TDU delivery charges are not a retailer markup. They are regulated fees set by the Public Utility Commission of Texas, and no amount of provider-switching will make them disappear. That distinction matters enormously when a shopper is trying to figure out why their electricity bill is higher than expected, or why two plans with identical advertised energy rates produce meaningfully different monthly totals.
This article explains what TDU delivery charges are, which utilities collect them and at what rates, why those rates have been rising, and how to account for them accurately when comparing retail electricity plans in the deregulated Texas market.
What a TDU Actually Is
Texas deregulated its retail electricity market in 2002 under Senate Bill 7. Deregulation split the old vertically integrated utilities into two distinct roles. Retail electricity providers (REPs) compete to sell you electrons. Transmission and distribution utilities (TDUs) own and operate the physical infrastructure that delivers those electrons to your meter.
Texas has five major TDU service territories that cover the deregulated ERCOT grid:
- Oncor Electric Delivery (Dallas-Fort Worth and surrounding areas)
- AEP Texas Central (Corpus Christi, Laredo, Rio Grande Valley)
- AEP Texas North (Abilene, Amarillo, Lubbock fringe)
- CenterPoint Energy (Houston metro)
- Texas-New Mexico Power (TNMP) (smaller markets including parts of the Panhandle and areas west of Houston)
Your TDU is determined entirely by your physical address. You cannot switch TDUs the way you switch REPs. When you see a charge on your bill labeled “TDU delivery charge,” “distribution charge,” or “transmission charge,” that money flows to whichever of those five entities serves your zip code. Your REP is simply a pass-through billing agent for those fees.
The Two Components: Fixed and Variable
TDU delivery charges generally break into two parts, and understanding both is necessary for accurate plan comparison.
The customer charge is a flat monthly fee regardless of how much electricity you use. Think of it as a connection fee. Oncor currently charges residential customers a customer charge of approximately $3.42 per month (based on PUCT-approved tariff schedules; verify current rates at oncor.com or the PUCT rate database, as these change with each rate case). CenterPoint’s equivalent charge runs approximately $4.39 per month. TNMP runs notably higher at approximately $7.85 per month.
The energy delivery charge is a per-kilowatt-hour (kWh) rate applied to every unit of electricity you consume. This is where significant variation appears across territories. Representative current figures from PUCT tariff filings:
- Oncor: approximately 3.8 cents per kWh
- CenterPoint: approximately 4.1 cents per kWh
- AEP Texas Central: approximately 4.5 cents per kWh
- AEP Texas North: approximately 4.6 cents per kWh
- TNMP: approximately 5.0 cents per kWh
Note: PUCT only publishes quarterly tariff snapshots, and TDUs file rate cases on irregular schedules. The figures above reflect the most recent publicly available tariff data at the time of publication. Readers should cross-check at the PUCT rate database (puc.texas.gov) before using these numbers in a purchase decision.
To see what this means in real dollars, apply it to actual usage. A Houston household using 1,500 kWh in August (a realistic summer month) faces CenterPoint delivery charges of approximately: $4.39 (customer charge) + (1,500 x $0.041) = $4.39 + $61.50 = $65.89. That sum appears on the bill before the REP adds a single cent of its own margin. A Dallas household at the same usage under Oncor pays approximately $3.42 + (1,500 x $0.038) = $3.42 + $57.00 = $60.42. The $5.47 monthly gap is purely a function of territory, not provider choice.
Why TDU Charges Have Been Climbing
Residential customers across every Texas TDU territory have seen delivery charges increase meaningfully over the past five years. There are several identifiable drivers.
Storm hardening investment. Winter Storm Uri (February 2021) exposed serious vulnerabilities in Texas grid infrastructure. Following Uri and subsequent legislative mandates under Senate Bill 3 (2021), TDUs filed rate cases requesting cost recovery for weatherization upgrades, buried power lines, and automated switching equipment. Oncor’s 2021 rate case settled with a revenue increase of approximately $105 million annually. CenterPoint’s infrastructure improvement plan has been a recurring source of PUCT scrutiny. These capital investments flow directly into delivery rates.
Aging infrastructure replacement. The TDU wires and substations serving most Texas metros were built in the 1960s and 1970s. Replacement cycles are now overlapping with storm hardening requirements, compressing capital expenditure into a shorter window than utilities would prefer.
Load growth. ERCOT has consistently revised its peak demand forecasts upward, driven by cryptocurrency mining, data center expansion, electric vehicle penetration, and industrial growth. Higher peak demand requires additional transmission capacity. Capacity investments require cost recovery through rate cases.
