What is the Difference Between Residential and Commercial Electricity?

Whether you are shopping for business or residential energy rates, it’s easy to get confused by the many options out there. This article will help to clear things up a bit.

The first difference is the type of meter used. Businesses use much more energy than homes on average, so the utility company needs to have a separate meter to track usage for commercial properties.

Type of Wiring

When shopping for an electricity plan, it’s important to know what type of electricity your business needs. Most energy retailers offer both residential and commercial plans, but it’s up to you to choose the right one for your business. The type of wiring your business uses will help determine what kind of commercial electricity rate you need.

Commercial electricity rates are generally higher than residential electricity rates because businesses use a lot more power than households do. This can lead to higher demand, which drives up the price of the electricity. In addition, commercial buildings are typically larger than homes and use more energy on a regular basis so it needs P2 Electrical Contracting to do the electrical services.

The most common type of wiring in homes is non-metallic, or NM, cable. This type of wire is usually made up of three or more individual conductors that are wrapped in a plastic jacket called sheathing. Typically, a NM cable has a live wire, a neutral wire and a grounding wire. It can be found throughout a home, and is commonly used to run lights and appliances.

Another type of wiring that can be found in commercial settings is metal conduit. This type of wire is more durable than a traditional copper cable and has a magnesium coat. It can be found in offices, warehouses and factories and offers a more permanent solution to electrical wiring.

Both types of wiring can be difficult to work with, but the differences between them are clear. Residential wiring is thin and sheathed in plastic, while the wiring found in commercial structures is thicker with a special insulative coating. It’s also often housed in tube-like conduits that are situated where they can be easily accessed.

Another difference between commercial and residential electricity is the way that the meters are read. Commercial meters are typically larger than residential meters and are read remotely by a truck that drives through the neighborhood. On the other hand, residential meters are read manually by a meter reader who walks around each household.

Three-Phase Power

Electrical power has recalibrated our lives in many ways. It is the backbone of our modern technological lifestyles, providing us with essential services such as heating & cooling, refrigerating, running appliances and mobile devices.

Compared to single-phase power, three-phase provides superior power quality, efficiency and reliability. A primary reason for this is the offset timing of sub-cycle voltage changes between the three phases, which reduces fluctuations and improves power stability. This is especially beneficial to large motors, which require a steady supply of electricity.

Additionally, three-phase circuits can transmit the same amount of energy with less conductor material than a two-wire single-phase circuit at the same line-to-ground voltage. This translates to reduced overall wiring costs, and allows for a greater load on the power grid.

In residential homes, it is not uncommon for a single-phase meter to feed a high load of energy at one point in time, such as when air conditioners start up, saws run and microwaves are turned on simultaneously. This is called a peak load and is charged at a higher rate per kilowatt hour than other times of the day.

Three-phase systems are required for industrial and commercial environments, where machines require higher levels of energy than a home. Consistent 3 phase power ensures that machinery can operate at full capacity without lulls in production, resulting in increased efficiency and a reduction of downtime.

The higher demand for electricity in business settings is the main factor driving the difference between residential and commercial electricity rates. However, there are other contributing factors that influence the difference in prices.

Electricity rates are based on the quantity and quality of energy consumed. The quantity is measured by a meter, and the quality of energy is determined by the type, grade or quality of materials used in the system. This information is then combined to determine the standard utilization of electricity, which serves as the basis for residential and commercial electric rates.

Understanding these differences can help homeowners and businesses make informed decisions about their energy consumption and usage. In addition, it may provide insight into why some electricity retailers offer multiple deals and discounts for residential plans but less or no offers for their business customers.


Commercial electricity needs are far greater than residential needs. The equipment in a business is much more energy-draining and requires more extensive electricity infrastructure to operate. The load and usage is usually higher as well, causing it to peak at certain times of the day. This means more energy is used and that typically translates to a higher cost. It’s why business energy rates are generally more expensive than residential energy rates.

When it comes to the different types of conduits, there are a wide variety available for use in the commercial and industrial settings. It is important to choose the right conduit for each application based on the environment. Some of the most common conduits include plastic, metal, fired clay, or fiber. These conduits are designed to offer varying levels of protection from impact, corrosion, gases and vapors, moisture, fire, and electromagnetic interference.

Most retailers that provide residential and commercial electricity will offer a wide range of plan options for their customers. Some may even have multiple plans that are specifically designed for commercial sized buildings. This is because many businesses will need specific receptacles to power the electrical systems and appliances.

The type of wire used at a commercial property is also more likely to be three-phase rather than single phase power. This is because commercial wiring must be upheld to a high level of code and standards. It must be able to withstand a greater amount of stress than residential wire, so the grade and quality of the material is much more strict.

It’s possible to get great deals on both residential and business electricity from reputable energy suppliers. However, it’s a good idea to understand the difference between business and residential energy so that you can choose the best option for your particular needs. For example, many energy providers have specific peak and off-peak hours for their business clients that aren’t necessarily the same as residential energy rates. That way, you can avoid paying for extra power when it’s not needed. That may help to lower your overall costs.

Wiring Material

The electrical wiring used in residential and commercial settings is very different. The insulative coating on commercial wires is thicker than the sheath that covers residential wiring, and it also includes special chemicals to resist heat, corrosion and chemical exposure. The quality and grade of the materials that make up the wiring is also different, with commercial materials being held to higher codes and standards than those used in homes.

The most common wiring in modern residences is non-metallic sheathed cable (NM), or Romex. This is a copper cable with three conductors: a hot wire, a grounding wire and a neutral wire. The cable is then sheathed in plastic to protect the strands from fire hazards and provide a smooth surface for bending or cutting. It is often installed in walls, rafters and attic crawl spaces in buildings.

In older homes, single insulated wires were run between building structural members to carry electricity throughout the house. This system, called knob and tube wiring, was replaced by a more standardized method in the mid-1930s. It involved ceramic tubes forming protective channels through joists and ceilings, along with ceramic knobs to hold the wires in place. It allowed smaller conductors to be used and helped to prevent the dangerous results of driving a nail into both conductors simultaneously.

Commercial electrical wiring is usually placed in conduits, and the strands are covered with a thermoplastic, high-heat resistant, nylon coated protective sheath. This insulation helps to prevent electrical damage caused by moisture and corrosion, and it carries much higher voltage than the residential insulation used in homes.

Depending on the environment, wires and cables are rated according to the amount of current they can safely carry. This is determined by the size of the conductors, the maximum voltage between them, and the temperature rating for wet or dry locations. When multiple conductors are bundled together, the total current capacity of the cable is lower than that of a single insulated wire.

Regardless of what type of wiring is installed, a home needs a reliable power source to operate and protect the wires and appliances that rely on them for energy. Electrical wiring channels are a helpful addition to any home, preventing tangling and disorganization of the insulated wires that run around the house. They are available in a variety of sizes and shapes to fit into nearly any space, and they can be made of metal or plastic.

Whether you are shopping for business or residential energy rates, it’s easy to get confused by the many options out there. This article will help to clear things up a bit. The first difference is the type of meter used. Businesses use much more energy than homes on average, so the utility company needs to…