How to Read Your Texas Electricity Bill
If you’ve ever looked at your Texas electricity bill and wondered why there are charges from a company you didn’t choose, you’re not alone. Unlike most states, Texas separates who generates your power from who delivers it to your home. This guide walks you through every line item—especially those confusing TDU delivery charges—so you know exactly what you’re paying for.
- Your Texas electricity bill includes charges from two entities: your Retail Electric Provider (REP) for energy supply and your TDU (like Oncor) for delivery.
- TDU delivery charges are regulated by the state—you can’t shop around for these rates, and they’re the same regardless of which REP you choose.
- The biggest variable you control is your energy supply rate. Compare plans using the Electricity Facts Label (EFL) to find the best deal.
- Common confusing line items include “TDSP Delivery Charges,” “Metering Fees,” and “System Benefit Fund”—all are standard regulated charges, not hidden fees.
Why Texas Electricity Bills Look Different
In 2002, Texas passed Senate Bill 7, which deregulated the retail electricity market. This means about 85% of Texans can now choose their electricity provider—but it also means your bill works differently than in most other states.
Before deregulation, one company handled everything: generating electricity, transmitting it across the state, and delivering it to your home. Today, those functions are split between competing companies and regulated utilities.
The key distinction: You choose your Retail Electric Provider (REP) for the electricity itself, but a separate Transmission and Distribution Utility (TDU) delivers that electricity to your home. The TDU charges appear on your bill whether you like it or not—they’re regulated rates, not negotiable.
This separation is why you might see “Oncor” or “CenterPoint” on your bill even though you signed up with a company like TXU, Reliant, or another REP. Oncor didn’t sell you electricity—they’re simply the utility that owns and maintains the power lines in your area.
Understanding this two-party structure is the first step to making sense of your Texas electric bill. Once you know who’s charging you for what, you can focus on the part you actually control: your energy supply rate.
REP vs. TDU: Who’s Who on Your Bill
Think of your electricity like mail delivery. Your REP is the sender (they source the electricity), and your TDU is the postal service (they deliver it to your door).
Your REP
Sells you electricity. You choose them.
Your TDU
Delivers power via lines. Assigned by location.
Your Home
Where you use the electricity.
Your Retail Electric Provider (REP) is the company you signed a contract with. They purchase electricity on the wholesale market and sell it to you at a retail rate. Companies like TXU Energy, Reliant, Gexa, and dozens of others compete for your business. You can switch REPs anytime (though early termination fees may apply).
Your Transmission and Distribution Utility (TDU)—sometimes called a TDSP (Transmission and Distribution Service Provider)—owns and maintains the physical infrastructure: poles, wires, transformers, and meters. You don’t choose your TDU; it’s determined by your address. If you live in the Dallas-Fort Worth area, Oncor is your TDU. Houston? That’s CenterPoint.
Here’s the important part: when your power goes out, you call your TDU, not your REP. Your REP handles billing questions and plan changes. Your TDU handles the actual wires and restores service after storms.
Meet Your TDU
Texas has five major TDUs serving the deregulated areas. Here’s who operates where.
Oncor
Dallas-Fort Worth, North & Central Texas
The largest TDU in Texas, serving over 10 million customers. If you’re in DFW, Waco, Midland-Odessa, or surrounding areas, Oncor delivers your power and maintains the grid.
CenterPoint Energy
Greater Houston Area
Serves the Houston metropolitan area and surrounding communities. CenterPoint handles delivery for approximately 2.8 million metered customers in Southeast Texas.
AEP Texas
South & West Texas
Covers a large geographic area including Corpus Christi, Laredo, the Rio Grande Valley, and parts of West Texas. Operates in both deregulated and some regulated territories.
Texas-New Mexico Power (TNMP)
Select Areas Across Texas
Serves scattered service territories including parts of the Texas Panhandle, areas near Lewisville, and some coastal regions. Smaller footprint but same regulated rate structure.
TDU Delivery Charges: Line by Line
This is the section most Texans find confusing. Your TDU delivery charges—sometimes labeled as “TDSP Delivery Charges” or “Transmission and Distribution Charges”—cover the cost of getting electricity from the grid to your meter. Here’s what each line item means.
Delivery Charge (per kWh) ~$0.03938/kWh
This is the main TDU charge based on your actual usage. The more electricity you use, the higher this charge. For Oncor customers, this rate is approximately $0.03938 per kWh (rates vary by TDU and are updated periodically by the Public Utility Commission). On a 1,000 kWh bill, that’s about $39.38.
This rate is the same whether you’re with TXU, Reliant, or any other REP in your TDU’s service area.
