How Texas Businesses Buy Electricity: The ERCOT Procurement Guide

Energy procurement, for a Texas business, means choosing who supplies your electricity, what kind of contract you sign, and when you sign it. In ERCOT (the Electric Reliability Council of Texas), all three are open choices, and timing alone can change the quote you are offered. This guide walks through each one, with the data.

Most of the country never thinks about any of this, because one utility sells the power and delivers it. Texas split those jobs in 2002. Your transmission and distribution utility (TDU) still owns the wires, but the electricity itself comes from a retail electricity provider you choose, on terms you negotiate. That is the opportunity, and the homework. Below, we cover the buying paths, the contract structures, the seasonal price study behind the question every procurement manager asks (when should we sign?), the request-for-proposal checklist, and a primer on the 4CP transmission charge that quietly decides a large share of a commercial bill.

A note on where this comes from. Chariot Energy powers more than 3,000 businesses and has 7+ years in service as a licensed Texas retail electricity provider. The analysis below combines its own enrollment records with public ERCOT, PUCT and EIA data. Every figure is sourced and dated, and the methodology is at the bottom.

Scope note: this guide covers commercial electricity procurement in the deregulated ERCOT market. It is written for small and mid-size businesses that already know the Texas market and are deciding what to sign next.

Key Takeaways

• Texas commercial customers paid an average of 8.66 cents per kilowatt-hour in June 2026, against a national commercial average of 14.19 cents (EIA Electric Power Monthly, Table 5.6.A). Texas commercial power costs well below the national average, which is exactly why the procurement decision is about risk, not just price.
• Wholesale prices are seasonal to a degree most buyers underestimate. From 2022 through 2025, the average ERCOT real-time hub price in the four 4CP months (June to September) was $61.44 per MWh, almost double the $31.07 average of the shoulder months (March, April, October, November). In 2026 to date the gap is much smaller: June to August averaged $31.36 per MWh against $28.33 for March and April. Source: our analysis of ERCOT settlement price data, detailed below.
• The all-in cost of electricity in ERCOT’s real-time market rose 13.8% in 2025, from about $34 to $38 per MWh, tracking a 61% increase in the daily natural gas index price (Potomac Economics, 2025 State of the Market Report). Gas still drives the price of Texas power.
• Price spikes happened 40% less often in 2025 than in 2024, and 30% of the spikes that did occur landed in the evening solar ramp rather than the afternoon peak (Potomac Economics, 2025). The risk has not gone away. It has moved to a different hour.
• Transmission charges under ERCOT’s 4CP method are set by your demand during four 15-minute intervals a year, and can represent 30 to 40% of a large customer’s bill (Amperon, 2025). The Public Utility Commission of Texas is weighing a move to a 12-month method with a target date of December 31, 2026.
• The grid a three or five year contract runs through is not today’s grid. ERCOT’s adjusted forecast takes the summer firm peak from 88,639 MW in 2026 to 132,240 MW in 2030, and the summer reserve margin from 18.3% to -12.7%, turning negative (-1.3%) in 2028. In ERCOT’s Senate Bill 6 scenario the 2030 peak is 90,955 MW instead (ERCOT, Capacity, Demand and Reserves report, December 2025).
• December brings the first answers on how much of ERCOT’s large load queue is real: final Batch Zero classifications, ERCOT’s verification reports to the Public Utility Commission due December 10, 2026, and the Commission’s 12CP target date of December 31. Nobody knows how they come out, and forward curves can move either way. If your contract ends within the next 12 months, ask for 36 and 60 month quotes now.
• Most Texas businesses start shopping 6 to 12 months before their contract ends. The businesses that get the best terms shop when the market is calm, not when their contract forces them to. The timing section below shows what that was worth.

Want a number instead of a theory? Request a custom commercial quote and Chariot Energy will return a priced contract within one business day. Or give us a call at 866-320-7951.

How Do Texas Businesses Buy Electricity?

There are three buying paths in ERCOT: directly from a retail electricity provider, through an energy broker, or with an energy consultant. Every path ends in the same place, a supply contract with a licensed REP. What changes is who does the work, who pays them, and how much of what they are paid is sitting inside your rate.

Start with the arithmetic, because it is the part nobody puts on the quote. An intermediary paid through your contract is paid in dollars per MWh, added to the energy price. Two dollars per MWh is a number you can barely see. On a facility using 5,000 MWh a year it is $10,000 a year, and over a 36 month term about $30,000. That is the cost of the path, before anyone has quoted you a rate. Knowing it is not an argument against brokers. It is an argument for knowing the number.

Directly from a provider

Buying direct means no intermediary sits inside the contract, so there is no intermediary adder in the rate, and you get direct access to the supplier’s pricing desk rather than a relayed version of it. To be clear about what that is not: no retail contract from any provider is sold at the wholesale price. Delivery, market charges, the cost of hedging your load and margin all sit between ERCOT’s market and your invoice. What going direct removes is the layer on top of that.

