Commercial Electricity for Hotels in Texas

Energy strategy for Texas hotels

Hotels sit in an unusual position in the Texas commercial electricity market. The property never fully turns off, HVAC runs harder in summer than almost any other building type, laundry and kitchen loads concentrate in specific hours, and guest rooms pull power whether they are occupied or not unless automation is in place. Electricity typically ranks among the top three controllable operating costs for a Texas property, which makes procurement an active margin lever.

This guide covers how hotel load actually behaves across the week and across the year, how multi-property groups use portfolio leverage, how brand-standard sustainability commitments change the procurement decision, and where single properties and franchise operators consistently overpay. Built for independent operators, franchisees, and management companies across Houston, Dallas-Fort Worth, San Antonio, and Austin.

How hotels use electricity

Hotels have four distinct load zones that peak at different times, and the overlap between them determines how your demand charges stack up each month.

Guest rooms are the largest single load zone, driven primarily by PTAC units (packaged terminal air conditioners), lighting, TVs, mini-fridges, and bathroom exhaust. Occupied rooms draw several times the baseline of a vacant room with HVAC on standby. If your property does not have occupancy-based thermostat setbacks, every empty room is costing power.

Common areas and public spaces cover lobby, corridors, elevators, meeting rooms, and exterior lighting. Corridor and exterior lighting runs 24 hours a day and is one of the single highest-return LED retrofit opportunities in the industry.

Back of house covers laundry, kitchen, dishwashing, water heating, and HVAC for staff areas. Laundry is a concentrated load: a mid-size hotel running commercial washers and dryers can create significant demand spikes during laundry hours. Running laundry outside summer afternoon peak windows is one of the simplest demand management wins available.

Amenity load covers pools, hot tubs, fitness centers, bars, and conference AV. Pool and hot tub pumps run continuously unless on a time clock, and a covered heated pool meaningfully reduces energy consumption compared to an uncovered one.

Load factor for most Texas hotels sits in a moderate-to-steady range, which is attractive to electricity suppliers because the load is relatively predictable. For a plain-English walk-through of how commercial electricity gets billed before you compare offers, see the commercial electricity pillar guide.

What actually drives your monthly bill

The number on your hotel electricity bill is not one price. It is a stack of charges, and most operators focus only on the top row.

The energy charge is the per-kWh number suppliers quote. Under a typical fixed-rate contract, this is the only piece that is actually locked.

TDSP delivery charges cover poles, wires, transformers, and metering. They are regulated by the Public Utility Commission of Texas and the same regardless of which supplier you pick. They float with periodic rate case decisions.

Demand charges are based on your peak 15-minute interval during the billing period, measured per kW. Hotels with large HVAC load can run meaningful demand charges, and demand is often the single highest-return cost item to actively manage.

4CP transmission charges apply to larger commercial accounts (roughly 700 kW peak and above). It is based on your facility's demand during the four highest 15-minute intervals on the ERCOT grid each summer, and it follows you into the next year's bills. For full-service hotels with convention centers, 4CP can be a significant annual line item.

Regulatory, fees, and taxes cover PUCT assessments, ERCOT fees, gross receipts tax, and sales tax (hotels pay sales tax on commercial electricity in most jurisdictions).

The practical implication: comparing suppliers on the headline per-kWh number alone can put you on a worse plan when the floating components stack differently. For a deeper walk-through of the delivery side, see TDU delivery charges explained.

Contract decisions that move the number

Three decisions do most of the work on a hotel electricity contract.

Term length. Most Texas hotels land on 24 or 36 month fixed-rate terms. Shorter terms suit operators who expect the market to fall or who anticipate a major capital project (brand conversion, major renovation, pool addition). Longer terms protect against a rising forward curve. Terms beyond 36 months rarely make sense unless the market is unusually low.

What is actually fixed. A "fixed" rate contract often lets delivery charges, 4CP, regulatory pass-throughs, and supply-side demand charges float. Read the contract to see which line items are held and which are pass-through. For a full-service hotel with a 700 kW+ peak, the 4CP line alone can swing bills meaningfully across a bad summer.

Bandwidth. Your contract assumes a usage range, usually 10 to 20 percent either side of forecast. Occupancy swings, a renovation that temporarily drops rooms offline, a new tower that comes online mid-term, or seasonal convention bookings can all blow past the band. Volume outside the band gets priced at spot. If you expect a material change in operations, negotiate a wider band up front or ask for a "no bandwidth penalty" clause.

Two other clauses deserve red-line attention before signing: the early termination fee, which can be two months of maximum contract value, and the material change clause, which lets the supplier reprice if your usage shifts beyond threshold.

Portfolio operators and franchise groups have real leverage

Hotel management companies, franchise groups, and REITs have a procurement advantage that single-property owners do not: aggregated load.

