As global energy prices continue to rise, managing your business’s energy costs has become more important than ever. Whether your company uses a lot of electricity, natural gas, or both, understanding what affects these costs is key. This guide explains what drives gas and electricity prices, how to find lower energy rates, and the best strategies to build an effective and affordable energy plan for your business.
Understanding Business Gas vs. Electricity
In most commercial buildings, electricity and natural gas serve different purposes.
Electricity powers HVAC systems, machinery, lighting, IT equipment, elevators, and more. It is a major part of most business energy bills, so understanding electricity usage is key to controlling costs.
Natural gas is mainly used for heating, cooking, hot water, industrial processes, and high-heat applications. Some businesses don’t have natural gas access and must use alternatives, but where available, natural gas can be an efficient energy source for operations.
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Cost Comparison
When looking at electricity and natural gas costs or bills, it’s important to know a few key points about each energy type:
Infrastructure
- Electricity: Cannot be stored. It is sent instantly through a large and complex transmission and distribution network that reaches nearly every part of the U.S.
- Natural Gas: Can be stored in tanks or underground facilities. It travels through centralized pipelines, but these pipelines do not cover as wide an area as electricity networks.
Factors That Influence Rates
- Natural Gas Rates: Spot market prices are driven by supply and demand, while futures prices depend on trading volume.
- Electricity Rates: Prices are closely linked to natural gas costs, since gas is a major fuel for power generation, and are also influenced by demand and grid conditions.
Billing Units
- Electricity is measured in kilowatt-hours (kWh) or megawatt-hours (MWh).
- Natural gas is measured in CCF (hundred cubic feet) / MCF (thousand cubic feet) or Therms/DekaTherms.
Wholesale Markets
- Electricity is traded on spot and futures markets. Prices often vary by on-peak and off-peak hours.
- Natural gas is also traded on spot and futures markets, but pricing is based on the total quantity consumed, regardless of the time of day.
Understanding these differences helps businesses anticipate price fluctuations and plan energy purchases more effectively.
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Business Energy Plan Types
There are several types of energy plans for businesses. Each plan has different features designed to meet specific commercial needs. Choose Energy can help you find the right plan for your business.
- Fixed-Rate Plans for Businesses: A fixed-rate plan locks in a stable electricity rate for the length of your contract. This plan is ideal for businesses with steady energy use that want predictable bills over time.
- Variable-Rate Plans for Businesses: A variable-rate plan means your electricity rate changes with market conditions, usually monthly or quarterly. This plan works well for businesses that can benefit from lower rates during periods of low demand and have the budget flexibility to handle higher rates during peak usage.
- Time-of-Use (TOU) Business Plans: TOU plans charge different rates depending on the time of day and season. Rates are usually higher during peak hours and lower during off-peak hours. These plans are ideal for businesses that can shift energy use to off-peak times to save money.
- Green Energy Business Plans: Green energy plans use renewable energy sources like solar or wind. These plans help your business reduce its carbon footprint and support a more sustainable future for both your company and the environment.
Replacing Electricity With Natural Gas
For many businesses, using natural gas instead of electricity for some processes can save money and improve efficiency. Heating is often cheaper with natural gas because gas furnaces and boilers cost less to operate per unit of heat than electric systems. Switching to natural gas isn’t just a matter of installing new equipment. Businesses need to consider the cost of converting machinery and running gas pipelines to the building.
Luckily, utilities sometimes cover part or all of the pipeline installation if your gas usage is high enough. Smaller businesses can also join together to make a stronger case for natural gas service. Utilities may extend pipelines at low or no cost if they expect long-term usage.
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For businesses with high electricity bills (if you want to read about the Electricity Bill Audit Service, then click here), especially for heating or thermal equipment like pizza ovens, switching to natural gas can lead to significant long-term savings and better operational reliability.
Gas-to-Power Applications
Natural gas can also be used to generate electricity efficiently, often more so than traditional fossil fuels. Many businesses are now using gas-to-power systems to reduce costs and improve energy efficiency.
Let’s take a closer look at how gas-to-power conversions work and the benefits they offer.
Natural Gas to Power Conversion
Converting natural gas into electricity focuses on efficiency and precise measurement. This process is often measured using heat rates and conversion factors. A gas-to-power conversion shows how many British Thermal Units (BTUs) of natural gas are needed to make one kilowatt-hour (kWh) of electricity.
On average, it takes about 7,000–8,500 BTUs to produce one kWh.
This measure is called the heat rate. The lower the heat rate, the more efficiently natural gas is converted into electricity.