The real question is whether it means more work. Here is what the process actually involves with Chariot Energy:

• A custom quote in one business day. Chariot returns a custom priced contract within one business day, built to your load profile. Off-the-shelf commercial rates are available immediately through real-time matrix pricing.
• Pricing runs off your meter, not a stack of paper bills. Quotes are priced by ESI ID against your interval usage. Smart Meter Texas gives that interval data to the account holder free, and authorizing it is usually a same-day step. It also produces a sharper price than monthly kWh totals.
• Enrollment is self-serve and open 24/7 through Chariot’s online portal, with multi-meter rollups for portfolios.
• Forward start dates. Lock a future term now and let it begin when your current contract expires. Chariot takes these case by case but can generally accommodate any forward start date.
• Terms from month-to-month to five years, across every structure below.
• One commercial desk. [email protected] or 866-320-7951. The same desk prices the contract, answers the questions and stays on the account.

The real objection, answered. Most buyers who use an intermediary are not buying competition. They are buying the feeling that somebody else knows how to run the process. That process is not a secret and it is not long: twelve months of usage, every ESI ID, a start date, the structures you want priced, and a sheet to score the offers on. The RFP checklist further down this page is that process in full. Run it once and going direct stops being a leap.

Through an energy broker

A commercial energy broker gathers your usage data, sends it to several providers, and brings back offers. Brokers are paid by the supplier, usually as an adder built into your contract rate, which is the $10,000 a year described above. Ask what the adder is and have it disclosed in writing. Texas requires brokers to register with the Public Utility Commission, and a good one earns the adder by running a real competitive process, reading the fine print for you and staying on top of your renewal calendar across sites. For a buyer with several meters and no energy manager, that is a fair trade, and plenty of Texas businesses make it deliberately. Chariot Energy works with licensed energy brokers and channel partners across Texas, prices into a broker’s RFP on the same desk that prices a direct quote, and pays commissions on a recurring, on-time schedule.

Four questions to ask any broker: What is your adder, in dollars per MWh, in writing? How many suppliers received this RFP? Are you registered with the PUCT? Do you receive anything from the supplier beyond the disclosed adder?

With an energy consultant

Consultants are paid by you, typically a flat fee or a retainer, and they may run the procurement, manage 4CP curtailment, and handle multi-site portfolios. Because the fee sits outside the rate it is visible, and you can judge it against what it saves. For companies with a dozen meters and no energy manager, a consultant is often cheaper than the mistakes they prevent. For a single facility, a direct quote usually wins on cost.

Path	Who pays them	What it costs in the rate	Best fit
Direct from a REP	Nobody. No intermediary sits in the contract	No intermediary adder. The rate is the supplier’s price	Any buyer who can produce twelve months of usage and a list of ESI IDs, from a single storefront to a multi-site portfolio. Most finish the RFP in an afternoon
Energy broker	The supplier, via an adder in your rate	A few dollars per MWh is common. At $2 per MWh, about $10,000 a year on 5,000 MWh	Buyers who want several suppliers approached at once, or a renewal calendar managed across many sites, and would rather pay for it inside the rate
Energy consultant	You, directly	Flat fee or retainer, outside the rate and visible	Multi-site portfolios, large industrial loads, ongoing 4CP and curtailment management

Broker and consultant cost ranges reflect common market practice in ERCOT, not a published survey. The $2 per MWh figure is illustrative, not any particular broker’s rate.

One thing all three paths share: none of them changes your delivery charges, and none of them changes when you sign. The timing section below shows a decision on this same 5,000 MWh facility that was worth about $42,798 a year, several times the adder. Get the path right, then get the timing right.

Which Contract Structure Fits Your Business?

Texas business electricity contracts come in five basic shapes: fixed, time-of-use, index, gas-indexed and block-and-index. The right one depends on how much price risk your business can carry, how predictable your usage is, and what time of day you use it.

Fixed price

One energy rate for the whole term, whether that is 12 months or five years. The supplier buys the power forward on the day you sign, so your price reflects the forward curve that day, plus a risk premium for the chance your usage swings. Fixed suits any business that budgets annually or cannot tolerate a bad summer showing up on a single invoice.

Time-of-use

Different rates for different hours, matched to when your business actually runs. A facility that does its heaviest work in the middle of the day is buying power in the hours when ERCOT’s solar fleet is at full output, and a time-of-use contract lets that show up in the price rather than being averaged away. It works in the other direction too, for operations that run overnight.

Index

Your energy price floats with the ERCOT day-ahead or real-time market each interval, plus a fixed adder. In a calm year like 2024, when the annual real-time hub average fell to $26.76 per MWh, index buyers did well. In August 2023, when the monthly average hit $191.71 per MWh, they did not. Index fits businesses with the balance sheet to absorb volatility, or the flexibility to curtail when prices spike.

