Commercial Electricity Rates by TDU: Oncor vs. CenterPoint vs. AEP
Commercial electricity rates in Texas vary by Transmission and Delivery Service Provider (aka TDSP or TDU) because each utility sets its own delivery charges. While your energy rate may be similar across providers, total costs differ based on where your business is located. Understanding your TDU helps you compare true electricity costs, not just advertised rates.
Why Location Matters More Than You Think
When businesses compare electricity rates in Texas, most focus on the price per kilowatt hour. That’s only part of the story.
Your total electricity cost depends on two components:
The energy rate from your retail provider
The TDU, or Transmission and Distribution Utility, is the company responsible for poles, wires, and infrastructure in your area.
And the key point is that TDU charges vary by region.
That means two businesses with the same energy rate can have different total bills depending on where they are located.
What Is a TDU and Why It Affects Your Rate
In Texas, the electricity market is structured so that supply and delivery are separate.
Retail providers sell electricity plans. TDUs deliver the electricity and maintain the grid. Every business is assigned to a TDU based on its location. You cannot choose your TDU. Each TDU has its own set of regulated delivery charges, which are approved by state regulators and applied to every provider in that area.
These charges are passed through directly to your bill.
The Three Major TDUs in Texas
Most commercial electricity customers fall into one of three main TDU territories.
Oncor: North Texas and Dallas Fort Worth
Oncor serves a large portion of North Texas, including Dallas, Fort Worth, Plano, and Arlington.
This is one of the most competitive electricity markets in the state, with a wide range of providers and plan options.
Oncor delivery charges typically include:
A per kilowatt hour delivery fee
A demand charge for applicable meters
A monthly service charge
Because of the size and infrastructure of the region, Oncor rates are often used as a baseline when comparing plans.
NOTE: Texas New Mexico Power (TNMP) and Lubbock Power & Light are other TDUs in Texas. While they cover smaller areas of Texas, their delivery charges are similar to the larger TDUs above.
CenterPoint: Houston and Surrounding Areas
CenterPoint serves the Houston area, including Sugar Land, Katy, and much of Southeast Texas.
Businesses in this region often see delivery structures similar to Oncor, but the actual rates differ.
CenterPoint delivery charges may include:
A per kilowatt hour delivery fee
Demand based charges for certain business types
A fixed monthly charge
For businesses in Houston, understanding CenterPoint rates is essential when comparing electricity plans, as these charges can make up a meaningful portion of the total bill.
AEP: Central and North Regions
AEP operates in two main territories:
AEP Central, which includes areas like Corpus Christi and surrounding regions
AEP North, which includes cities like Abilene and parts of West Texas
AEP delivery charges can differ from both Oncor and CenterPoint in structure and price.
Businesses in AEP territories should pay close attention to:
Demand charge applicability
Regional delivery rates
Differences between Central and North service areas
These variations can impact total cost even if the energy rate looks competitive.
Why Two Businesses Can Pay Different Rates
Let’s say two businesses sign contracts with the same energy rate.
One is in Dallas. The other is in Houston.
Even though their energy pricing is identical, their total bills may differ because:
Their TDUs charge different delivery rates
Their demand charges may be structured differently
Their fixed monthly utility fees may vary
This is why comparing electricity plans based on energy rate alone can be misleading.
Breaking Down What Actually Impacts Your Total Cost
When evaluating commercial electricity rates, you need to look at the full picture.
That includes:
Energy Rate
This is the rate offered by your retail provider.
It is typically quoted in cents per kilowatt hour and may be fixed for the contract term.
TDU Delivery Charges
These include:
Per kilowatt hour delivery fees
Demand charges if applicable
Monthly utility charges
These are set by your TDU and apply regardless of provider.
Demand Charges
For businesses with higher usage, demand charges can significantly impact total cost. These charges are based on your highest usage during a short interval, not your total usage.
The structure and rates for demand charges can vary by TDU.
Taxes and Regulatory Fees
State and local taxes, along with regulatory assessments, are applied across all territories but may vary slightly by location.
How to Compare Rates the Right Way
To accurately compare business electricity rates in Texas, focus on total cost, not just the headline number.
Ask:
Does the quoted rate include delivery charges
What are the TDU charges in my area
Are demand charges applicable
What is the expected all in cost based on my usage
The goal is to understand what you will actually pay, not just the advertised rate.
Why This Matters for Businesses Across Texas
Whether your business is in Houston, Dallas, Fort Worth, or a smaller surrounding market, your location determines part of your electricity cost.
That is not something you can change.
What you can control is:
The plan structure you choose
The provider you work with
How well your plan matches your usage
Understanding your TDU gives you a clearer picture of your total cost and helps you make more informed decisions.
Location Sets the Baseline, Your Plan Sets the Outcome
Electricity pricing in Texas is a combination of location and choice.
Your TDU sets the baseline through delivery charges. Your electricity plan determines how your usage is priced on top of that. When you understand both pieces, you can evaluate rates with confidence.
And instead of comparing numbers in isolation, you are comparing real costs that reflect how your business operates.
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