Understanding Heat Rates in Gas-to-Power Conversion
A heat rate measures how efficiently a power plant or generator turns fuel, like natural gas, into electricity. It shows how much fuel energy, in British Thermal Units (BTUs), is needed to make one kilowatt-hour (kWh) of electricity.
The lower the heat rate, the more efficient the generator is, because it uses less fuel per kWh. For example:
- A modern combined-cycle natural gas plant may have a heat rate of 6,500–7,000 BTU/kWh.
- Older or less efficient plants can exceed 10,000 BTU/kWh.
Heat rates are important for gas-to-power economics because they affect the cost of electricity. For instance, if natural gas costs $3.00 per MMBtu (million BTUs) and a plant’s heat rate is 7,000 BTU/kWh, the fuel cost per kWh is about 2.1 cents.
Businesses considering on-site generation, like combined heat and power (CHP) systems, must analyze heat rates carefully. This ensures that generating electricity on-site will truly save money compared to buying it from the grid.
On-Site Gas Generation
For many commercial and industrial users, on-site natural gas generation can be a cost-effective alternative to buying electricity from the grid.
Combined Heat and Power (CHP) systems are a common example. They:
- Generate electricity from natural gas.
- Capture and reuse the heat produced, which improves overall efficiency compared to standard grid power.
Businesses with large, steady energy needs, like manufacturers, data centers, or hospitals, benefit most. Pairing on-site natural gas generation with renewable energy or storage can increase reliability and provide long-term cost savings through electricity brokerage.
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Business Electricity Rates by State
State / U.S. | Commercial Electricity Rates June 2025 (¢/kWh) | Commercial Electricity Rates June 2024 (¢/kWh) | Yearly % Change |
Connecticut | 21.36 | 19.28 | 10.78% |
Maine | 21.05 | 17.51 | 20.20% |
Massachusetts | 23.10 | 20.86 | 10.73% |
New Hampshire | 19.46 | 18.99 | 2.47% |
Rhode Island | 22.15 | 19.83 | 17.63% |
Vermont | 19.79 | 18.89 | 4.76% |
New Jersey | 18.00 | 15.51 | 16.05% |
New York | 21.72 | 19.48 | 11.49% |
Pennsylvania | 12.37 | 10.71 | 15.49% |
Illinois | 12.86 | 12.17 | 5.66% |
Indiana | 13.71 | 12.62 | 8.63% |
Michigan | 14.87 | 14.61 | 1.77% |
Ohio | 11.35 | 10.47 | 8.40% |
Wisconsin | 13.36 | 12.90 | 3.56% |
Iowa | 12.64 | 11.37 | 11.16% |
Kansas | 12.07 | 11.54 | 4.59% |
Minnesota | 13.63 | 13.36 | 2.02% |
Missouri | 12.42 | 11.70 | 6.15% |
Nebraska | 9.35 | 9.31 | 0.42% |
North Dakota | 8.05 | 7.32 | 9.97% |
South Dakota | 11.27 | 11.13 | 1.25% |
Delaware | 12.45 | 11.79 | 5.59% |
District of Columbia | 20.37 | 16.89 | 20.60% |
Florida | 11.48 | 10.66 | 7.69% |
Georgia | 12.37 | 11.66 | 6.08% |
Maryland | 14.82 | 12.88 | 15.06% |
North Carolina | 9.76 | 10.22 | –4.50% |
South Carolina | 11.00 | 10.58 | 3.96% |
Virginia | 9.66 | 9.23 | 4.65% |
West Virginia | 11.49 | 11.59 | -0.86% |
Alabama | 14.44 | 13.65 | 5.78% |
Kentucky | 11.88 | 11.74 | 1.19% |
Mississippi | 12.85 | 12.13 | 5.93% |
Tennessee | 13.49 | 12.12 | 11.30% |
Arkansas | 10.84 | 10.03 | 8.07% |
Louisiana | 11.15 | 9.85 | 13.19% |
Oklahoma | 9.77 | 9.55 | 2.30% |
