Commercial electricity procurement for multi-site companies
What a business electricity contract actually fixes, how fixed and index pricing differ, why capacity and transmission now decide so much of the price, and how to buy for many sites at once.
Commercial electricity procurement is buying the supply part of a business's electricity from a competitive retail supplier, in states where customers may choose. The local utility still delivers the power and bills delivery under its tariff. Discovery Energy Utility Audits buys electricity for multi-site commercial and industrial companies: it inventories every account, times purchases with its monthly Energy Risk Report, runs one RFP to the full supplier field, compares offers by structure, and tracks every contract to renewal.
01 / 06
What a supply contract changes on the bill, and what it does not
A commercial electricity bill has two halves. Delivery covers the utility's wires, meters, customer charges and riders, set by a tariff the state commission approves; it is the same whoever supplies the energy. Supply covers the electricity itself, plus the wholesale costs that come with it. In deregulated states, a business can buy supply from a retail supplier instead of taking the utility's default service.
Supply is no longer just energy. In the regional markets it bundles several wholesale costs, and how a contract treats each of them matters more than the headline rate:
| Component | What it pays for | How it is set for your account |
|---|---|---|
| Energy | The wholesale electricity used each hour | Your usage times the wholesale price, or the fixed price in your contract |
| Capacity | Power plants committed to be available at peak | In PJM, your peak load contribution times the auction price; in MISO, the seasonal auction price; ERCOT has no capacity market |
| Transmission | The high-voltage grid | In PJM, often your network service peak load; in ERCOT, your demand in four summer intervals (4CP); elsewhere, in the utility's tariff |
| Ancillary services and losses | Reserves, regulation and power lost on the wires | Usually a per-kWh charge, fixed or passed through |
| Renewable standards | State renewable portfolio requirements | A per-kWh cost the supplier carries or passes through |
| Supplier margin and any broker fee | The supplier's and intermediary's compensation | Built into the price; a broker's commission should be disclosed |
02 / 06
Why capacity and transmission now matter as much as energy
For years, capacity was a small line. That changed in PJM, the grid operator for all or part of 13 states and the District of Columbia. Its auction cleared at $28.92 per MW-day for 2024/25, then rose to $329.17 for 2026/27 and $333.44 for 2027/28. The 2028/2029 auction, held in July 2026, cleared at the price cap of $325 per MW-day across the whole region, the third auction in a row at the cap, and 6,831 MW short of PJM's reliability requirement. PJM's simulation without the cap would have cleared far higher.
For a site with a 1 MW peak load contribution, $329.17 per MW-day is about $120,147 of capacity a year, before the utility's scaling factors, against about $10,556 at the 2024/25 price. That cost reaches the bill whether or not the contract mentions it: either the supplier prices it into a fixed rate or it passes it through. Which one, and on what basis, is the most important thing to read in a PJM contract. Discovery's PJM capacity charges guide explains what a business can do about it.
MISO's auction moved the other way for 2026/27: annualized prices of $116 to $126 per MW-day, down from $212 to $217 the year before, as more capacity was offered. In ERCOT, there is no capacity market; transmission costs follow the four summer peak intervals, explained in the ERCOT 4CP guide.
03 / 06
Fixed vs indexed electricity contracts for businesses
The structure decides who carries price risk. Discovery shows every offer in each structure that fits the site, and the client chooses.
| Structure | What is fixed | Who carries the risk | Fits |
|---|---|---|---|
| Fixed price (all-in) | Energy, capacity, transmission and the rest, for the term | Supplier, who charges a premium for it | Tight budgets, predictable load |
| Fixed with pass-throughs | Energy; named charges billed at cost | Shared | Buyers who can manage capacity tags or 4CP |
| Index | Only the supplier's adder | Buyer | Flexible load or flexible budget |
| Block and index | A block of baseload; the rest floats | Shared | Steady baseload with a variable top |
| Layered buying | Each tranche, at the price on its purchase day | Shared over time | Large loads with a long planning horizon |
A fixed price is not always fully fixed. Many "fixed" offers pass through capacity, transmission or new charges under a change-in-law clause. Before comparing prices, put every offer on the same terms.
04 / 06
Timing: when to buy
Contract dates usually decide when companies buy. The market should. Forward electricity prices move with natural gas, which sets the marginal price in most regions, and with capacity results and weather. Discovery's monthly Energy Risk Report gives a buy-or-wait call on three-year forwards, and the Henry Hub price page tracks the gas price behind them. For a portfolio, buying can be split into tranches over several months, which avoids putting the whole budget on one day's price.
EIA's November 2026 Short-Term Energy Outlook expects commercial-sector electricity demand, which includes data centers, to grow 2.8% in 2027. Rising demand is one reason buyers in the most affected regions have been fixing longer terms; see how data centers are affecting commercial electricity prices by region.
05 / 06
Buying for many sites
For a multi-site company, procurement is an inventory problem before it is a price problem. Discovery starts with every account in every state, flags sites on default service or month-to-month pricing, aligns end dates so the portfolio renews together, and runs one RFP across every deregulated state. Each contract is then held in TaraBase with supplier, term, rate and expiration, and renewals are flagged well in advance. See multi-site energy contracts.
Where a state does not allow supplier choice, the price is set by the tariff, and savings come from an electricity bill audit: rate class, riders, demand ratchets, power factor and meter setup. Which states allow choice is on the deregulated states page.
06 / 06
Questions buyers ask
Is a fixed or indexed electricity contract better for a business?
Neither is better in general. Fixed pricing protects a budget and costs a risk premium; index pricing avoids the premium and leaves the business exposed to market swings. Many buyers split the difference with block and index or layered purchases. The right answer depends on load shape, budget tolerance and what the price includes.
How far ahead should we renew a commercial electricity contract?
Start the process several months before expiry so you can buy when the market is favorable, not on the last week. Contracts can be signed well ahead with a deferred start date.
What happens if our contract expires and we do nothing?
Depending on the contract and the state, the account rolls onto the supplier's month-to-month rate or the utility's default service. Either is usually priced higher than a competitive contract, which is why expirations should be tracked centrally.
Does switching supplier change who delivers our power?
No. The local utility still delivers the electricity, reads the meter and handles outages. Only the supply portion changes.
Can Discovery buy electricity in every state?
Only where state law allows customers to choose a supplier. In regulated states, Discovery audits how the utility's tariff is applied instead.
Sources
- US EIA, Can customers choose their electricity supplier?
- PJM, 2026/2027 Base Residual Auction Report, $28.92 per MW-day for 2024/25 and $329.17 for 2026/27.
- PJM, Review of 2027/2028 Base Residual Auction results, $333.44 per MW-day.
- PJM, Capacity auction procures 138,318 MW of generation resources (July 14, 2026), 2028/2029 price of $325 per MW-day and 6,831 MW shortfall.
- American Public Power Association, MISO 2026 Planning Resource Auction, annualized prices of $116.06 to $126.19 per MW-day.
- US EIA, Short-Term Energy Outlook, electricity, commercial demand growth of 2.8% in 2027.
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