Last Updated on November 6, 2023 by Mary Pressler

Understanding TDU Charges in Texas 

If you compare electricity rates in Texas, you will notice differences from city to city. Texas has a deregulated power sector, and you can choose your electricity provider – the company who supplies the kilowatt-hours. However, that energy must be delivered from power plants to consumers, and specific companies are in charge of the power grid in each region.

  • These companies are called transmission and distribution utilities (TDU), and they charge for delivery of electricity.
  • Even if you find identical electricity plans in different parts of Texas, the final kWh price may change because of TDU charges.

The main TDUs in Texas are CenterPoint Energy, Oncor Electric Delivery, American Electric Power (AEP) Central, AEP North, and Texas-New Mexico Power (TNMP). TDU delivery charges are reviewed twice per year by the Public Utility Commission of Texas, on March 1 and September 1.

Why Are Electricity Prices Higher in Some Parts of Texas?

How Much Do TDUs Charge to Deliver Electricity?

The following table summarizes the latest residential TDU charges published by the PUCT (September 1, 2023).

Utility Company Fixed Charge ($) TDU Charges (Cents/kWh)
Oncor $4.23 5.0339 cents / kWh
CenterPoint $4.39 5.4694 cents / kWh
AEP Central $4.79 5.5226 cents / kWh
AEP North $4.79 5.1265 cents / kWh
TNMP $7.85 6.0465 cents / kWh

Assume you are comparing power bills for five homes with a consumption of 1,000 kWh per month and a fixed rate of 8 cents/kWh. Even at the same tariff, final kWh prices will vary if each home is in a different utility territory:

TDU Service Territory Cost of 1,000 kWh at 8 cents / kWh TDU charges for 1,000 kWh Tocal Cost of 1,000 kWh Average kWh Price
Oncor $80 $54.57 $134.57 13.46 cents
CenterPoint $80 $59.08 $139.08 13.91 cents
AEP Central $80 $60.02 $140.02 14.00 cents
AEP North $80 $56.06 $136.06 13.61 cents
TNMP $80 $68.32 $148.32 14.83 cents

In this example, the TNMP customer pays 10% more than the Oncor customer due to higher TDU fees, even when all homes have a fixed rate of 8 cents/kWh.

The availability of electricity plans in your city can also affect kWh prices. However, when you compare identical electricity plans in different regions of Texas, the power bill differences can be explained by TDU charges.

You can choose freely among the Retail Electricity Providers (REP) where you live, but you cannot switch your TDU unless you change your residence. For example, if you move from Houston to Dallas, your utility company will change from CenterPoint to Oncor.

The Public Utilities Commission of Texas has compared average electricity prices for residential users in the five TDU service territories, based on 12-month plans. Their comparison includes seven providers: Ambit Energy, Direct Energy, Discount Power, Green Mountain Energy, Reliant Energy, TXU Energy and Veteran Energy.

TDU Service Territory Avg. kWh price at 500 kWh Avg. kWh price at 1000 kWh Avg. kWh price at 2000 kWh
Oncor 14.20 cents 13.36 cents 12.96 cents
CenterPoint 14.96 cents 14.11 cents 13.70 cents
AEP Central 14.56 cents 13.86 cents 13.51 cents
AEP North 15.32 cents 14.62 cents 14.26 cents
TNMP 16.14 cents 14.95 cents 13.97 cents

The effect of TDU charges can be observed here: Oncor has lowest monthly fees as of late 2023, while TNMP has the highest fees. For a home using 1,000 kWh per month, the average monthly bill in the TNMP territory is 12% higher.

In Conclusion

Retail electricity providers can compete with each other because they use the same power lines, poles and transformers. If you switch your electricity plan, you will continue using the same power meter and grid connection. However, competition between TDUs would require a separate grid for each company, which would be impractical and a waste of money – imagine having five times more power lines and utility poles in your city!

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