TDU Delivery Charges Explained

Rhythm Research Team
Rhythm Research Team on Wednesday, July 10, 2024
Blog Hero: puct1

You sign up for an electricity plan. Your lights turn on. All is good. But have you ever thought about how that electricity gets to your home and who is responsible for it?

What Is a TDU?

In some areas across the country, they may be called a utility company – but in Texas, the technical term is Transmission and Distribution Service Providers (TDSPs or TDUs). TDUs are the ones in charge of transmitting and distributing electricity from the power plants to your home. Those electricity poles that you see on the side of the road? Owned by a TDUs. The wires connecting them? Also by a TDU.

TDUs own, operate, transmit, and distribute electricity across the Lone Star State. They take the energy from the electric grid and transport it to your home. They’re even in charge of reading your electric meter each month and restoring power whenever there’s an outage.

TDUs in Texas

There are currently five TDUs across the deregulated markets in Texas.

  • CenterPoint Energy – serves the Houston and surrounding area. For more information, or to report a power outage, call 1-800-332-7143. Outage Map

  • Oncor Electric Delivery – serves the Dallas/Ft Worth and surrounding area. For more information, or to report a power outage, call 1-888-313-4747. Outage Map

  • American Eagle Power (AEP) Texas Central – serves markets including Victoria, Corpus Christi, McAllen and Laredo. For more information, or to report a power outage, call 1-866-223-8508. Outage Map

  • American Eagle Power (AEP) Texas North – serves markets including Abilene, Alpine, San Angelo and Vernon. For more information, or to report a power outage, call 1-866-223-8508. Outage Map

  • Texas New Mexico Power (TNMP) – serves markets across all of Texas, from Lewisville in north-central TX to League City south of Houston to Kermit in West Texas. For more information, or to report a power outage, call 1-888-866-7456. Outage Map

What Are TDU Delivery Charges?

Your electric bill actually includes bills from two companies, one for energy charges and the other for delivery charges. Energy charges are the cost of generating and supplying electricity, while delivery charges are the cost of delivering electricity to the customers’ homes.

  • Your Retail Electricity Provider (REP) is the company that sells you energy.

  • Your TDSP or TDU is the company in charge of the local grid, so they bill you for delivering electricity to your home or business. Regardless of which REP you choose, the TDU is based on your service area so it remains the same.

TDU charges are typically fixed and are determined by the Public Utility Commission of Texas (PUCT). REPs do not mark up these charges – the money from them goes straight to the TDU to maintain and upgrade transformers, power lines, poles, and other electrical infrastructure, also known as “the grid.”

REP charges include the cost of producing and supplying electricity. This price of energy depends on many factors including the cost of fuel and how much supply and demand there is for electricity. Your energy charges are based on the kilowatt-hours (kWh) that you use, with the rate depending on the energy plan you have chosen through your REP.

Blog image Choosing Electricity Texas Guide New Residents

Unpacking TDU Pass-Through Charges

You only get one bill with both charges included, which comes from your REP. Because it also includes charges from the TDU, those are known as “pass-through charges.”

TDUs provide a service, and the poles and wires they use to provide that service need to be upkept and maintained. If something goes awry, it needs to be fixed and fixing infrastructure costs money. These TDU charges are usually called out separately from your energy rate on your electric bill.

How Often are TDU Delivery Charges Updated?

TDU charges are always approved by the Public Utility Commission of Texas (PUCT) and can change throughout the year, so you may not always see the same rates being assessed on your electricity bill. They may also be updated at other times, depending on market conditions, but these updates are not scheduled.

How Are TDU Delivery Charges Calculated?

The TDU charges are broken down into two components:

  1. Fixed monthly charge – Regardless of how much electricity you consume during your billing period, the same, flat month cost will be charged. Usually between $3 and $10 a month.

  2. Variable monthly charge – This is a fixed, cents-per-kilowatt-hour rate that is multiplied by how much energy you use during your billing period, which also varies by TDU and typically ranges from 2¢-5¢ per kilowatt-hour.

Impact of TDU Delivery Charges on Your Monthly Bill

TDSP charges are fixed, and are divided among the total amount of electricity used. So the more electricity you consume, the lower your fixed delivery charges will be per kWh.

How to Reduce Your TDU Delivery Charges

There are ways that you can reduce these charges. The first is by choosing a REP that offers a lower TDU delivery charge, so it’s worth comparing plans before you sign a contract, or considering a switch to a new REP. The second is by reducing your overall consumption of electricity – because the less you use, the lower your delivery charges will be.

Some simple steps to reduce your energy use include turning off lights and electronics when you aren’t using them, choosing energy-efficient appliances and light bulbs, adjusting your thermostat so it runs hotter or cooler during off-peak hours, and weatherproofing your home to improve its energy efficiency. Want more ideas? Check out our article on How to Save on Energy in Texas.

Interested in Learning More about Texas Electricity?

Check out other Rhythm Energy blogs below:


Why are delivery and energy charges different on my electric bill?

One charge is for generating and supplying your energy, and that comes from your Retail Electricity Provider (REP). The other is for delivering your energy, and that comes from your Transmission and Distribution Service Provider (TDSP or TDU), which is a “pass-through” charge that shows up on the bill you receive from your REP.

How do I find out which TDU services my area?

Take a peek at the bulleted list above to determine which TDU services the area where you live.

How can I save on TDU charges?

First, you can shop around for a different REP, one with lower TDU charges. Second, you can reduce the number of kilowatt hours of energy that you consume every month, which will also lower your TDU charges.

Categories: Electricity 101
Tagged: rhythm-marketing, energy, tdu, puct, electricity
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