Gas-indexed

Your energy price is tied to a published natural gas index rather than to the power market. Because gas is the marginal fuel on most ERCOT days, a gas-indexed contract tracks the fundamental that sets the floor under power prices while stripping out the scarcity spikes that come from tight reserve margins. It suits buyers who already hedge gas elsewhere in the business.

Block-and-index

You fix a block of your load, for example 70% of expected volume in a flat or on-peak shape, and let the remainder float on the index. It hedges the volume you are sure of and leaves the uncertain part to the market.

For finance teams. Fixed and time-of-use contracts take variance out of the energy line; delivery still moves with demand and 4CP. Index and block-and-index put it on the P&L: on 5,000 MWh a year, every $10 per MWh market move is $50,000. Size any floating share to what the budget could absorb in a summer like 2023.

Chariot Energy’s commercial products

Every product below is available on terms from month-to-month to five years, priced to your load profile, with no overage penalty for high usage.

• Fixed Rate with ECRS Included. One energy rate for the term with ERCOT Contingency Reserve Service costs already inside it, rather than arriving later as a separate ancillary line. ECRS is a reserve product ERCOT buys to keep supply and demand balanced, and its cost moves; including it means the rate you sign is the rate you budget. Buyers who would rather see every component priced separately can take the same product with ECRS passed through instead. Both are on the shelf.
• Time-of-Use (TOU). Rates that change by time of day, with options built for high-day load and for high-night load. Chariot is one of the few Texas providers offering commercial TOU contracts, and the reason it can price low daytime hours aggressively is structural: its parent, 174 Power Global, develops and operates utility-scale solar in Texas, so Chariot’s supply position is long exactly when the sun is up.
• Index. Real-time or day-ahead ERCOT settlement prices passed through with a fixed adder, with daily and hourly billing detail and hourly load modeling. Available straight, or as block-and-index.
• Gas-indexed. Energy priced against a published natural gas index, for buyers who already manage gas exposure.
• Solar Buyback. For sites with on-site solar generation. Excess production that flows to the grid is credited against your usage charges.

Two details matter with every structure and every supplier. First, swing or bandwidth terms: many fixed contracts assume your usage stays within a band and charge market price for anything outside it. Ask how the supplier handles it; Chariot’s fixed commercial products carry no overage penalty for high usage. Second, term length and start date: a longer fixed term smooths out seasons, and forward start dates let you lock a future term in a month when the curve is kind. Chariot also offers blend-and-extend, which reopens an existing fixed contract and extends it at a blended rate when the forward curve drops.

Which Structure Fits Your Industry?

Two businesses with the same annual kWh can want completely different contracts, because a contract is priced against the shape of your usage, not the total. This table maps the industries Chariot Energy serves in Texas onto the structures that usually fit them, and onto how exposed each tends to be to the 4CP transmission charge covered further down.

Industry	Load shape	4CP exposure	Structure that usually fits
Agriculture	Seasonal and irrigation-driven, concentrated in summer daylight hours	High in irrigation season	Time-of-use against fixed, priced side by side. Irrigation load is daytime load, which is where the solar hours are.
Automotive	Long daytime hours, lighting and HVAC led, steady week to week	Moderate	Fixed. Time-of-use if service bays or body shops run a second shift.
Construction	Temporary sites, unpredictable volume, short horizons	Low	Month-to-month or a short fixed term. The no-overage-penalty term matters more than the rate.
Data centers	Flat around the clock, high density, growing	High and constant	Long-term time-of-use or block-and-index.
Education	Weekday daytime, deep summer dip when campus is empty	Low, because the dip lands on the 4CP months	Time-of-use, long fixed term. The summer dip is an asset worth pricing.
Food and restaurant	Evening-weighted service load over refrigeration that never stops	Moderate	Fixed. Evening ramp exposure is where the remaining price spikes now land.
Gas stations and convenience	Refrigeration and lighting around the clock, very flat	Moderate	Fixed, with consolidated billing across sites.
Healthcare and dental	Clinical daytime peaks over 24/7 facility load	Moderate to high	Fixed. Little tolerance for a surprise invoice, and usually no ability to curtail.
Hotel and hospitality	Around the clock with large seasonal occupancy swings	High in summer	Fixed with a generous swing band. Confirm the overage terms in writing.
Industrial and manufacturing	Shift-driven, with genuinely controllable process load	High, and shiftable	Time-of-use or block-and-index, plus 4CP curtailment and the grid services covered below.
Real estate and developers	Common-area load across many meters, occupancy dependent	Moderate	Fixed, consolidated billing, a forward start date per building as leases turn.
Religious centers	Concentrated into a few hours a week over a low baseline	Low	Fixed. The simplest structure wins; the load is too small for the rest to pay for itself.
Shopping and retail	Mall hours, HVAC led, holiday peaks	Moderate	Fixed with a multi-site rollup on one invoice.
Warehouse and storage	Lighting and HVAC, increasingly cold storage and EV charging	Moderate and rising with electrification	Fixed or time-of-use. Declare planned EV charging in the RFP; it changes the shape and the price.
Wellness, gyms, spas and salons	Early morning and evening peaks across long open hours	Low to moderate	Fixed. Small loads price well off matrix rates without a custom quote.