Texas | 8.60 | 9.03 | -4.76% |
Arizona | 12.98 | 12.97 | –0.07% |
Colorado | 13.51 | 13.03 | 3.68% |
Idaho | 9.00 | 9.67 | -6.90% |
Montana | 13.14 | 12.40 | 5.96% |
Nevada | 8.80 | 11.22 | –21.50% |
New Mexico | 11.46 | 11.07 | 3.52% |
Utah | 10.58 | 8.43 | 15.50% |
Wyoming | 9.78 | 9.26 | 5.61% |
California | 26.69 | 26.06 | 2.41% |
Oregon | 11.60 | 10.91 | 6.32% |
Washington | 11.30 | 10.42 | 8.44% |
Alaska | 22.93 | 21.77 | 5.32% |
Hawaii | 35.54 | 38.57 | –7.85% |
United States (avg) | 13.63 | 13.01 | 4.76% |
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Business Natural Gas Rates by State
State | Business Gas Rates June 2025 ($/MMBtu) | Business Gas Rates July 2025 ($/MMBtu) | Monthly % Change | Business Gas Rank |
Alabama | 5.15 | 5.35 | 3.9 | 16 |
Alaska | 5.90 | 6.29 | 6.6 | 22 |
Arizona | 4.21 | 4.16 | -1.2 | 5 |
Arkansas | 7.93 | 8.36 | 5.4 | 32 |
California | 11.69 | 12.24 | 4.7 | 40 |
Colorado | 9.83 | 11.16 | 13.5 | 37 |
Connecticut | 9.30 | 6.21 | -33.2 | 21 |
Delaware | NA | 25.53 | NA | 43 |
Florida | NA | NA | NA | NA |
Georgia | 5.73 | 5.82 | 1.6 | 17 |
Hawaii | 26.93 | 23.11 | -14.2 | 42 |
Idaho | 4.09 | 4.04 | -1.2 | 4 |
Illinois | 7.94 | 10.23 | 28.8 | 36 |
Indiana | 6.82 | 7.35 | 7.8 | 28 |
Iowa | 5.90 | NA | NA | NA |
Kansas | 5.30 | 5.10 | -3.8 | 15 |
Kentucky | 4.37 | 4.19 | -4.1 | 6 |
Louisiana | 4.26 | 4.25 | -0.2 | 7 |
Maine | 6.96 | 6.79 | -2.4 | 26 |
Maryland | NA | NA | NA | NA |
Massachusetts | 11.91 | 12.22 | 2.6 | 39 |
Michigan | 9.31 | 8.11 | -12.9 | 30 |
Minnesota | 5.77 | 6.38 | 10.6 | 23 |
Mississippi | 5.00 | 4.76 | -4.8 | 11 |
Missouri | 6.78 | 6.74 | -0.6 | 25 |
Montana | 7.32 | 7.38 | 0.8 | 29 |
Nebraska | 4.70 | 4.70 | 0.0 | 10 |
Nevada | NA | NA | NA | NA |
New Hampshire | 5.71 | 8.65 | 51.5 | 33 |
New Jersey | 6.83 | 9.65 | 41.3 | 35 |
New Mexico | 8.03 | 8.16 | 1.6 | 31 |
New York | NA | 11.28 | NA | 38 |
North Carolina | 6.70 | NA | NA | NA |
North Dakota | 2.49 | 2.60 | 4.4 | 1 |
Ohio | 10.66 | NA | NA | NA |
Oklahoma | 3.66 | 3.32 | -9.3 | 3 |
Oregon | 6.45 | 6.40 | -0.8 | 24 |
Pennsylvania | 11.99 | 12.36 | 3.1 | 41 |
Rhode Island | 10.99 | 9.37 | -14.7 | 34 |
South Carolina | 6.12 | 6.12 | 0.0 | 20 |
South Dakota | 5.32 | 5.88 | 10.5 | 19 |
Tennessee | 5.09 | 4.96 | -2.6 | 13 |
Texas | 3.22 | 3.27 | 1.6 | 2 |
Utah | 5.63 | 5.87 | 4.3 | 18 |
Vermont | 4.44 | 4.39 | -1.1 | 9 |
Virginia | 5.20 | 4.99 | -4.0 | 14 |
Washington | 14.02 | NA | NA | NA |
West Virginia | NA | 4.26 | NA | 8 |
Wisconsin | 4.97 | 4.95 | -0.4 | 12 |
Wyoming | 4.23 | 6.93 | 63.8 | 27 |
U.S. | 4.46 | 4.41 | -1.12 | – |
Thinking About Your Energy Broker?
Choosing the right energy broker for your business is about aligning cost and reliability with your operational goals. Our team can serve as a strategic partner in this choice, bringing decades of expertise in energy procurement and market analysis. Our Great Energy 1’s team will evaluate your facility’s unique load profile, help determine if some of your business’s processes are inefficient, and look for ways to improve efficiency. If you’re looking for an experienced energy brokerage partner, you’ve come to the right place. Contact us today to learn more about our solutions.