Your electricity provider doesn’t want you to understand your bill. If you did, you’d realize how much they’re hiding.
That “10.5 cent rate” you signed up for? It’s actually costing you 14 cents after all the fees they didn’t mention upfront. That confusing pile of line items—TDU charges, delivery fees, base charges, regulatory assessments—isn’t complicated by accident. It’s complicated by design.
The more confusing the bill, the harder it is to comparison shop. The harder it is to comparison shop, the easier it is to overcharge you. Let’s decode exactly what you’re paying for.
The Two Companies on Your Bill
Here’s something that confuses a lot of people: two separate companies are involved in getting electricity to your home.
Your Retail Electric Provider (REP): This is who you signed up with—TXU, Reliant, Rhythm, whoever. They sell you the electricity and handle billing.
Your Transmission and Distribution Utility (TDU): This is the company that owns the power lines. In Houston, that’s CenterPoint. In Dallas, it’s Oncor. In other areas, it might be AEP Texas or TNMP.
You don’t choose your TDU—they’re assigned by your address. But their charges show up on your bill.
Breaking Down the Charges
Energy Charge
This is the actual electricity you used, measured in kilowatt-hours (kWh). If your rate is 12 cents per kWh and you used 1,000 kWh, that’s $120.
Simple, right? Well, sort of. Some plans have tiered rates that change based on usage. Use 500 kWh, you pay one rate. Use 2,000 kWh, you might pay a different rate. This is where the advertised rate can get misleading.
Pro tip: The Electricity Facts Label (EFL) shows your actual rate at 500, 1,000, and 2,000 kWh usage levels. That’s the real number to compare.
TDU Delivery Charges
These cover the cost of maintaining the power lines and delivering electricity to your home. They typically include:
Base charge: A flat monthly fee, usually $3-10, just for being connected to the grid.
Metering charge: Pays for your electric meter and the system that reads it.
Per-kWh delivery charge: A small amount (often 3-5 cents) for each kWh delivered through the wires.
Here’s the thing: TDU charges are the same regardless of which REP you choose. If Oncor charges $4.39 for a base fee, you’re paying that whether you’re with TXU, Reliant, or a budget provider. For a deeper dive into delivery fees, check out our guide on understanding TDU charges.
Transmission Charges
Separate from local delivery, transmission charges cover the cost of moving electricity across the state’s high-voltage power lines. Think of delivery as the local roads and transmission as the highways.
These are usually bundled into your rate or shown as a small per-kWh charge.
Taxes and Fees
State taxes: Texas doesn’t have a state income tax, but they do tax electricity. Expect around 6-8% depending on your city and county.
Franchise fees: Many cities charge REPs a fee for doing business there. This gets passed on to you, usually as a percentage of your bill.
System benefit fund: A small charge that funds assistance programs for low-income Texans and helps with energy efficiency programs.
The Hidden Charges to Watch For
Minimum Usage Fees
Some plans charge extra if you don’t use enough electricity. Live in a small apartment using 400 kWh a month? You might get hit with a fee that pushes your effective rate way up.
Check the EFL for “minimum usage fee” or “base charge” language. Rhythm Energy and several other low-usage-friendly providers don’t have these, which makes them better for apartment dwellers and light users.
Usage Credits (and Their Catch)
Some plans advertise a “bill credit” if you hit certain usage levels—use exactly 1,000 kWh and get $50 off. Sounds great until you realize the base rate is higher to compensate, and you only benefit if you hit that exact range.
Late Fees
Pay late and you’ll get hit with fees—usually a flat amount plus a percentage of your balance. These add up fast. Set up autopay and forget about it.
Reading Between the Lines
The “Average Price You Paid” Line
Most bills show your average price per kWh after all fees and charges. This is the real number. Compare it to what you were promised when you signed up.
If your advertised rate was 10 cents and your average price is 14 cents, something’s off. Either you’re not using the “optimal” amount for your plan, or there were fees you didn’t account for.
Usage Comparison
Many bills show your usage compared to the same month last year or the previous month. Significant jumps could mean:
- Seasonal changes (summer AC, winter heating)
- A malfunctioning appliance
- Meter reading errors (rare, but they happen)
- Someone’s mining cryptocurrency in your garage
Rate Expiration Warnings
If your contract is ending, your bill should warn you. This is when providers switch you to a much higher “month-to-month” rate. Don’t ignore these warnings—start shopping for a new plan a month before your contract ends. Check out our guide on the best time to switch electricity providers.
What to Do With This Information
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Calculate your real rate: Total bill divided by kWh used. That’s what you’re actually paying per kWh.
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Compare to your EFL: Are you paying what you expected? If not, figure out why.
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Note your usage patterns: Do you use more or less than 1,000 kWh? This affects which plans work best for you.
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Check contract end dates: Mark them in your calendar. Never let a contract expire without shopping around.
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Compare providers: Once you understand your bill, you can compare apples to apples. Check out our provider comparisons to see how different companies stack up.
The Bottom Line
Your electricity bill isn’t complicated because the physics are hard—it’s complicated because that serves the companies selling you power. Once you understand the structure, you can shop smarter and catch problems before they cost you money.
Still confused? That’s fair. The Texas electricity market has been deregulated since 2002, and they’ve had two decades to make it convoluted. But now you know what you’re looking at, and that’s the first step to not getting ripped off.