Commercial Electricity for Office Buildings in Texas

Energy strategy for Texas office buildings

Office buildings are the archetypal commercial electricity account: predictable weekday HVAC, clean load factor, and a tenant structure that determines whether cost reduction flows to the owner or the tenant. Whether procurement helps NOI, helps tenant retention, or both depends almost entirely on the lease structure, which is the single most important input to the contract decision.

This guide covers how office building load behaves across the week, how lease structure affects the procurement strategy, how multi-building portfolios use aggregation leverage, and how Electric Decisions runs a documented procurement for office owners and property managers. Built for independent landlords, institutional owners, REITs, property management firms, and multi-tenant office operators across Houston, Dallas-Fort Worth, San Antonio, Austin, and the rest of the ERCOT market.

How office buildings use electricity

Office building electricity load splits into tenant load and common-area (house) load, and the split matters more than the total.

Tenant load is the largest share and includes everything inside the leased premises: tenant HVAC (where submetered), interior lighting, equipment, break rooms, and server closets. Under full-service and modified gross leases, this load is on the owner's electricity bill and recovered through CAM or rent. Under triple-net (NNN) and tenant-metered structures, the tenant pays directly.

Common-area (house) load includes lobby HVAC and lighting, elevators, corridor and stairwell lighting, parking garage lighting (significant in multi-story structured parking), building management systems, exterior lighting, security cameras, and life safety systems. House load runs on a very different schedule than tenant load: lobbies and corridors run 24/7, parking garages run with reduced levels overnight, and elevator load follows daily tenant occupancy.

Weekday load profile. Office load ramps up between early morning and mid-morning as tenants arrive and HVAC catches up, peaks midday when occupancy and solar gain combine, and ramps down between late afternoon and early evening. Weekend load drops to a fraction of weekday peak, with HVAC in deep setback and only common areas and small weekend tenants running.

Load factor sits in a moderate range for most office buildings.

Lease structure shapes the procurement decision

The single most important input to an office building electricity procurement decision is the lease structure, because it determines who captures the savings.

Triple-net (NNN) leases: The tenant reimburses operating expenses, including the pass-through of utility costs. Energy procurement savings on common-area load flow to tenants through lower CAM reconciliation. This improves tenant occupancy cost (making the building more competitive for renewal and new leases) but does not directly lift the owner's NOI on a stabilized asset.

Full-service and modified gross leases: The owner pays utilities out of base rent. Energy procurement savings flow directly to the owner's NOI dollar for dollar.

Hybrid structures: Many office buildings run mixed lease books: some NNN tenants, some gross, some with electrical submetering, some without. Procurement strategy should reflect the actual lease book, not an assumption about "office is NNN."

Tenant-metered buildings: Where tenants have their own meters and REP contracts, the owner is procuring only common-area load. That is typically a smaller account and warrants a focused procurement on house load.

For office buildings held for near-term sale or repositioning, the contract term also needs to align with the hold strategy. Signing a 36-month contract on a building you plan to sell in 18 months creates an assumable obligation for the buyer, which can affect the sale price or complicate the transaction.

What drives your monthly bill

The number on your office building electricity bill is not one price. It is a stack of charges.

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. Regulated.

Demand charges matter for office buildings because of the sharp weekday HVAC peak during Texas summer afternoons.

4CP transmission applies to larger office buildings (roughly 700 kW peak and above). Most mid-rise office buildings cross this threshold, and multi-building portfolios on consolidated metering almost always do. For a Class A high-rise, 4CP is a significant annual line item. The TDU delivery charges explained guide covers delivery components in detail.

Regulatory, fees, and taxes cover PUCT assessments, ERCOT fees, gross receipts tax, and sales tax.

Contract decisions that move the number

Three decisions do most of the work on an office building electricity contract.

Term length: Most Texas office buildings land on 24 or 36 month fixed-rate terms. Owners with near-term sale plans should align term with hold strategy to avoid creating an assumable obligation.

What is actually fixed: A fixed-rate contract often lets delivery charges, 4CP, regulatory pass-throughs, and supply-side demand charges float. For buildings with large 4CP exposure, the delta between a true fixed and a pass-through contract can be material.

Bandwidth: Your contract assumes a usage range. Occupancy swings, major tenant moves, repositioning projects, and tenant improvement build-outs all change usage.

For NNN buildings, the contract should also align with the lease CAM reconciliation timing to avoid pass-through disputes with tenants. The Texas early termination fees guide covers ETF structuring.

Portfolio owners and REITs have real leverage

Office building portfolios (REITs, institutional owners, property management firms with multiple buildings under management) have a procurement advantage that single-building owners do not: aggregated load.

Suppliers price a combined portfolio more aggressively because the volume is easier to hedge, one credit review covers all buildings, and administrative cost is spread.

Coordination questions:

Renewal cohorts: Larger portfolios typically stagger renewals.

TDU zone coverage: Statewide portfolios span multiple utility zones. The Texas Retail Electric Providers directory lists which suppliers actively bid each zone.

Add-a-site and divest language: Portfolios actively acquiring or disposing of buildings need a clean mechanism for both directions.

Lease book diversity: Mixed NNN/gross/tenant-metered portfolios need procurement that reflects the actual book.

ESG and renewable supply: Institutional investors increasingly ask about scope 2 emissions. Treat RECs or renewable supply as a procurement input where tenant or investor pressure applies.

Where your office building sits

Texas has four investor-owned TDUs plus municipal utilities. Oncor covers North Texas including the DFW office markets. CenterPoint covers Greater Houston. AEP Texas and TNMP cover other regions. Austin Energy and CPS Energy are municipal utilities. See the Dallas commercial electricity page or Houston commercial electricity page for the two largest office markets.

Where office building owners overpay

Letting the contract roll to month-to-month: Holdover rates run well above market.

Ignoring 4CP exposure: For a Class A office building above 700 kW peak, 4CP is often the second-largest line item on the bill. Signing without 4CP management strategy locks in next year's transmission allocation.

Signing a term that outlives the hold: For buildings held for near-term disposition, a 36-month contract creates an assumable obligation that can affect sale economics.

Comparing only cents per kWh: For NNN buildings, the pass-through back to tenants depends on contract line-item treatment, not just the headline rate.

Mismatching contract and lease CAM reconciliation: For NNN buildings, utility costs flow back to tenants through CAM. If the contract pricing and the CAM reconciliation are out of sync, tenant disputes can follow.

Timing the renewal

Start before contract expiry. For a single building, four to six months of runway is enough. For a portfolio or a Class A high-rise, six to nine months is safer.

The single most avoidable mistake is starting in the final 30 days.

How Electric Decisions runs an office building procurement

Five documented steps. Same process on a single building, same process on a 30-building 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 NNN buildings, we also review the lease pass-through structure.

Step 2: Reference: We benchmark your current all-in cost against the live ERCOT forward curve.

Step 3: Competition: We run an identical-specs RFP against the suppliers who bid your zone or zones competitively.

Step 4: Contract: We red-line the paperwork in plain English. ETF, bandwidth, material change clause, 4CP treatment, pass-through caps, holdover language, lease alignment.

Step 5: Execution: We manage the switch and watch the market through your term.

Our margin is disclosed in writing before you sign.