As of September 1st, 2023, the Public Utility Commission of Texas (PUCT) increased the transmission and distribution charges Texans pay for their electricity service. The increase varies depending on your utility company or TDU like Oncor and CenterPoint.
Your electricity provider has no control over these rates or increases. The PUCT uses these increases to pay for improvements to the electricity grid.
Remember the 2021 Winter Storm Uri, when everyone was shouting about the condition of the grid? This increase is the financial repercussion of the improvements meant to prevent such an event from happening again.
What Are TDU delivery charges?
Before delving into the reasons for the rise, it's essential to understand what TDU charges are. Every electricity bill has two primary components:
Energy Charge: This is the fee you pay for the actual electricity you consume, which goes to the energy provider. You can shop for this rate.
TDU Charges: Fees that cover the cost of transmitting (moving the electricity through large regions using high-voltage lines) and delivering the electricity to your via local poles and wires. The local Transmission and Delivery Utility levies these charges, and they're passed directly to consumers without any markup from the retail electric provider. You cannot shop for this rate.
The Retail Electricity Provider (REP or Energy Supplier) is responsible for the energy charge. Some well-known examples include TXU Energy, Reliant Energy, and Green Mountain Energy.
The Transmission and Distribution Utility (TDU) is responsible for the TDU Charges. The TDU company is in charge of the electricity grid in your area. They charge you for delivering energy to your home or business. TDUs are also known as Transmission and Distribution Service Providers (TDSP). You probably know them as your utility company. For example, Oncor or CenterPoint.
What Does the TDU Increase Mean for Me?
Higher Monthly Bills: The most direct impact is an increase in the monthly electricity bill. Even if a consumer's energy consumption remains constant, their bill might rise due to higher TDU charges.
Choice of Retail Electric Provider (REP): Some consumers might feel compelled to switch their REP to find a better energy rate, offsetting the rising TDU charges. Make sure you do the math to make sure you aren't signing up for a plan with a higher energy charge or offsetting your savings with an early termination fee.
Demand for Energy Efficiency: With higher bills, there's a greater incentive for consumers to invest in energy-efficient appliances, home improvements, or even solar panels to reduce their energy consumption.
Electricity Bill Increases After The TDU Increase
*Based on example electricity supply rate of $0.10 per kilowatt hour (kWh)
Why Are Electricity Delivery Charges Increasing?
Several factors contribute to the escalating TDU charges in Texas:
Infrastructure Upgrades: As the state's population grows and the demand for electricity increases, there's a need to upgrade and expand the electricity infrastructure. Building new transmission lines, substations, and other facilities can be expensive.
Maintenance Costs: Texas faces extreme weather conditions, from scorching summers to unexpected winter storms, like the one witnessed in February 2021. Such conditions wear and tear the infrastructure, necessitating regular maintenance and, sometimes, unexpected repairs.
Integration of Renewable Energy: Texas has seen a significant rise in renewable energy sources, especially wind and solar. Integrating these sources into the grid can be costly, as they often require new transmission lines or technologies to ensure consistent delivery.
Regulatory Compliance: As environmental and safety standards evolve, TDUs need to invest in updates to ensure compliance, which can drive up costs.
Current TDU Charges for Each Utility in Texas
Starting September 1st there is an updated rate structure for all utilities (TDUs) in Texas. There are two types of TDU passthrough charges.
Variable Delivery Charges: This is a fee added on to each kilowatt hour (kWh) of electricity you use.
Flat Delivery Charges: This is a fixed fee that everyone will see on their bill regardless of how much electricity they use.
Below is a comparison of the TDU charges you will see on your bill in the future.
Variable TDU Delivery Charges
These charges are applied to each kilowatt hour of electricity you use.
Current Delivery Charge (Sep 2023)
Previous Delivery Charge (Mar - Aug 2023)
AEP Texas Central
AEP Texas North
Fixed TDU Delivery Charges
This is a one time fee applied to your monthly electricity bill.
Current Delivery Charge (September 2023)
Previous Delivery Charge (March - August 2023)
AEP Texas Central
AEP Texas North
Written by Thad Warren
Thad is a native Texan who has worked in the energy industry for just over 5 years