Suppliers price a combined portfolio more aggressively because the volume is easier to hedge, one credit review covers all sites, and administrative cost is spread across more revenue. The coordination questions are harder than the economics.

Renewal timing. Aggregating onto a single renewal date gives maximum leverage but concentrates portfolio exposure if that date lands in a bad market. Most operators with ten or more properties stagger renewals into two or three cohorts across the year.

TDU zone coverage. A Texas portfolio commonly spans Oncor (DFW), CenterPoint (Houston), AEP Texas (South Texas, West Texas), and TNMP (parts of the Gulf Coast). Not every supplier serves every zone competitively. The shortlist has to actually cover your footprint. The Texas Retail Electric Providers directory lists which suppliers actively bid each zone.

Add-a-site language. Groups that are growing need a clean mechanism for adding new properties to the master agreement without renegotiating the whole book.

Brand standards. Major franchise brands publish portfolio carbon targets that flow down to franchisees. If brand standards require renewable supply or REC coverage, that belongs in the RFP from day one, not bolted on later.

TDU zones and where your hotels sit

Texas has four investor-owned TDUs in the deregulated market, plus municipal utilities that do not allow retail choice. Each zone has its own delivery rate structure and competitive supplier set.

Oncor covers North Texas including Dallas, Fort Worth, Arlington, Plano, Frisco, McKinney, and Waco. Largest TDU by customer count with the deepest competitive supplier bench.

CenterPoint Energy covers Greater Houston including Sugar Land, Pasadena, Pearland, and Galveston. CenterPoint zones carry significant 4CP exposure for larger hotels because of high summer coincident peaks.

AEP Texas Central covers South Texas and the Coastal Bend including Corpus Christi, Laredo, and the Rio Grande Valley. Coastal weather drives tourism season and peak load.

AEP Texas North covers Central and West Texas including Abilene, San Angelo, Odessa, Midland, and parts of the Panhandle.

TNMP covers non-contiguous zones including parts of the Gulf Coast, DFW suburbs, and West Texas.

Austin Energy and CPS Energy serve Austin and San Antonio respectively as municipal utilities. Hotels inside those city limits cannot shop for a retail provider, but hotels in surrounding competitive-choice areas can. See the Houston commercial electricity or Dallas commercial electricity for metro-specific detail, or Oncor coverage, CenterPoint coverage, AEP Texas Central coverage, AEP Texas North coverage, or TNMP coverage for TDU-specific detail.

Where hotels overpay

Hotel margins are tight and the recurring procurement mistakes compound.

Letting the contract roll to month-to-month: Holdover rates after contract expiry run well above market. This is the single most expensive and most avoidable procurement mistake in hospitality.

Signing without reviewing demand charges: For a hotel with large HVAC load, the demand component can be meaningful. Shaving the energy rate while ignoring the demand charge misses where the real money sits.

Ignoring the 4CP exposure: Full-service properties often cross the 700 kW threshold on summer afternoon convention days. If 4CP is not managed, next year's transmission allocation can land well above forecast.

Comparing only cents per kWh: Pass-throughs, demand charges, bandwidth penalties, and material change clauses all change the real cost.

Not aligning renewals with capital events: Signing a 36-month contract six months before a brand conversion, a renovation, or a new tower is signing against your own forecast. The contract should align with the operating plan.

Timing the renewal

Start well before contract expiry. For a single property, three to six months of runway is enough. For a portfolio or a large full-service hotel, six to nine months is safer.

That window lets Electric Decisions pull your 12 months of usage data, model your demand and 4CP exposure against the live ERCOT forward curve for the specific months your new term will cover, run an RFP against the suppliers who actually bid your zone competitively, red-line the contract in plain English, and time the lock when the forward curve dips.

The single most avoidable mistake is starting in the final 30 days. That gives suppliers all the leverage.

How Electric Decisions runs a hotel procurement

Five documented steps. Same process on a single property, same process on a 50-property portfolio.

Step 1: Intake

We pull your last 12 months of usage from the TDU through a Letter of Authorization and profile every meter. For portfolios, we build a consolidated usage picture across all sites, flagging the properties that drive most of the demand charge exposure.

Step 2: Reference

We benchmark your current all-in cost against the live ERCOT forward curve for the exact term you are evaluating. You see where you sit against the market.

Step 3: Competition

We run an identical-specs RFP against the suppliers who bid your zone or zones competitively. Same kWh, same kW, same term, same bandwidth, same pass-through treatment.

Step 4: Contract

We red-line the paperwork in plain English. ETF, bandwidth, material change clause, add-a-site language, 4CP treatment, pass-through caps, holdover language.

Step 5: Execution

We manage the switch between your existing REP and the new REP so service never interrupts. Then we watch the market through your term and put you back into competition before the next renewal.

Our margin is disclosed in writing before you sign. We do not sell electricity and we are not paid to prefer one supplier over another.