General guidance based on typical load shapes, not a published survey and not a substitute for pricing your own interval data. Find your row, then ask for that structure and a fixed quote side by side in your RFP. The comparison is the point.

Has the Summer Premium Gone Away?

Partly, and for a structural reason worth understanding before you price a contract. The headline averages above are dominated by 2022 and 2023. Read the series forward and a different story appears.

Summer (June to September) average	$ per MWh	Premium over the shoulder months
2022	$89.75	2.12x
2023	$95.73	3.71x
2024	$27.72	1.11x
2025	$32.53	1.04x
2026 (June to August)	$31.36	Against $28.33 for March and April 2026

That is a drop of about 68% from the 2023 peak to the three years since. August makes the point on its own: $191.71 in 2023, then $36.03, $36.35 and $35.32 in the three Augusts that followed.

This is not luck. ERCOT has added utility-scale solar and battery storage at scale, and solar output peaks in the same afternoon hours that used to set the scarcity price. Potomac Economics attributes the 40% fall in price-spike frequency in 2025 to that build-out, and ERCOT’s interconnection queue is now more than three quarters solar and storage, so the trend has further to run.

What this changes, and what it does not. It changes the size of the bet. Three consecutive calm summers mean the insurance a fixed contract buys is cheaper than it was, and an index or time-of-use structure is less reckless than it looked in 2023. It does not change the timing logic in the next section. And it does not make summer safe. The grid that produced $191.71 in August 2023 is the same grid, now carrying the load growth described further down.

When Should a Texas Business Sign Its Next Electricity Contract?

Our analysis of four full years of ERCOT settlement prices (2022 to 2025) shows a clear pattern: the four 4CP months carry the highest and most volatile prices, and the shoulder months of spring and fall are consistently the calmest. Contracts priced off the forward curve during calm months tend to carry less risk premium than contracts priced during or right after a spike.

We pulled every 15-minute real-time settlement price for the ERCOT hub average from January 2021 through August 2026, more than 190,000 intervals, and averaged them by month. Real-time prices are not what a business pays on a fixed contract, but they are what the forward market anchors to, and they are the best public record of when the Texas market is calm and when it is not.

What the data shows

• Summer is where the risk lives. Averaged across 2022 to 2025, June through September prices ran $61.44 per MWh against $31.07 in March, April, October and November. August alone averaged $88.18 per MWh, and in 2023 the four summer months averaged $95.74 per MWh against $24.32 for the other eight.
• The bad months are very bad. July 2022 averaged $141.20 per MWh and August 2023 averaged $191.71. A business on an index contract in August 2023 paid a monthly average nearly four times the level of October 2022, ten months earlier.
• The calm years are very calm. The highest monthly average in 2024 was $37.71 (May) and in 2025 it was $36.42 (May). Potomac Economics says the drop in price spikes is likely due to the large build-out of solar and battery storage on the grid, and notes that a growing share of the spikes that remain, 30% in 2025, land in the evening ramp when solar output falls.
• The floor has moved up with gas. Even so, the 2025 annual average of $32.47 sat 21% above 2024 on a simple monthly average (Potomac’s load-weighted measure rose 13.8%), tracking a 61% rise in the daily natural gas index (Potomac Economics, 2025). Gas remains the single biggest driver of a Texas business’s forward price.
• Winter is a tail risk, not a season. February 2021 averaged $1,521.84 per MWh during Winter Storm Uri, and January 2026 was the highest month of this year so far at $47.60. Winter contracts price in that memory.

The best months to lock a contract

Taking the four years together, the shoulder seasons are when the ERCOT market has been calmest, and a calm spot market tends to produce calmer forward quotes. The practical rule for a Texas business is this: get quotes in October and November after the summer has resolved, or in February through April before the market starts pricing the next one. Use a forward start date so the contract begins whenever your current one ends. A contract that expires in July does not have to be shopped in July.

Window	Four-year average real-time price (2022 to 2025)	What it tends to mean for a fixed quote
February to April	$28.33 per MWh	Calm market, forward curve reflects the coming summer but not a live spike
May	$47.97 per MWh	Heat arrives early; quotes start carrying summer risk premium
June to September	$61.44 per MWh	Highest volatility; quotes are most expensive and change daily
October to November	$33.43 per MWh	Summer resolved, winter not yet priced; historically the friendliest window
December and January	$31.38 per MWh	Usually calm, with a winter-storm tail that the curve remembers

Businesses buy summer power at almost exactly the rate summer power costs more

Chariot Energy analyzed 13,292 small commercial enrollments on its own system, October 2023 through September 2026. Because the book grew quickly over that period, each month is indexed against its own year’s average, so a busy month means busy relative to that year rather than simply later in the series. ERCOT prices are indexed the same way.

