How delivery charges work

The charge pays for the poles and wires, the substations, the meter on your wall, the crew that restores your power after a storm, and the meter readings your bill is calculated from. Because one utility operates the local delivery network, its rates are regulated rather than set through retail competition.

In most of the competitive market your delivery utility is one of five: Oncor, CenterPoint, AEP Texas Central, AEP Texas North or Texas-New Mexico Power. Texas law calls those five transmission and distribution utilities, or TDUs. Each files its rates with the Public Utility Commission of Texas, and the approved rates apply to every customer on the same rate schedule, whichever retailer they buy energy from. Municipally owned utilities and cooperatives can open their own systems to competition too. Lubbock Power & Light did, and it does the same job under a different legal category.

Texas retail bills use the term TDU. ERCOT also uses TDSP, short for Transmission/Distribution Service Provider, for entities that own or operate transmission or distribution facilities.

The terms are related but are not always interchangeable. Texas law defines a TDU more narrowly and excludes municipally owned utilities and electric cooperatives, while ERCOT uses TDSP more broadly. For a residential shopper, both terms describe the delivery side of the electricity system rather than the retail provider selling the plan.

The delivery charge usually shows up as a fixed monthly amount, plus an amount for every kilowatt-hour you use. How much of that your bill spells out depends on your retailer's bill format. Some retailers show delivery as a separate line; others fold it into a single rate. Where it is shown separately, commission rules give it a standard name: TDU Delivery Charges. If your bill does not break it out, you can ask for an itemized breakdown, and your retailer has to give you one.

Each utility files its own schedule, and there are more parts to it than your bill shows. Oncor's residential schedule starts with a monthly customer charge and a metering charge. On top of those it adds per-kilowatt-hour amounts that include the distribution system, transmission, energy-efficiency programs, nuclear plant decommissioning and distribution investment. Smaller charges are added and removed as the commission approves them. Your retailer collects the total and shows it to you.

Whether your bill itemizes it or not, delivery is included in the average prices on the Electricity Facts Label. That is what makes those figures comparable between two plans in the same delivery territory. Compare a plan in one territory with a plan in another and you are also comparing two different delivery charges.

Within one territory there is no single delivery rate either. The monthly charges and the per-kilowatt-hour charge are published separately. A quoted delivery rate therefore either excludes the fixed monthly charges or converts them into an effective rate at a particular usage level.

Because the monthly charges do not move with usage, the delivery portion works out lower per kilowatt-hour the more electricity you use. You can see it in the commission's own table, which prints an average residential delivery bill at 500, 1,000 and 2,000 kilowatt-hours. Divide each of those by its usage and the cost per kilowatt-hour is lower every time, for all five utilities. So two households in the same delivery territory, on the same plan, can pay different effective delivery rates per kilowatt-hour.

If you want the current figures, the commission publishes them for all five and links each one's tariff, which is the filed document the rates come from. Oncor says the same about its own rate summary: where the summary and the tariff disagree, the tariff controls.

Different components of delivery charges can change at different times. At each of the five TDUs, transmission cost recovery factors are updated on March 1 and September 1. Other approved charges can change on separate schedules. Utilities in the competitive market must apply each year to adjust the energy-efficiency charge, and an approved change also takes effect on March 1. The distribution-investment factor can move once a calendar year at most.

When one of those changes lands, a fixed-rate plan's price is allowed to move with it. That permission is written into the commission's own definition of a fixed-rate product, and your Electricity Facts Label has a row for whether your price can change.

That is why the total amount you pay can change during a fixed-rate contract even when the plan's retail energy rate holds steady. A fixed-rate plan does not freeze regulated delivery charges.