Bill Literacy

What Are TDU Charges and Why Do You Pay Them?

TDU charges are a legitimate, fixed, and unavoidable part of your electricity bill — and understanding them is essential to understanding what you're actually paying for.

5–6 min read

If you've ever looked closely at your Texas electricity bill, you've probably noticed a cluster of charges that have nothing to do with how much electricity you actually used — or at least don't seem to. They go by names like "TDU Delivery Charge," "Distribution Charge," or "Transmission and Distribution Fee."

These charges confuse a lot of people. Some assume they're fees tacked on by their electricity provider. Others think they're negotiable. A few assume they're some kind of error.

They're none of those things. TDU charges are a legitimate, fixed, and unavoidable part of your electricity bill — and understanding them is essential to understanding what you're actually paying for.

What is a TDU?

TDU stands for Transmission and Distribution Utility. In Texas, TDUs are the companies that own and operate the physical infrastructure that delivers electricity to your home or business — the poles, wires, transformers, substations, and meters that make up the local delivery network.

The four main TDUs serving most of deregulated Texas are:

Centerpoint Energy — Houston metro area
Oncor Electric Delivery — Dallas/Fort Worth and much of North Texas
AEP Texas — Central, South, and West Texas
Texas-New Mexico Power (TNMP) — scattered service territories statewide
Your TDU is determined entirely by your location. You cannot choose your TDU — it's whoever owns the infrastructure in your area. This is one of the fundamental differences between the delivery side and the supply side of your bill.

What do TDU charges actually pay for?

When you pay TDU charges, you're paying for the physical infrastructure that makes electricity delivery possible. Specifically:

Transmission infrastructure — the high-voltage lines that carry electricity from generation facilities (wind farms, natural gas plants, solar installations) across long distances to regional substations
Distribution infrastructure — the lower-voltage local network that delivers electricity the last mile to your neighborhood, your street, and your home
Metering and data — the equipment that measures your electricity usage and reports it to your REP for billing purposes
Grid maintenance and repairs — ongoing upkeep, storm damage repair, equipment replacement, and safety inspections
Outage response — when the power goes out, it's the TDU that sends crews to restore service — not your REP

How TDU charges are structured

TDU charges on your bill typically have two components:

1. Fixed monthly charge

A flat fee charged every month regardless of how much electricity you use. This covers the fixed costs of maintaining your connection to the grid — metering, account management, and your share of local infrastructure costs.

For Centerpoint customers in the Houston area, this fixed charge is currently in the range of $3–$6 per month. For Oncor customers in DFW, it's similar. These numbers are subject to periodic adjustment by the PUCT.

2. Variable delivery charge

A per-kWh charge based on how much electricity you actually use. This covers the variable costs of moving electricity through the distribution network — the more electricity flowing through the lines, the more wear and operational cost.

The variable TDU charge typically ranges from 3 to 6 cents per kWh depending on your TDU and current rate schedule. Added to your supply rate, this is a meaningful portion of your total effective cost per kWh.

Who sets TDU rates?

TDU charges are not set by your electricity provider. They're not set by ERCOT. They're regulated and approved by the Public Utility Commission of Texas (PUCT).

TDUs file rate cases with the PUCT — essentially applications to adjust their rates — and the commission reviews and approves changes after a public process. Rate adjustments happen periodically, not monthly, but they do happen.

This is why your bill can increase even when you're on a fixed rate plan and haven't changed providers. If the PUCT approves a TDU rate adjustment, the delivery portion of your bill goes up regardless of your supply contract.

It's also why no REP — and no broker — can negotiate your TDU charges down. They are what they are.

The key thing to understand about TDU charges and shopping

Here's the practical implication of everything above:

When you switch electricity providers, your TDU charges do not change.

The same Centerpoint charges you pay today will appear on your bill next month whether you're with Provider A or Provider B. This is actually reassuring — it means switching providers truly doesn't affect your physical electricity service, your outage response, or your delivery infrastructure.

What it also means is that when you're comparing electricity plans, the only number that actually changes is the supply portion. A broker who understands this will build your rate comparison around your total effective cost — supply plus TDU delivery — not just the advertised supply rate.

That full-cost picture is what Mike looks at when he evaluates plans on your behalf.

Why TDU charges matter more than most people think

Consider a simplified example:

Charge	Approximate Amount
Supply — Energy charge (11¢ × 1,200 kWh)	$132.00
REP base charge	$5.95
TDU fixed monthly charge	$4.50
TDU variable delivery (4.5¢ × 1,200 kWh)	$54.00
Transmission charge	$12.00
Taxes and fees	~$14.00
Total	~$222.00

In this example the supply rate is 11 cents per kWh — but the total effective cost including delivery is closer to 18.5 cents per kWh. That's a significant difference from the advertised rate.

This is exactly why the advertised rate on a plan isn't the whole story — and why understanding TDU charges helps you make smarter comparisons.

Can you reduce TDU charges?

Not directly — but a few things are worth knowing:

Efficiency reduces the variable portion. Since the variable TDU charge is based on kWh used, reducing your consumption reduces that portion of the delivery charge along with your supply cost. Programmable thermostats, LED lighting, and sealing air leaks help on both sides of the bill.
Time-of-use plans interact with TDU structures. Some REPs offer time-of-use pricing that aligns with ERCOT's demand patterns. These plans are more complex but can reduce total effective cost for households with flexible usage patterns.
You can't switch TDUs. If you move to a different part of Texas served by a different TDU, your delivery charges will change — but within a service territory, you have one TDU and that's that.

The bottom line

TDU charges are a fixed, non-negotiable part of your Texas electricity bill. They pay for the physical infrastructure that makes electricity delivery possible and they're the same regardless of which provider you choose.

Understanding them matters because they represent a meaningful portion of your total bill — and because the advertised supply rate you see on electricity plans doesn't include them. The real cost of any plan is supply plus delivery, and the only way to know that number for your specific situation is to look at both together.

That's exactly the kind of full-picture analysis Mike builds into every rate review.

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