Rate case timing. TDUs earn a regulated return on their invested capital. When they invest more capital, they file rate cases to recover it. The PUCT approves or negotiates a settlement. Approved revenue requirements are then spread across the customer base as updated tariff rates. This is a predictable, recurring cycle, not a one-time event.
Why “Why Are TDU Charges So High” Is the Wrong Question
The question worth asking is not whether TDU charges are high in absolute terms, but whether they are high relative to what the infrastructure requires. The PUCT’s Office of Public Interest Counsel (OPIC) and the State of Texas Office of the Attorney General both participate in contested rate cases on behalf of consumers. Rate cases are public proceedings. Intervening parties can challenge TDU cost filings line by line.
The practical point for a shopper is this: TDU charges are regulated, transparent, and the same for every REP operating in a given territory. A provider cannot offer you a lower TDU charge. A provider that buries the TDU pass-through inside an opaque bundled rate is not giving you a deal. It is making comparison harder.
The Electricity Facts Label (EFL), which every PUCT-licensed REP must publish for each plan, is required to disclose the average price per kWh at three usage tiers: 500 kWh, 1,000 kWh, and 2,000 kWh. Those prices include the TDU pass-through. When comparing EFLs across REPs in the same territory, the TDU component is constant. The variation between plans is entirely REP margin, energy cost, and any plan-level credits.
This is where many shoppers make an error. They compare an Oncor-territory plan from one REP against a CenterPoint-territory plan from a different REP and conclude one provider is cheaper. The TDU difference alone accounts for much of that gap. Always compare plans within the same TDU territory.
How TDU Charges Appear on Your Bill
TDU charge labeling is not standardized across REPs. Some REPs itemize TDU delivery charges as a distinct line. Others roll them into a single “electricity charge” line and disclose the breakdown only in the bill footnotes or the EFL. Neither practice is prohibited, but the bundled approach makes it harder to verify that the pass-through matches the tariff rate.
A straightforward verification process:
- Identify your TDU from your bill or by entering your zip code at powertochoose.org.
- Pull the current residential tariff for that TDU from puc.texas.gov (navigate to Utility Rate Database, filter by company name and customer class).
- Multiply the tariff’s energy delivery rate by your kWh usage for the month and add the customer charge.
- Compare that calculated figure to the TDU line item on your bill.
If your REP bundles TDU charges rather than itemizing them, request an itemized breakdown. REPs are required to provide this upon request under PUCT substantive rules. A material discrepancy between the tariff calculation and the billed amount is worth pursuing with the REP’s billing department and, if unresolved, filing a complaint with the PUCT (complaint line: 1-888-782-8477).
Practical Implications for Plan Comparison
When LightCompanies profiles a retail electricity plan, TDU pass-through accuracy is one component of the billing reliability score. A REP that consistently misquotes or misapplies TDU charges ranks below one that applies them correctly, even if the energy rate is otherwise competitive.
For shoppers doing their own comparison work, three practical adjustments:
Adjust EFL comparisons for TDU territory. If you are moving from a CenterPoint address to an Oncor address, your bill will decline slightly from TDU rate differences alone. Do not credit your new REP for that savings.
Normalize for usage tier. TDU charges are linear (per kWh), so a 500 kWh household pays proportionally less in variable delivery charges than a 2,000 kWh household. The EFL’s three-tier disclosure lets you find the closest match to your actual usage. At 1,000 kWh in an Oncor territory, TDU charges run approximately $41.42. At 2,000 kWh, approximately $79.42. That is a $38 swing. Plan economics can reverse when you move between tiers if a plan carries a bill credit tied to usage thresholds.
Account for TDU charges in the total effective rate. Divide your total monthly bill by your kWh usage to get the all-in effective rate. Compare that across plans, not the advertised energy rate alone. A plan advertising 9.5 cents per kWh in a CenterPoint territory carries an effective rate closer to 13.5 to 14 cents per kWh at 1,000 kWh once TDU charges are included. A competing plan at 10.2 cents per kWh in the same territory has a higher advertised rate but nearly identical all-in cost. Margin differences between REPs at that usage level are often smaller than the TDU component suggests.
Summary
TDU delivery charges are the fixed infrastructure cost embedded in every Texas electricity bill. They are territory-specific, PUCT-regulated, and uniform across all REPs operating in a given area. The five major TDUs serving the deregulated Texas market charge meaningfully different rates, with TNMP running higher than Oncor on both the customer charge and the per-kWh delivery rate. Charges have increased across all territories in recent years, primarily reflecting post-Uri storm hardening investment and ongoing infrastructure replacement cycles.
For shoppers, the correct use of this information is to strip TDU charges out of the comparison variable. The TDU component is fixed. The REP component is the decision variable. Any analysis that conflates the two produces a misleading picture of which provider is actually offering better value.