The two curves line up almost exactly. June through August runs 1.87x the shoulder months for enrollments. Power in those months runs 1.84x the shoulder months for price. June alone is the biggest month at 1.71x a normal month, and it holds in all three years measured.

Nothing about summer makes it a good time to buy power. It is a good time to notice power, because that is when the bill arrives large and the air conditioning is running. The contract calendar follows the attention, and the attention follows the weather. A forward start date breaks that loop: you can notice the problem in August and still sign the contract in October.

What the timing decision was actually worth

The claim that timing matters is easy to make and rarely quantified, so we ran it. Take a facility using 5,000 MWh a year signing a 24 month fixed contract. Compare two signing dates three months apart in the most volatile year in the series, and price each contract’s delivery window against what ERCOT’s hub average actually did over those 24 months.

Signed	24 month term	First three months of the term	Realized cost of the term
July 2023 (inside the summer)	August 2023 to July 2025	$102.12 per MWh	$37.43 per MWh
October 2023 (after it resolved)	November 2023 to October 2025	$28.01 per MWh	$28.87 per MWh
Difference			$8.56 per MWh

That is about $42,798 a year, or roughly $85,596 over the term. Three months of patience, on one contract, at one site. And almost all of it sits at the front: the July signer’s contract opened with August 2023 at $191.71 per MWh and September at $86.85. The October signer’s opened in November, after the summer had resolved. From month four onward the two contracts cover almost the same market.

How to read this honestly: these are realized ERCOT hub prices for each delivery window, not quoted fixed rates. Forward curves are not public, so no one can publish what either contract would actually have been quoted at. What this measures is the market value of the power each contract covered, which is the thing a forward curve is trying to estimate. Treat the dollar figure as illustrative and the lesson as firm.

A caveat that belongs in every procurement deck: forward prices move on news the spot market has not seen yet, including gas storage reports, ERCOT’s seasonal reliability outlooks, the Public Utility Commission’s rulemakings, and the large load decisions covered below. Seasonality tells you when the odds are in your favor. It does not tell you the price. That is what the quote is for.

The timing playbook

• Contract ends in the next 12 months. Do not wait for the December filings. Ask for 36 and 60 month prices this month, with a forward start date matching your expiry.
• Contract ends in summer. Request quotes the previous October or the following February with a forward start date matching your expiry. Check any auto-renewal notice window first; 30 to 90 days is common.
• Contract ends in a calm month. Take quotes 60 to 90 days ahead, compare fixed against block-and-index, and price the longer term described in the large load section below.
• Already on index. A calm October is the natural moment to fix part of your load with a block, or move to fixed without paying a summer premium.

For finance teams. The backtest is a P&L number as much as a price number: $42,798 a year lands in the energy line for the life of the contract. Putting the signing month in the procurement calendar, rather than letting the renewal date or the August invoice set it, is the cheapest budget-variance control available.

Ready to put a date on it? Request a custom quote, name your start date, and Chariot Energy will price it within one business day.

What Belongs in Your RFP?

A complete request for proposal lets a supplier price your load in a day instead of a week, and it keeps the offers comparable. Here is the checklist we recommend.

1. Twelve months of interval or monthly usage data for every meter, in kWh. Interval (15-minute) data from Smart Meter Texas or your current provider produces a sharper price than monthly totals.
2. Every ESI ID. The Electric Service Identifier is the long ID number on your bill that identifies each meter (17 or 22 digits, depending on your utility). Suppliers price by ESI ID, and a missing one delays the whole quote.
3. Current provider, contract end date and any notice requirement. Some contracts auto-renew or require 30 to 90 days’ notice to leave without a fee.
4. Desired start date and term options. Ask for 12, 24, 36 and 60 months. Chariot prices terms from month-to-month to five years, with forward start dates.
5. Contract structure. Fixed, index, block-and-index, or all three priced side by side so you can see the premium you are paying for certainty.
6. Swing tolerance and any known load changes. New equipment, a second shift, an expansion, an EV fleet, or a closure all change the price.
7. Your 4CP exposure and curtailment ability. If you can shed load for an hour on a hot afternoon, say so. It changes your transmission cost and may change your energy price.
8. Renewable content requirement. If your company reports on Scope 2 emissions, specify the renewable energy certificate (REC) content you need. Chariot offers 100% green commercial plans, so specify the REC content you need.
9. Billing preferences. Consolidated billing across sites, daily or hourly billing for index products, and pass-through line items you want to see.

Send all of that at once, and a good supplier will come back with a firm price that holds for a stated number of days. Send half of it, and you will get an indicative number that changes when the rest arrives.

