• MWh = kWh ÷ 1,000

Worked Example: From Watts to kWh

Take a 1,500-watt electric unit heater in a warehouse office, running for an 8-hour shift.

1. Convert to kilowatts: 1,500 W ÷ 1,000 = 1.5 kW.
2. Multiply by the hours it runs: 1.5 kW × 8 h = 12 kWh.

Now change one thing at a time. Add a second heater on the same schedule, and both numbers double: 3 kW and 24 kWh. Run the original heater for 16 hours instead, and kWh doubles to 24 while kW stays at 1.5. That is the same energy as two heaters at half the power.

That last case is the whole reason a commercial bill carries two numbers. Spreading load across more hours adds kWh without adding kW. Stacking load into the same hours adds kW.

Nameplate wattage is a quick way to estimate, not a meter reading. Thermostats cycle and equipment rarely runs flat out, so your own interval data is the real answer.

kW and kWh Conversion Table

Two cautions. A motor's horsepower rating describes its shaft output, and its electrical input is higher because no motor is perfectly efficient, so horsepower × 0.746 understates the kW a motor draws through the meter. And the Btu row is an energy-content conversion for comparing fuels, not a cost comparison. If you are lining electricity up against gas, our guide to commercial gas units (Mcf, MMBtu, therm) covers the gas side.

Wholesale power trades in megawatt-hours, 1,000 kWh at a time, which is why ERCOT market prices are quoted per MWh. Our ERCOT LMP explainer covers how those prices are set.

How Your Meter Turns kWh Into Billed kW: The 15-Minute Rule

An advanced commercial meter does not just keep a running kWh total. It records usage in 15-minute intervals, 96 readings a day, and PUCT §25.130 requires advanced metering systems to deliver interval data of 15 minutes or shorter to the utility's web portal on a day-after basis.

Billed demand comes out of those intervals. Oncor, CenterPoint, AEP Texas and TNMP each define monthly NCP demand as the kW (kVA for CenterPoint) supplied during the 15-minute period of maximum use in the billing month. See the Oncor, CenterPoint, AEP Texas and TNMP delivery tariffs.

Converting an interval takes one step. Fifteen minutes is a quarter of an hour, so:

Average kW for an interval = kWh in that interval × 4. A reading of 50 kWh in one 15-minute interval is 200 kW for that interval.

This is where the textbook definition of kW needs a correction. Power is instantaneous, but billed demand is a 15-minute average. A few seconds of motor inrush barely moves that average. Twenty minutes of every rooftop unit, compressor and oven running together sets it.

To look at your own intervals, start with the premise's ESI ID; our ESI ID lookup guide shows where to find it. The data comes from the meter your TDU owns, and a broker or consultant can request it on your behalf with a signed letter of authorization. Our interval data guide walks through finding the interval that set the peak, how to read a commercial electric meter shows where demand appears on the meter itself, and if you are not sure what kind of meter a site has, see getting a new or smart commercial meter in Texas.

Why a Texas Commercial Bill Charges for Both kWh and kW

A commercial bill is really two bills: supply from your REP and delivery from your TDU. kWh and kW both show up, but they do different jobs.

Energy Charges Follow kWh

The REP's energy charge is total kWh multiplied by your contracted rate. The TDU also bills per-kWh items, and for smaller accounts the entire distribution charge is per kWh. Oncor's secondary schedule for loads of 10 kW or less, for example, prices its distribution charge per kWh with no demand component. If your bill has no kW or kVA line at all, that is probably why.

Demand Charges Follow Your Peak kW (or kVA)

Once an account crosses its TDU's threshold, the distribution charge switches to a price per unit of billing demand, and several riders are billed per kW as well. Our guide to how demand charges work covers the mechanics in full. The thresholds and units differ by TDU:

Secondary-voltage schedules in each TDU's delivery tariff in effect in September 2026. Primary-voltage service follows different rules, and Lubbock Power & Light is not shown. Check the tariff for your own rate class.

Keep these thresholds separate from the 50 kW line in PUCT §25.471. That rule defines a small commercial customer for customer-protection purposes. It has nothing to do with when demand billing starts.

Why Billed Demand Can Be Higher Than This Month's Peak

A demand ratchet puts a floor under billed demand based on earlier peaks. In Oncor territory, a load whose highest peak in the preceding 11 months was above 20 kW, with an Annual Load Factor above 25%, is billed on the higher of this month's peak or 80% of that earlier peak. CenterPoint's secondary schedule has no ratchet. Texas rules in PUCT §25.244 bar ratchets for nonresidential secondary-voltage customers with an annual load factor of 25% or less, which is why the tariffs carve that group out. In a ratcheted territory, a single high interval can keep raising the bill for up to 11 months, which our warehouse demand guide works through.

The Largest Accounts: 4CP Transmission

Most commercial accounts never see 4CP. Once a premise sets a peak of 700 kW (above 700 kVA in CenterPoint territory) in any previous month, the TDU tariffs bill transmission on 4CP instead of the account's own monthly demand: the average of its 15-minute demand at ERCOT's system peak in each of June, July, August and September of the previous year. The figure is reset once a year, in January for Oncor, AEP Texas and TNMP and with the February billing month for CenterPoint, and the four summer peaks are the same ones the wholesale transmission rule, PUCT §25.192, uses to allocate transmission costs. ERCOT also requires an interval data recorder meter for premises with peak demand above 700 kW, under Section 18 of the ERCOT Nodal Protocols. Our breakdown of capacity vs energy charges covers 4CP and how large accounts manage it.

