Compare Oncor Utility Rates
TDU and City |
Base Customer Charge |
Per kWh Rate |
Oncor (Dallas/Ft Worth) |
$3.42 |
$0.038447 cents per kWh |
Centerpoint (Houston) |
$5.47 |
$0.024928 cents per kWh |
AEP (Abilene) |
$8.18 |
$0.024837 cents per kWh |
TNMP (Fort Stockton) |
$7.85 |
$0.025670 cents per kWh |
Oncor Transmission/Distribution Rates
Electricity customers in Texas pay separate charges for their electricity supply and the electricity's transmission and distribution. Transmission and distribution charges on your bill cover the cost of maintaining the poles and wires of the local grid to get your electricity to your home or business. Basically, TDSP or TDU charges are really transmission and distribution charges from your local utility.
On your bill, TDSP or TDU charges reflect two main charges:
- A fixed-rate customer charge. This charge is made up of the cost of maintaining an account with Oncor and a metering charge measuring your usage.
- Transmission/distribution charges per kWh used during the month.
But while TDSP or TDU charges are usually somewhat explained on the monthly bill, many customers are often confused because providers "TDSP" and "TDU" sometimes use these terms interchangeably.
What do TDSP and TDU Mean?
TDSPs include:
- Bulk transmission companies (high tension lines that move hundreds of megawatts across the state)
- Rural Electric Cooperatives (RECs)
- Municipal-Owned Utilities (MOUs)
- Investor Owned Utilities (IOUs) that operate a Transmission and Distribution Utility (TDU) in Texas.
The problem is that when deregulation started, "TDSP" and "TDU" were bandied about interchangeably by regulators, legislators, and providers to mean the same thing; local distribution charges. But there is actually a difference.
"TDSP" or "Transmission/Distribution Service Provider" is mainly used by ERCOT. ERCOT runs the electricity markets plus takes care of the day to day BULK transmission/distribution operations on the Texas grid (those tall HIGH VOLTAGE, high tension power lines.) ERCOT works with transmission/distribution service providers (the companies that own and operate these big power lines) to send megawatts of electricity where it needs to go at the right time. According to ERCOT, "TDSPs own/operate, for compensation, the equipment/facilities to transmit and/or distribute electricity in Texas."
"TDU" or "Transmission/Distribution Utility" is mainly used by the PUC of Texas. The PUCT regulates and approves transmission rates set by the different utilities such as MOUs and IOUs that deliver electricity locally to homes and businesses. According to PUCT, a TDU is the local utility company (which includes the monopoly IOU companies) that handles the local transmission and distribution to local customers within its service territory. In short, TDUs handle the local distribution to home and business users, track usage, and bill everyone equally to help maintain the equipment.
TDUs include: :
- Oncor
- Centerpoint
- AEP (North and Central)
- TNMP
- Sharyland Utilities
One way to think of this whole transmission/distribution process is that once the electricity arrives from the TDSP (bulk supply) at the local city/town switching station it then becomes the TDU's job to deliver the electricity to homes and businesses at the PUC approved tariff amount.
Of course, this seemingly clear distinction is clouded by the fact that all the major TDU companies that distribute power on local grids are also TDSPs. This is because these companies are all involved in planning, building, and operating the major transmission lines reaching across the state. So, it's not surprising that twenty years ago, TDSPs and TDUs became interchangeable terms among folks who weren't being terribly picky about making a big distinction between the two roles. Even though "TDU" is a PUCT term, in a number of PUCT reports about local transmission/distribution companies dating before 2006, oddly enough it's "TDSP" that is used and there's no mention at all of "TDU".
However, beginning around 2006, the PUCT began using "Transmission and Distribution Utility" or "TDU" in its orders and rulings. In one PUCT rule-making case in 2006, TDU is used 679 times throughout the report but TDSP is used only once.
Which is right?" TDSP or TDU? Both. Texas electricity customers still see local distribution or deliver charges on their bills listed as TDSP or TDU charges and there's nothing wrong with it.
But technically speaking because these are PUCT-approved delivery tariff charges from the Transmission/Distribution Utility (TDU) and not bulk transmission from ERCOT's Transmission/Distribution Service Provider (TDSP), it's more accurate to call these "TDU distribution charges".
Ask Oncor Why TDU Charges So High?
As many Oncor customers know, TDU charges alone can add 1/3 or more to your monthly bill because they depend on how much electricity you use to power your home. For example, the Oncor rate is 4.1867 cents per kWh. If you use 1000 kWh per month, you'll be charged $41.87 to have that 1000 kWh delivered to your home. Add in Oncor's customer charge of $3.42 and your total monthly delivery charge roughly comes to $45.29!
And that doesn't even include the electricity you actually used!
While these charges aren't welcome expenses, remember that Oncor is required by the State of Texas to reliably operate and maintain a transmission and delivery network that's over 103,000 miles of power lines. This same network delivers power to some 420 cities and towns. Keeping their part of the ERCOT electric grid running smoothly to supply nearly 10 million people with reliable energy in all kinds of Texas weather is an intensive and expensive job.
Before Oncor can change its rates, it must file a request with the Public Utility Commision of Texas. The PUC updates rates (also called "tariffs") twice a year. Oncor and other TDUs can file rate change requests whenever they want but all such changes must be first reviewed and approved by the commission before they can go into effect.
© 2023 Texas Electricity Ratings — Rates as of
