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What's actually inside your rate. Quoted ¢/kWh compresses four very different cost streams. Knowing the mix tells you which lines are negotiable and which are pass-through.
ENERGY SUPPLY
55%
TDU DELIVERY
28%
CAPACITY & ANCILLARY
11%
TAXES & FEES
6%
Energy supply moves with the ERCOT forward curve plus a small zonal congestion adder. Delivery is set by the PUCT and identical across every REP in your zone.
Capacity, ancillaries, and taxes are mostly pass-through, but how they're disclosed in the contract matters — bundled language hides who eats the next ERCOT fee change.
The negotiable surface is narrower than most buyers think: supplier margin, swing bandwidth, and regulatory pass-through clauses. Everything else is plumbing.
Mix shifts with size and shape. Small accounts run delivery-heavy; industrial loads tip toward supply. Use the strip above as a directional reference, not a quote.
Three structures. Three risk profiles. Same forward curve, different products — where summer scarcity lands depends on the structure you sign.
| Dimension | Fixed | Index | Block & Index |
|---|---|---|---|
| Budget certainty | High — locked $/kWh | Low — floats monthly | Medium-high — block hedges base |
| Summer scarcity exposure | Hedged in | Full pass-through | Partial — index covers swing |
| Best for | Tight-budget tenants | Sophisticated, hedged loads | Mid-load buyers, 1+ MW |
| Typical premium vs strip | +3 to +5% | −2 to +20% | −1 to +3% |
How a $/kWh quote is built — five stages. Every offer in your inbox starts at the forward strip and stacks adders until it lands at a single number. Knowing the stack is the difference between negotiating and accepting.
Step 01
ERCOT forward strip
Step 02
Ancillaries & ORDC
Step 03
TDU pass-through
Step 04
Supplier margin
Step 05
Final $/kWh quote
Stages 1–3 are the same for every supplier in your zone. Stage 4 — supplier margin and risk adders — is where suppliers actually compete, and it's typically the largest single lever after supply itself.
A clean RFP forces every bidder to disclose stages 2 and 3 the same way, so the only thing left to compare is the margin line and the contract clauses around it.
Longer isn't always cheaper. Quoted rate by contract term — illustrative. The shape of the curve is the lesson, not the absolute numbers.
Suppliers price the back end of long contracts with extra weather and policy risk. A 36-month deal can quote above two staggered 18-month locks even when forwards look cheap.
The sweet spot is usually 18 to 30 months for mid-market loads — long enough to amortize transaction costs, short enough to skip the deep tail premium.
Illustrative ranges. Actual quotes depend on zone, shape, and timing.