What Are 4CP and Demand Charges?

4CP stands for four coincident peaks. Your TDU sets next year’s transmission charges based on your facility’s demand during the single highest 15-minute interval of ERCOT-wide demand in each of June, July, August and September. Cut your load during those four intervals, and you cut a charge that can run 30 to 40% of a large customer’s bill.

The catch is that nobody knows which interval will be the peak until the month is over. Customers and their suppliers watch ERCOT’s demand forecasts and curtail on the handful of afternoons most likely to set the record. Getting it right for four hours a year is worth a lot of money for a large load, which is why 4CP management has become a service in its own right. Ask your supplier what 4CP support they offer before you sign.

Demand charges are the cousin of 4CP. Beyond the coincident peaks, TDU delivery tariffs bill many commercial accounts on their own monthly peak demand in kW, not just their kWh. A facility that runs everything at once for fifteen minutes on the first of the month pays for that peak all month, and under some tariffs for months afterward. Staggering start-ups, adding storage, or scheduling the heaviest process outside the afternoon are the standard fixes.

One change to watch: the Public Utility Commission of Texas is considering replacing 4CP with a 12CP method that would allocate transmission costs on the coincident peak in every month of the year, with a target implementation date of December 31, 2026. If adopted, summer-only curtailment strategies would lose most of their value, and the proposal also includes a minimum billing demand for large loads. Any contract you sign now should be written with that possibility in mind.

What Does ERCOT’s Large Load Growth Mean for Your Contract Term?

A business choosing between a three and a five year term is choosing how much of 2028 to 2030 to lock in now. Those are the years where ERCOT’s own planning numbers move furthest, and a fixed quote prices them on the day you sign.

Most of the growth is large load. ERCOT told the Texas Senate on July 29, 2026 that about 474 GW of large load was seeking interconnection as of June 2026, roughly 90% of it data centers, against an all-time peak of 91,089 MW set July 22, 2026. Most of that queue will never be built, and ERCOT plans accordingly: it counts new data center requests at about half their requested size. Even so, its December 2025 Capacity, Demand and Reserves report has the adjusted summer firm peak rising from 88,639 MW in 2026 to 132,240 MW in 2030, about 44 GW, while the capacity it counts on grows about 11 GW. That is how the summer reserve margin falls from 18.3% in 2026 to -1.3% in 2028, its first negative year, and -12.7% by 2030.

The counterweight, also from ERCOT. Senate Bill 6 gives ERCOT authority to require large loads to curtail during emergency conditions, and ERCOT models data center load as 100% curtailable on that basis from summer 2027. In that scenario the same report puts the 2030 summer firm peak at 90,955 MW rather than 132,240 MW, and the reserve margin stays near 27.0%. Both outlooks are ERCOT’s. Which one a supplier’s forward curve leans toward is the open question in this market.

December: the large load question gets its first answer

Three Texas decisions land within weeks of each other this winter, and each one changes how much of that queue is real.

• Batch Zero. ERCOT’s one-time study of large loads, defined as 75 MW or more, that want to connect. On September 3, 2026 ERCOT gave every applicant a conditional classification: 362 projects, roughly 190 GW, remain in the study, and 373 projects, 302.2 GW, were excluded. ERCOT will confirm final inclusion and exclusion in December.
• The verification. On August 3, 2026 Governor Abbott directed the Public Utility Commission of Texas and ERCOT to verify every data center advancing through interconnection. ERCOT paused approvals to energize new data centers and crypto mining facilities of 75 MW or more, and will file its Batch Zero Eligibility Verification Report and a Community Impact Review Report with the Commission by December 10, 2026.
• Transmission cost allocation. The Commission’s 12CP target date is December 31, 2026. The 4CP section above covers what it would change.

Nobody knows how these come out. A smaller verified queue would ease the 2028 to 2030 picture. A larger one, or one that holds together, would sharpen it. Forward curves move when this news lands, in whichever direction, and a quote signed before it is priced on today’s information. Waiting for clarity is also a decision: you would be signing on the day the market has just repriced, at a price you did not choose.

What we recommend. If your contract ends within the next 12 months, ask for 36 and 60 month quotes now, with a forward start date if you need one, and decide before the December filings. A calm October is the cheapest day you are likely to get to hold both options in your hands.

What it means for a three or five year quote

A fixed quote is built from the forward curve, and the curve prices this trajectory long before the load arrives or the plants are built. A three year term signed now runs into 2029, inside the window where ERCOT’s base forecast runs short. A five year term covers all of it. The longer term carries more of that risk premium in its price, and it also protects you from it for longer. Neither is automatically right for a mid-size business. What matters is seeing where the premium sits.