The method may change. In PUCT Project 58000, the Commission has proposed replacing the 4CP method for assigning transmission costs with 12 monthly coincident peaks measured on 30-minute intervals. The proposal was approved for publication on July 9, 2026, and comments closed on August 11, 2026. As of September 2026 it has not been adopted.

Worked Example: Same kWh, Different kW

Here is how the two numbers play out on a published delivery tariff. Take two hypothetical secondary-voltage accounts in Oncor territory. Each uses 60,000 kWh in a 30-day month (720 hours). Business A starts its HVAC, lighting and equipment together every morning, and its highest 15-minute interval is 50 kWh. Business B staggers the same start-up, and its highest interval is 30 kWh.

The kWh is the same, so the energy line is the same at the same contract rate. Yet one delivery line differs by $554.51 a month. Nothing about the supply price changed. The whole difference is the peak.

What this example assumes. The $6.931363 figure is the base Distribution System Charge on Oncor's Secondary Service Greater Than 10 kW schedule (Sheet 1.3 of the Oncor tariff, effective June 1, 2026) for loads above 20 kW with an Annual Load Factor of 26% or higher. Oncor sets that tier from the previous calendar year's annual load factor, not from a single month. The example also assumes billing kW equals this month's peak, with no 80% ratchet from a higher earlier month. It leaves out customer and metering charges, riders, transmission cost recovery and taxes, and Oncor's DCRF and TCRF rider rates move to temporary rates for bills rendered on and after October 4, 2026 (PUCT Docket 59249). This is arithmetic on a regulated tariff that is identical whichever REP serves the account. It is not a supply price and not a savings estimate.

The load factor row captures the whole difference in one number. Our guide to load factor in electricity uses the same 60,000 kWh, 200 kW account to show how to calculate yours from a bill.

Cutting a peak is not free, though. Staggering start-up can cost staff time or slow operations, and in a ratcheted territory a lower peak may not show up fully in billed kW for up to 11 months. If Business B had peaked at 200 kW earlier in the year, 80% of that, 160 kW, would still be its billing floor until the old peak aged out.

What kW and kWh Mean When You Shop for Electricity

The delivery side of the bill, both its per-kWh and per-kW charges, is set by the TDU's tariff and is the same whichever REP you choose. Our guide to Texas TDU delivery charges covers that half. Shopping changes the supply side.

Both numbers still matter there. A REP prices your energy from how much you use and when you use it, and your interval kW history is what shows the when. That is why two accounts with the same monthly kWh can draw different offers.

What a quote needs is your bill. If you can't send one, monthly spend, kWh usage and ZIP code are enough to start the conversation, though not to price the account. To check the numbers yourself first, read your commercial bill line by line, then see how commercial electricity in Texas is bought.

Frequently Asked Questions

What does kW mean on an electric bill?

kW stands for kilowatt, a unit of power equal to 1,000 watts. On a commercial bill it usually appears as demand: the highest average rate of use your meter recorded in any 15-minute interval of the billing month. It tells you how much load ran at once, not how much energy you used in total. In CenterPoint territory the same measurement is billed in kVA.

What is a kWh of electricity?

A kilowatt-hour is a unit of energy: one kilowatt of power used for one hour, or 1,000 watt-hours. It equals exactly 3.6 megajoules, or about 3,412 Btu. Your meter adds up kWh across the billing period, and the energy charge on the supply side of the bill is calculated from that total.

How many watts are in a kWh?

There is no fixed number, because watts measure power and kilowatt-hours measure energy. A kWh is 1,000 watt-hours: the energy used by a 1,000-watt load running for one hour, a 500-watt load running for two hours, or a 100-watt load running for ten hours.

How do I convert kW to kWh?

Multiply kilowatts by the hours the load runs: kWh = kW × hours. A 1.5 kW heater running for 8 hours uses 12 kWh. Going the other way, divide kWh by hours to get average kW. For 15-minute interval data, multiply an interval's kWh by 4 to get the average kW for that interval. Without a time period, kW cannot be converted to kWh.

Is my business charged for kW or kWh?

Every account pays for kWh. Demand charges start only above your TDU's threshold for secondary-voltage service: 10 kW for Oncor and AEP Texas, 10 kVA for CenterPoint, and 5 kW for TNMP, under the tariffs in effect in September 2026. Below the threshold, distribution is billed per kWh. Oncor, for example, moves an account to its demand schedule after three readings above 10 kW in a rolling 12 months, or one reading above 12 kW.

Why does my CenterPoint bill show kVA instead of kW?

CenterPoint's delivery tariff bills demand in kilovolt-amperes (kVA), which measures apparent power. kVA includes current that some equipment, such as motors, draws without turning it into work. Power factor is the ratio of kW to kVA, so a facility with a low power factor has higher billed kVA for the same real power. A 200 kW load at a 0.90 power factor is about 222 kVA.

Why is my billed demand higher than my peak this month?

Usually because of a demand ratchet. In Oncor territory, if your highest peak in the previous 11 months was above 20 kW and your Annual Load Factor is above 25%, billed kW for the distribution charge is the higher of this month's peak or 80% of that earlier peak. CenterPoint's secondary schedule has no ratchet. On an Oncor bill, a power factor below 95% lagging that has not been corrected can also raise billed demand.