That advertised “10-cent electricity rate”? It’s a lie by omission.
You signed up for 10 cents. Your actual bill shows you’re paying closer to 15 cents per kWh. The difference? TDU charges—fees that appear on every Texas electricity bill, that you can’t avoid, and that most providers conveniently leave out when advertising their “low rates.”
This isn’t illegal. It’s just how the industry hides the true cost. Here’s what TDU charges actually cover, why you’re stuck paying them, and how to factor them in when comparing plans.
The Delivery Fee Nobody Mentions
TDU stands for Transmission and Distribution Utility. You might also hear them called TDSPs (Transmission and Distribution Service Providers). Same thing, different acronym.
Here’s the truth: TDUs are the companies that own the power lines, substations, transformers, and electric meters. They’re responsible for getting electricity from power plants to your house. Your provider doesn’t own any of this infrastructure—they just buy electricity wholesale and resell it to you.
Think of it like this: Your Retail Electric Provider (REP) is selling you water. The TDU owns all the pipes. You’re paying both—but most ads only show you the water price.
Your REP—TXU, Reliant, Rhythm, whoever—sells you electricity and handles billing. But they don’t own any infrastructure. When you “switch providers,” you’re switching who you pay for the electricity itself. The physical delivery system stays exactly the same.
The Four Major TDUs in Texas
Texas has several TDUs, but four dominate the deregulated market:
Oncor Electric Delivery
Service area: Dallas-Fort Worth, Central Texas, West Texas
Major cities: Dallas, Fort Worth, Arlington, Plano, Irving, Garland, Grand Prairie, Denton, Waco, Midland, Odessa
Customer count: About 3.7 million meters
Oncor is the largest TDU in Texas, serving roughly 35% of the deregulated market. If you live in the Dallas-Fort Worth metroplex, you’re almost certainly an Oncor customer.
CenterPoint Energy Houston Electric
Service area: Greater Houston, Galveston, coastal Texas
Major cities: Houston, Pasadena, Pearland, Sugar Land, Baytown, Missouri City, The Woodlands, League City, Galveston, Conroe, Katy
Customer count: About 2.6 million meters
CenterPoint serves the Houston metro area, making it the second-largest TDU in Texas. About 25% of deregulated Texas customers are in CenterPoint territory.
AEP Texas (Central and North)
Service area: South Texas, West Texas, parts of the Permian Basin
Major cities: Corpus Christi, Victoria, Abilene, San Angelo, Wichita Falls
Customer count: About 450,000 meters combined
AEP Texas operates two divisions—Central (South Texas) and North (West Texas). They serve a large geographic area with lower population density than the big metro TDUs.
Texas-New Mexico Power (TNMP)
Service area: Scattered territories across Texas
Major cities: Lewisville, Flower Mound, Highland Village, Temple, Belton, Marble Falls
Customer count: About 250,000 meters
TNMP is unique because their service territory is spread across different parts of the state rather than one contiguous region. You might be in TNMP territory even if your neighbors are served by Oncor.
Lubbock Power & Light (LP&L)
Lubbock joined the deregulated market in 2023, giving West Texas residents in the Lubbock area access to retail choice for the first time.
What Do TDU Charges Actually Cover?
When you see “TDU delivery charges” or “transmission charges” on your bill, you’re paying for real infrastructure and services. Here’s what your money covers:
Physical Infrastructure
Power lines: Thousands of miles of transmission and distribution lines that carry electricity from power plants to homes. This includes both the big high-voltage transmission lines you see along highways and the local distribution lines in your neighborhood.
Substations and transformers: The equipment that steps voltage up and down as electricity moves through the system. That green box in your yard? That’s a transformer owned by your TDU.
Electric meters: The device that measures your usage. In most Texas areas, these are now smart meters that report usage automatically.
Maintenance and Operations
Line crews: The workers who maintain lines, clear vegetation, and restore power after storms.
