Your monthly electric bill has two major components.  The first one is the energy charge that is assessed by your retail electric provider.  This charge is assessed in accordance with the rate and terms set forth in the plan documents provided by the energy supplier.

Delivery Charges

The second component is the Transmission and Distribution Utility (TDU) delivery charge.  Sometimes called the “wires and poles” charge, this charge is assessed by the TDU serving your area in accordance with their tariffs as approved by the Public Utility Commission of Texas (PUCT).  In Texas, it is your energy supplier’s responsibility to bill and collect the delivery charges on behalf of the TDU.  The retail electric provider does not have any control over the charges and they are assessed by the TDU without regard to which provider you choose.

Residential retail energy suppliers may approach collecting these fees in different ways.  Some providers will incorporate or bundle the delivery charge with their energy charge.  The retail electric provider will typically reserve the right to modify your rate if the TDU tariffs change during the term of your contract.  An increasingly popular approach is to pass through the delivery charges as separate line items on the electric bill.  This billing method is the most transparent and makes it easy to reflect any changes in the TDU delivery tariffs.

Delivery Charge Components

Residential TDU delivery charges are divided into base (per month) charges and usage (per kWh) charges.  Base charges apply regardless of how much electricity you use in your home.  The base charges currently assessed to retail electric customers in Texas include the Customer Charge, Metering Charge and Advanced Metering Cost Recovery Factor.  The Customer Charge reflects the costs for the TDU to transmit billing data to the retail provider and track remittance.  The Metering Charge is the TDU’s cost of metering the customer.  The Advanced Metering Cost Recovery Factor is associated with the costs of smart meters.  Residential electric customers in the Centerpoint Energy (Houston) service area also have a small charge assessed for their TDU’s energy efficiency program.

Variations across Texas

The number of line items in the usage (per kWh) charges is extensive and varies by TDU due to the unique cost recovery elements in their PUCT rate cases.  The primary drivers are the costs of operating and maintaining the transmission and distribution systems, making changes to the transmission system, decommissioning nuclear-fueled power plants, and recovering costs associated with transitioning assets to the deregulated market.  Energy efficiency program costs are also recovered based on electricity usage.

The TDU delivery charges for the various service areas are shown below (tariffs in effect as of October 2014).

ClassificationOncorCenterpoint EnergyAEP Texas CentralAEP Texas NorthTNMPSharyland Utilities
Fixed (per Month) Charges$5.25$8.7178$9.00$10.53$8.65$10.00
Usage (per kWh) Charges$0.033156$0.039894$0.041497$0.033098$0.034684$0.066404

 

Published by Charlie Hewitt

Charlie Hewitt has more than 25 years of in-depth energy experience having served in executive and managerial roles at some of the largest retail energy providers in North America.His expertise covers a wide range of retail energy disciplines including pricing, contracting, risk management, and credit. He holds an MBA from UT Arlington, MA and BS degrees in geology from UT Austin, and was a TXU environmental research fellow.

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