What is making my small business electricity bill so high? Photo of a small business owner in his bike shop.

Page Contents

Advertiser Disclosure: At ElectricityRates.com, our number one goal is to help you make better energy decisions. We adhere to strict editorial guidelines, however this post may include references to products offered from our partners.

Energy Factors that Impact Your Small Business Electricity Bill

As a small business owner, it’s important to reduce expenses and increase revenue as much as possible. One expense that you can’t avoid is electricity costs. Small businesses can experience excessive power bills out of the blue. But, you can drastically reduce your small business electricity bill by implementing certain steps.

This article explores the most common elements that influence small business electricity costs. It will also give small business owners ways to reduce energy expenditure and costs – a victory for your bottom line and the environment.

Types of Energy Sources:

The energy source your small business relies on determines your electricity bill. Traditional sources like coal, gas, and oil have varying costs influenced by market demand, availability, regulations, and extraction/transport expenses. Changes in these factors directly impact rates if your provider uses traditional fuels.

Renewable sources like solar or wind energy offer stable pricing due to their abundance and consistency. While setup costs may be high, they save small businesses money in the long term. Knowing your power provider’s energy sources helps predict and control expenses.

To compare small business power rates, and find the best power provider for your needs, visit our page How to Shop for Small Business Electricity Rates. Shop small business electricity rates in Texas, Pennsylvania, Ohio, or any Energy Choice state to find a suitable plan and price.

Distance from the electricity source:

Electricity has to travel from the power plant to your business through a transmission and distribution lines network. As distance increases, electrical resistance causes the loss of more energy, known as “line loss.” Wastefulness in the transmission and distribution network can also lead to further losses.

Electricity providers charge customers located farther away from the power plant higher prices. They do this to cover the expenses of maintaining the infrastructure. Small business energy suppliers add these costs to your electricity bill’s transmission and distribution charges.

Businesses in remote areas or far from the grid often have higher electricity costs. Urban or suburban areas usually are closer to power sources and have reduced transmission costs.

Government Policies and Laws:

Government policies, regulations, and laws can significantly influence the cost of electricity for small businesses. Laws and policies at different government levels also affect electricity costs.

Local government policies often dictate building codes and standards, which can affect the energy efficiency of your business premises. Tougher energy efficiency rules may mean paying more initially but will save you money on electricity over time.

State governments often have a more significant impact on electricity rates. Many states have implemented Renewable Portfolio Standards (RPS). This requires electricity providers to supply a certain percentage of their power from renewable sources.

These rules can increase the cost of electricity in the short term. Utility companies may charge customers for investing in new renewable energy infrastructure. However, the cost of renewable energy technologies continues to decrease. These investments generally result in lower and more stable electricity rates over the long term.

Federal regulations imposed by the Environmental Protection Agency (EPA) on greenhouse gas emissions can also impact electricity rates. For example, the Clean Power Plan, implemented during the Obama administration, put limits on carbon emissions from power plants. This policy potentially increased the cost of electricity, particularly in areas that depend on coal power. Many power plants had to purchase cleaner yet more expensive technologies.

There are a few strategies to mitigate the impact of government policies and laws on your electricity costs. One is to take advantage of tax credits, rebates, and grants available for energy efficiency upgrades and renewable energy installations. The Federal Investment Tax Credit (ITC) is a popular program. It can offset up to 30% of the cost of installing a solar panel system.

Many utility companies also offer demand response programs. These programs provide money to businesses that use less electricity when demand is high, helping to decrease energy expenses. Finally, you can think about changing to a cheaper or better electricity company, if you live in a state with Energy Choice.

Compare electricity providers on our marketplace on our page here.


Businesses in colder regions usually have higher energy bills in the winter as they consume more energy on heating. Instead of relying on heating equipment, consider using zone heating throughout the office and turning off those unused spaces. Ensure you properly insulate your business and use programmable thermostats to prevent wasting extra energy.


Small businesses employ a variety of energy-sapping appliances, including computers, printers, vending machines, and refrigerators. These devices consume electricity even when they’re not in use. Before leaving your business, turn off devices and power down the server and other big appliances.

Additionally, consider installing energy-efficient appliances. Swap traditional light bulbs for LED lights. This can save you up to 80% in lighting costs. Replace old appliances with more energy-efficient models.

Time of Use:

Many small businesses can reduce their energy consumption by altering their usage patterns. Using energy during off-peak hours is less expensive than during peak hours.
If electricity is expensive at certain times, you can change when you do business to cheaper off-peak hours. By keeping an eye on the clock, small businesses can save hundreds to thousands of dollars a month.


Extreme winter or summer months may result in higher electricity costs as businesses consume more heating or air conditioning energy.

Climate change also has the potential for dramatic spikes in your small business electricity bill. For example, Texas continues to hit peak power use records summer after summer. Investing in energy-efficient HVAC systems reduces energy consumption. Seal windows and doors, and insulate walls to keep the heat in during winter and cool in summer.

Using programmable thermostats to maintain a balanced indoor temperature and reducing energy use outside working hours by encouraging energy-saving habits, like turning off lights and electronics when not in use, can yield significant savings over time.

Education and Training:

Provide employees with energy-saving tips to increase awareness and reduces waste. Hold employees accountable and offer bonuses for reduced energy costs to foster a culture of energy consciousness.

Looking for commercial electricity rates? Compare business electricity plans in Texas, Pennsylvania, New York, California, Michigan, Oregon, Virginia, and all other Energy Choice states. You will find the best commercial energy supplier for your needs and the cheapest commercial electricity rates available.

Types Of Small Business Energy Plans:

The type of small business electricity plan you choose dramatically impacts your small business electricity prices. Electricity providers offer four primary types of electricity plans for business owners.

Fixed-Rate Small Business Electricity Plans:

  • Provides a guaranteed rate for a specified contract term (e.g., 12, 24, or 36 months).
  • Best suited for small businesses that prefer stable and predictable energy costs.
  • Allows businesses to budget efficiently without worrying about fluctuations in electricity prices.

Indexed Small Business Electricity Plans:

  • Your power prices depend on a specific market index, such as natural gas prices or wholesale electricity rates.
  • Offers potential savings when energy prices are low.
  • Ideal for businesses that can handle some price changes and want the possibility of lower rates during favorable market conditions.

Variable Month-to-Month Small Business Electricity Plans:

  • Rates can change monthly based on the energy market.
  • Provides flexibility with no long-term commitment.
  • Suitable for small businesses with fluctuating energy needs or those seeking short-term contracts.

Block & Index Small Business Electricity Plans:

  • Combines the stability of a fixed price for a portion of the energy usage with an indexed price for the remainder.
  • Allows businesses to hedge against price fluctuations while still benefiting from potential market savings.
  • Recommended for small businesses looking for a balance between cost stability and potential savings.

When selecting an energy plan for your business, it’s important to consider your usage patterns and budget. A fixed-rate plan is ideal for companies with a tight budget and predictable costs. A variable or indexed plan may appeal to risk-taking small business owners seeking potential savings.

See our complete guide to learn more about shopping for small business electricity rates.

Small Business Electricity Bill Takeaways:

Many factors impact small businesses’ electricity costs. But savvy small business owners can offset those impacts and save money on their energy bills.

When shopping for small business energy providers, you must be informed about the best electricity rates and services.

ElectricityRates.com provides a marketplace where businesses can browse prices of the market’s most competitive small business electricity providers. ElectricityRates.com is your go-to source for power supply providers with the best pricing and rates.

Take a step in the right direction today and change your small business electricity supplier!