Grid monitoring: 24/7 operations centers that monitor the system and coordinate with ERCOT (the Texas grid operator).
Vegetation management: Trimming trees near power lines to prevent outages.
Pole and wire replacement: Aging infrastructure gets replaced on a regular schedule.
Emergency Response
Storm restoration: When a hurricane, ice storm, or tornado knocks out power, TDU crews restore service. This includes bringing in contractors and mutual aid crews from other utilities during major events.
Outage response: Even on a normal day, TDUs respond to outages from car accidents, equipment failures, and other incidents.
Metering Services
Meter reading: Collecting usage data (mostly automated now with smart meters).
Meter maintenance and replacement: Keeping meters accurate and functional.
Data transmission: Sending your usage data to your retail provider for billing.
The Breakdown of TDU Charges
Your TDU charges typically appear as several line items:
Base Charge (Monthly Charge)
A flat fee just for being connected to the grid. This covers fixed costs that don’t vary with your usage—things like billing systems, customer service, and maintaining your meter connection.
Current base charges (as of late 2025):
- Oncor: $4.23/month
- CenterPoint: $4.90/month
- AEP Texas Central: $3.24/month
- AEP Texas North: $3.24/month
- TNMP: $7.85/month
- LP&L: No base charge (built into per-kWh rate)
Per-kWh Delivery Charge
A charge for each kilowatt-hour of electricity delivered through the wires. This scales with your usage.
Current per-kWh delivery rates:
- Oncor: 5.60 cents/kWh
- CenterPoint: 6.00 cents/kWh
- AEP Texas Central: 6.06 cents/kWh
- AEP Texas North: 5.92 cents/kWh
- TNMP: 7.21 cents/kWh
- LP&L: 6.31 cents/kWh
What This Means in Real Dollars
Let’s do the math for a customer using 1,000 kWh per month:
Oncor customer:
- Base charge: $4.23
- Delivery (1,000 kWh x 5.60 cents): $56.00
- Total TDU charges: $60.23
CenterPoint customer:
- Base charge: $4.90
- Delivery (1,000 kWh x 6.00 cents): $60.00
- Total TDU charges: $64.90
TNMP customer:
- Base charge: $7.85
- Delivery (1,000 kWh x 7.21 cents): $72.10
- Total TDU charges: $79.95
That’s why the same “10-cent rate” from the same provider can cost different amounts depending on where you live. A TNMP customer pays about $20 more per month in delivery charges than an Oncor customer at the same usage level.
Why You Can’t Avoid TDU Charges
Here’s the part that frustrates a lot of people: TDU charges are the same no matter which retail provider you choose.
If you’re in Oncor territory, you pay Oncor’s delivery rates whether you’re with TXU, Reliant, Rhythm, or any other provider. Switching REPs doesn’t affect your TDU charges at all. See our guide on how to switch electricity providers for what switching actually changes.
Why? Because TDUs are regulated monopolies. It doesn’t make economic sense to have multiple companies stringing power lines down the same street. So each area has one TDU, and they charge everyone the same regulated rates.
The Public Utility Commission of Texas (PUCT) approves TDU rates through a formal process. TDUs have to justify their costs, and rate changes require regulatory approval.
What About “Free Delivery” Plans?
You might see plans advertised as “free delivery” or “no TDU charges.” Read the fine print. These plans aren’t actually waiving TDU charges—they’re building them into the advertised rate.
It’s like a store advertising “free shipping” but charging higher product prices to cover shipping costs. The total might be competitive, but there’s no magic trick making TDU charges disappear.
Always compare the all-in price at your usage level. Whether TDU charges are listed separately or baked into the rate, you’re paying them either way.
How TDU Charges Show Up on Your Bill
Depending on your retail provider, TDU charges appear in different ways:
Itemized separately: Some REPs break out TDU charges as their own line items. You’ll see “TDU Delivery Charges” or “Oncor Delivery” with the base charge and per-kWh charges listed.
