Transmission and Distribution Utility (TDU) delivery rate changes in Texas impact your monthly electric bill. Delivery rates change every March (usually down) and every September (usually up).
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You may open up your electricity bill and notice new line items, or a different charge compared to the prior month. Most of the time, it’s small changes in the delivery rates, but these can add up. There’s no way to avoid these changes, but it helps if you understand what’s going on.
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What are TDU Delivery Rates?
TDU delivery rates pay for the maintenance of the poles and wires that deliver electricity to your home and for the meters that measure it. The TDU delivery rates are regulated. Any changes to the TDU delivery rates must be approved by the Public Utility Commission of Texas (PUCT). These delivery rates are passed through to the customer without markup and show up on the electricity bill from the retail electricity provider (REP).
For residential consumers, the rates will be the same for everyone that lives in the same TDU delivery area regardless of who provides the electricity. For Commercial customers, the rates may vary depending on the type of meter and your demand level.
I Thought I Had a Fixed Rate?
This is a common complaint of residential electricity customers in Texas — “I signed up for a fixed rate, and then it changed!”
Here’s the real deal. Whether you have a “bundled rate” (one rate for both energy and delivery) or an “unbundled rate” (a fixed rate for energy plus delivery rates passed through at cost), when the delivery rate changes, the overall price you pay for electricity will change.
The fine print on the electricity facts label usually says something like this:
The price you pay each month will reflect the transmission and distribution utility TDU Delivery Charges in effect for your monthly billing cycle.
Or it may include something like this:
**TDU Delivery Charges are subject to change.
When the Delivery Rate Changes, your price will change.
If you have a bundled rate, you will typically see a new line item on your bill when delivery rates change, with a description like “Centerpoint Energy Additional XXXX Charge.” If you have an unbundled rate, the delivery rate will simply change on your bill, with no additional line items.
Some companies that have bundled rates do state that they will not change the delivery fees. However, this is very rare, because the retail provider has no control over the delivery rates and doesn’t know how much they can change.
When do TDU Delivery Rates Change?
TDU delivery rates change twice a year — March 1 and September 1. (And sometimes in between.)
The Public Utility Commission of Texas (PUCT) must approve delivery rate changes. And March 1 and September 1 are the official dates that any of these approved changes go into effect.
Just know that if delivery rate changes occur, and they impact your bill, your supplier can provide the details of the change. You should ask them directly if you see a new line item on your bill. And, your REP may also also include a note on your bill.
Why do Delivery Rates Change?
Each of the regulated utility companies is entitled to collect 100% of their costs from their rate payers, and receive a guaranteed rate of return. That’s because they provide a critical public service: delivering electricity, maintaining the infrastructure, and responding in case of an emergency.
The Public Utility Commission of Texas reviews and approves each utility’s rate case.
The items in each rate case may include costs from hurricane or storm recovery, upgraded service equipment, or bond issues and financing costs for system upgrades.
What Makes up the TDU Delivery Charges?
There are multiple components included in the TDU delivery charges. Below is an example of the tariff for Centerpoint Energy, the TDU delivery company for Houston, Texas and the surrounding area. The example shown below is from September 1, 2018, but it shows everything that goes into a rate change.
|Customer Charge per month||per month||$1.62000||Standard customer charge per retail customer per month|
|Metering Charge per month||per month||$3.85000||Standard metering (meter-reading) charge per retail customer per month|
|AMS Surcharge||per month||$0.00000||Additional payment for the implementation of Advanced Meters in Houston|
|Energy Efficiency Cost Recovery Factor (EECRF)||per kWh Usage||$0.000728||Charge for the TDU's cost recovery of energy efficiency programs|
|Transmission System Charge||per kWh Usage||$0.00844||Charge for electricity transmission from the generating plants to electrical substations|
|Distribution System Charge||per kWh Usage||$0.01649||Charge for electricity distribution (local electric wiring)|
|Transition Charges (Schedule TC2, TC3, SRC, and TC5)||per kWh Usage||$0.007563||Charges assessed by a TDU for the costs associated with the transition to a competitive, deregulated market|
|Nuclear Decommissioning Charge||per kWh Usage||$0.00001||A fee that covers the cost of safely removing a nuclear generation facility from service|
|Transmission Cost Recovery Factor (Rider TCRF)||per kWh Usage||$0.008758||A fee (or credit) that accounts for changes in wholesale transmission rates without the need of a TDU rate case|
|Accumulated Deferred Federal Income Tax (ADFIT) Credit||per kWh Usage||$-0.000213||A credit to provide customers federal income tax benefits associated with Hurricane Ike restoration costs|
|Distribution Cost Recovery Factor (Rider DCRF)||per kWh Usage||$0.000762||A fee that accounts for changes in distribution-invested capital without filing a full rate case|
Fortunately, most REPs summarize these rates on their monthly electric bills. You’ll never see this level of detail on your monthly residential bill.
TDU delivery rates for the other Texas deregulated utilities like Oncor, AEPC, AEPN, and TNMP are broken down in a similar manner to those above. The degree to which each of these TDUs break down and disclose the delivery rates vary. At the very least, each of these TDUs provide a link to the official tariff documents that outlines the rates that are approved by the PUCT. These tariff documents are 200+ pages long and are a proven cure for insomnia.
How Much Did TDU Rates Change from September 1, 2018 to March 1, 2019?
The chart below shows the new charges for each delivery company effective March 1, 2019, and the change from September rates.
|Delivery Company||March 1, 2019||September 1, 2018||Net Change|
|Centerpoint||$5.47/month + 3.6983¢/kWh||$5.47/month + 4.2536¢/kWh||Down 0.5553¢/kWh|
|Oncor||$3.42/month + 3.135¢/kWh||$3.49/month + 3.8271¢/kWh||Down 7¢/month; Down 0.6921¢/kWh|
|AEP TX Central||$9.00/month + 3.9405¢/kWh||$9.00/month + 4.1602¢/kWh||Down 0.2197¢/kWh|
|AEP TX North||$10.53/month + 3.6596¢/kWh||$10.53/month + 3.8807¢/kWh||Down 0.2211¢/kWh|
|TNMP||$7.85/month + 3.8999¢/kWh||$8.65/month + 3.6961¢/kWh||Down 80¢/month; Up 0.2038¢/kWh|
For most customers the changes in the TDU delivery rates are not significant, but hey, a dollar is a dollar!
For a customer using 1000 kWh a month, you will see a decrease in your bill of around $2-$6 per month with these changes. Woo hoo!