• Both terms, on the same day. Request 36 and 60 month prices together so the only difference between them is the years they cover. Chariot prices terms up to five years.
• The shape, not just the number. A 60 month price averages across years that look very different. Ask which years carry the premium.
• Which outlook was priced. Ask any supplier quoting past 2028 whether its curve assumes ERCOT’s adjusted forecast or the Senate Bill 6 scenario.
• Your 4CP and demand exposure. If transmission costs are allocated across a bigger peak, the cost of being on the wrong side of it rises with it.
• Your flexibility. If your load can move, treat it as an asset rather than a cost, which is the next section.

For finance teams. A longer fixed term converts the 2028 to 2030 uncertainty into a known budget line now, at a price. A shorter term keeps the option to reprice later, and puts that later price on a future year’s P&L. Model both against your planning horizon rather than against this year’s rate.

Where Chariot sits in this. In March 2026 Chariot Energy’s parent, Hanwha Energy USA Holdings, agreed to acquire Ector County Generation, LLC, a 324 MW simple-cycle natural gas plant in ERCOT’s West Zone, near the Permian Basin. Chariot also prices and serves large loads in ERCOT. What a supplier owns, where, and in which hours is part of how it prices the years ahead. It is a fair question to put to any supplier quoting you a long term.

Can Flexible Load Earn Money? Grid Services and BlueWaters

Everything above treats electricity as a cost to be minimized. For a growing number of Texas facilities that is only half the ledger. If your site can move load, or has generation or storage behind the meter, the grid will pay you for it. ERCOT runs markets for the services that keep the system stable moment to moment and buys them from whoever can deliver. Historically that meant power plants. It no longer does.

Service	What it is	What it takes
Frequency regulation	Second-by-second adjustment up or down to hold grid frequency at 60 Hz	Fast, automated response, usually battery storage
Spinning and non-spinning reserves	Capacity held ready to deliver on short notice when the grid is short	Storage, on-site generation, or load that can drop quickly
Voltage support	Reactive power that holds local voltage inside limits	Inverter-based assets, typically solar or storage
Black start	Generation able to restart without grid power after an outage	Specific generator capability and certification
Demand response	Reducing consumption on request when the system is tight	Load you can shed on a defined notice, and a plan for doing it

Chariot Energy’s grid services help facilities participate through tailored load flexibility, storage strategies and ancillary services, and handle the parts that make participation hard: integrating storage and controls, navigating ISO protocols, meeting performance thresholds, and staying compliant once enrolled. This pairs directly with the 4CP section above. The same flexibility that earns revenue in the ancillary markets is what shaves your 4CP demand and your monthly peak, so a curtailment capability built for one pays for itself twice.

BlueWaters: the answer to watching a dashboard all summer

The 4CP problem asks you to predict which four fifteen-minute intervals of the summer will be the highest. Grid services ask you to dispatch assets against grid signals in seconds. Neither is a job for a person refreshing a forecast page through July. BlueWaters is Chariot Energy’s proprietary AI technology for grid services, combining price forecasting, machine learning and real-time market conditions.

• It removes the manual watch. Machine learning models and real-time telemetry take the latency out of the decision. Assets ramp up, scale down or shift usage without waiting for someone to notice an alert.
• It forecasts rather than reacts. Chariot develops advanced price forecasting models through strategic partnerships and applies similar-date and market-shadowing models to improve precision, which is exactly the capability the 4CP problem needs: a view of which afternoon is likely to set the peak, before it does.
• It learns your site, adapting over time to usage patterns, weather, asset availability and pricing signals.
• It works across markets, so assets can participate across capacity, ancillary and frequency markets rather than being committed to one.
• Battery storage is the anchor. Chariot pairs the platform with battery energy storage deployments to mitigate peak-hour risk. Storage is what converts a forecast into an action: if the model says this afternoon is likely to set the 4CP interval, the battery discharges and the meter reads lower without anything in the plant slowing down.

Grid services participation depends on asset capability, ERCOT program requirements and qualification. Availability and revenue are site-specific; nothing here is an offer or a projection of earnings.