Bundled with energy: Other REPs combine everything into one “energy charge” line. The TDU costs are still there—just not shown separately.
Pass-through charges: Many REPs pass TDU charges through at cost, adding them to whatever energy rate they charge. Others build TDU costs into their overall pricing.
For comparison shopping, what matters is the total. Check the Electricity Facts Label (EFL) for the “average price per kWh” at 500, 1,000, and 2,000 kWh. That number includes TDU charges and gives you the real cost.
Why TDU Charges Vary by Area
If TDUs are all regulated monopolies, why do their rates differ so much?
Infrastructure Age and Condition
Older systems require more maintenance and replacement. TDUs serving areas with aging infrastructure may have higher costs to maintain reliability.
Geographic Challenges
Serving spread-out rural areas costs more per customer than dense urban areas. Running 50 miles of line to serve 100 customers is more expensive per customer than running 5 miles of line to serve 10,000 customers.
Weather Exposure
The Gulf Coast gets hurricanes. The Panhandle gets ice storms. Different weather patterns mean different costs for storm hardening and restoration.
Customer Density
More customers per mile of line means costs spread across more bills. TNMP’s scattered service territory means lower customer density and higher per-customer costs.
Capital Investments
Major grid upgrades—new substations, line replacements, smart meter deployments—get recovered through rates over time. TDUs in the middle of big capital projects may have temporarily higher rates.
TDU Charges vs. Transmission Charges
You might see both “delivery charges” and “transmission charges” on your bill. What’s the difference?
Distribution (local delivery): The final leg of electricity delivery—from neighborhood substations to your home. This is the local grid of lines and transformers in your area.
Transmission (long-haul): Moving electricity across the state on high-voltage lines from power plants to local substations. Think of transmission as the interstate highway system for electricity.
Both show up on your bill, but they’re managed differently. Transmission charges are set by ERCOT and the PUCT based on statewide transmission costs. Distribution charges are set by each TDU based on their local costs.
In practice, most people don’t need to worry about the distinction. Both are unavoidable costs of getting electricity to your home, and both are the same regardless of which retail provider you choose.
What Happens During Outages
When your power goes out, you might wonder who to call—your REP or your TDU.
Call your TDU for outages, downed lines, and power restoration issues. They own the infrastructure and dispatch the crews.
TDU outage numbers:
- Oncor: 1-888-313-4747
- CenterPoint: 1-800-752-8036
- AEP Texas: 1-866-223-8508
- TNMP: 1-888-866-7456
- LP&L: 1-806-775-2509
Call your REP for billing questions, plan changes, and account issues. They handle the business side; the TDU handles the wires.
During major storm events, TDU websites and social media accounts provide restoration updates. ERCOT’s website shows system-wide conditions but not local outage details.
The Bottom Line on TDU Charges
TDU charges are a necessary part of having electricity. Someone has to own and maintain the grid, and that costs money. In a deregulated market, those costs are passed through to customers as delivery charges.
Key takeaways:
-
TDU charges are unavoidable: Switching providers doesn’t change them. They’re determined by your address.
-
They vary by area: TNMP customers pay more than Oncor customers for the same electricity delivery. That’s just how the territories work.
-
They’re a big part of your bill: At typical usage levels, TDU charges can be 40-50% of your total bill. Don’t ignore them when comparing plans.
-
Compare all-in prices: Whether TDU charges are listed separately or bundled into the rate, what matters is total cost at your usage level. Start with our guide to the cheapest electricity providers to see who offers the best all-in rates.
-
They’re regulated: TDU rates require PUCT approval. They can’t just raise prices arbitrarily.
Understanding TDU charges won’t make them go away, but it helps you make sense of your bill and compare plans accurately. The next time you see “delivery charges” on your statement, you’ll know exactly what you’re paying for—and why you can’t shop your way out of it.