TDU Base Charge / Customer Charge ~$3.42 – $4.39/month
A flat monthly fee just for being connected to the grid. This covers basic meter infrastructure and account maintenance. Oncor’s base charge is approximately $3.42 per month; CenterPoint’s is around $4.39. You pay this even if you use zero electricity.
Some REPs bundle this into your plan’s “base charge,” which may differ from the TDU base charge.
Metering Charge ~$2.19 – $3.62/month
Covers the cost of reading your meter and maintaining metering equipment. With smart meters now standard across Texas, this fee helps fund the Advanced Metering Infrastructure (AMI) that enables time-of-use rates and real-time usage data.
System Benefit Fund (SBF) $0.00065/kWh
A state-mandated charge that funds programs for low-income customers (LITE-UP Texas) and customer education. It’s a fraction of a cent per kWh—usually less than $1 on a typical residential bill—but it appears as a separate line item.
Transition Charges & Competition Transition Charges Varies
Legacy charges from the 2002 deregulation that helped utilities recover “stranded costs”—investments made before deregulation that couldn’t be recovered in a competitive market. These charges have been phasing out for most TDUs but may still appear on some bills.
Transmission Cost Recovery Factor (TCRF) Included in delivery
Covers the cost of using ERCOT’s high-voltage transmission lines to move power across Texas. This is often bundled into your delivery charge rather than shown separately. When TDUs file for rate increases, TCRF adjustments are a common reason.
What You Can and Can’t Control
You Control
- Your Retail Electric Provider (REP)
- Your energy supply rate per kWh
- Plan type (fixed, variable, indexed)
- Contract length and terms
- How much electricity you use
- When you use electricity (for time-of-use plans)
Fixed (Same for Everyone)
- Your TDU (determined by your address)
- TDU delivery charges per kWh
- TDU base/customer charges
- Metering fees
- System Benefit Fund fees
- Who restores power after outages
Red Flags: How to Spot Billing Errors
- Check your kWh usage against your meter. If your smart meter shows 950 kWh but your bill says 1,200 kWh, contact your REP immediately. Meter reading errors do happen.
- Compare your rate to your Electricity Facts Label (EFL). The EFL you received when signing up shows your exact rate structure. If your billed rate doesn’t match at your usage level (500, 1000, or 2000 kWh), something’s wrong.
- Watch for sudden spikes in TDU charges. TDU rates change, but they don’t double overnight. If delivery charges jump dramatically, verify the rate with your TDU’s published tariff schedule.
- Look for duplicate charges or unfamiliar fees. Standard TDU charges are delivery, base, metering, and sometimes System Benefit Fund. If you see vague “service fees” or charges you don’t recognize, ask for itemization.
- Verify your contract hasn’t rolled over to a variable rate. Many fixed-rate contracts automatically convert to month-to-month variable rates when they expire—often at much higher prices.
Frequently Asked Questions
Oncor (or your local TDU) owns and maintains the power lines, transformers, and meters in your area. Your REP sells you the electricity itself, but Oncor delivers it. It’s like buying a product online—the retailer sells you the item, but UPS or FedEx delivers it. Both have costs. Oncor’s delivery charges are regulated by the state and passed through on your bill regardless of which REP you choose.
No. Your TDU is assigned by your physical address, and you cannot shop around for a different one. TDU rates are regulated by the Public Utility Commission of Texas (PUCT) and are the same for all customers in that TDU’s service area. The only way to lower TDU-related costs is to reduce your electricity usage, since most TDU charges are calculated per kWh.
TDSP stands for Transmission and Distribution Service Provider—it’s another term for TDU. Some bills and REPs use “TDSP charges” instead of “TDU charges,” but they mean the same thing: fees for delivering electricity over the power grid to your home. If you see “TDSP Delivery Charges” on your bill, these are the regulated utility charges for maintaining power lines and infrastructure.
A “fixed-rate” plan typically fixes your supply rate—the energy charge from your REP—but TDU delivery charges can still change. When the PUCT approves TDU rate adjustments (which happen periodically), those changes are passed through to customers even on fixed-rate plans. Additionally, if your usage increased, your total bill will rise because more kWh means higher delivery charges. Check both your usage and the TDU line items to identify the change.
Sources
- Public Utility Commission of Texas (PUCT) – Electric Industry Information and TDU Rate Schedules
- Oncor Electric Delivery – Delivery Charges and Tariff Information
- CenterPoint Energy – Rate Schedules and Service Area Information
- Electric Reliability Council of Texas (ERCOT) – Texas Electricity Market Structure
- Texas Legislature, Senate Bill 7 (1999) – Electric Utility Restructuring Act