Methodology and Sources

Wholesale price figures in this guide come from ERCOT’s public Real-Time Market Load Zone and Hub Settlement Point Prices report (report type 13061), using the hub average settlement point (HB_HUBAVG) for every 15-minute interval from January 2021 through August 2026. Monthly and annual figures are simple arithmetic means of those intervals, not load-weighted, so they describe market conditions rather than the average price paid. The 2021 annual figure excludes February to keep Winter Storm Uri from dominating the comparison. Load-weighted all-in costs, natural gas price changes and price-spike frequency are from the 2025 State of the Market Report for ERCOT by Potomac Economics, the market’s independent monitor. Retail price averages are from the U.S. Energy Information Administration, Electric Power Monthly, Table 5.6.A, June 2026 data (August 2026 release). 4CP mechanics are as described by ERCOT and summarized by Amperon; the 12CP proposal is from Public Utility Commission of Texas filings. Large load queue figures are from ERCOT’s “ERCOT Update” presentation to the Texas Senate, July 29, 2026. Batch Zero classifications, the August 3 directive and the December 10 report dates are from ERCOT Board of Directors Item 14, Batch Zero Update, September 14 to 15, 2026, and ERCOT’s June 18, 2026 release on PUCT approval of the Batch Zero process; the September 3 classifications are conditional and subject to the verification process. Adjusted firm peak load, total capacity, planning reserve margins and the Senate Bill 6 curtailment scenario are from ERCOT’s Capacity, Demand and Reserves report, December 2025, Table 1, summer peak load hour. The 91,089 MW peak of July 22, 2026 is from ERCOT’s 2026 peak demand records and is unofficial until final settlement. The Ector County Generation acquisition is from Hanwha Energy USA Holdings’ announcement (Business Wire, March 18, 2026). The timing backtest averages the monthly ERCOT hub series across each 24 month delivery window and measures realized market value, not a quoted fixed rate; the 5,000 MWh volume is flat by assumption and the figures are illustrative. The 2026 year-to-date comparison uses June to August against March and April 2026. The enrollment finding is from Chariot Energy’s own records, 13,292 small commercial enrollments, October 2023 through September 2026, counted by the month containing each enrollment week; because the book grew over the period each month is indexed against its own year’s average, and ERCOT prices are indexed the same way using 2022 to 2025. It describes Chariot’s book, not the Texas market as a whole. Contract terms, fee ranges, industry load shapes and procurement practices reflect common practice in the ERCOT market and are provided as general guidance. Confirm specifics with your supplier or broker.

Frequently Asked Questions

What does energy procurement mean for a business?

Energy procurement is the process of choosing an electricity supplier, a contract structure and a contract timing for your business. In deregulated markets like ERCOT it is a genuine purchasing decision, because the energy portion of the bill is negotiated rather than set by a regulator. The delivery portion, charged by your TDU, stays regulated no matter who supplies you.

Is it cheaper to use an energy broker or buy directly?

Buying directly removes the broker adder, which is commonly a few dollars per MWh. A broker earns that adder if they run a broader competitive process than you would on your own and catch contract terms you would miss. For a single facility with clean usage data, a direct quote is often the better deal. For a portfolio of sites or a load with complicated swing, a good broker or consultant usually pays for themselves.

How far in advance should a Texas business shop for electricity?

Most Texas businesses start 6 to 12 months before their contract ends. The better answer is to shop in a calm month and use a forward start date. Chariot Energy takes forward start requests case by case and can generally accommodate any start date, so a contract that ends in August can be locked months earlier. If your contract ends within the next 12 months, ask for quotes before ERCOT’s December large load filings.

Should a Texas business sign a three or five year electricity contract?

Neither is automatically right for a mid-size business. A fixed quote is built from the forward curve, and the curve prices ERCOT’s forecast for 2028 to 2030, when its planning reserve margin turns negative, long before the load arrives. A three year term signed now runs into 2029; a five year term covers all of it. The longer term carries more of that risk premium in its price and protects you from it for longer. Request 36 and 60 month prices on the same day and ask which years carry the premium.

What is the difference between a fixed and an index electricity contract?

A fixed contract sets one energy rate for the term. An index contract floats with the ERCOT market each interval, plus an adder. Fixed transfers price risk to the supplier in exchange for a premium. Index keeps the risk, and the upside, with you. Block-and-index fixes part of your load and floats the rest.

How is 4CP calculated?

ERCOT identifies the single 15-minute interval of highest system-wide demand in each of June, July, August and September. Your facility’s average demand across those four intervals becomes the basis for your transmission charges the following year. Reducing load during the likely peak afternoons lowers the charge, which is why large customers and their suppliers track ERCOT’s demand forecasts closely each summer.

Can a business get 100% renewable electricity in Texas without paying more?

Yes, on request. Renewable content is delivered through renewable energy certificates matched to your usage, and Chariot Energy offers 100% green commercial electricity plans. Specify the REC content you need in your RFP and ask for it to be priced both ways so you can see the difference, if any.

Summary

Buying electricity in ERCOT is a decision with three parts. Choose the path that fits your time and your portfolio: broker, direct, or consultant. Choose the structure that fits your risk tolerance: fixed for certainty, index for flexibility, block-and-index for both. Choose the term with the 2028 to 2030 forecast in view. Then choose your timing on purpose, using the calm windows in the timing section. Put your load data together, send a complete RFP, and get your quote when the market is quiet, not when the calendar forces you to. Request a custom quote from Chariot Energy, or explore our large commercial and industrial solutions and business electricity plans.

Plan details, rates, and fees are subject to change. Wholesale price analysis in this article is as of September 2026 and describes ERCOT market conditions, not the rates available to any individual customer. Commercial pricing is provided by custom quote and is subject to credit approval and contract terms. An Electricity Facts Label is available for every plan.