Electric Utility Delivery Charges

September 2018 Texas TDU Delivery Rate Changes

Transmission and Distribution Utility (TDU) delivery rate changes in Texas impact your monthly electric bill. It happens every September and every March. You 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.

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 and will be the same for everyone that lives in the same TDU delivery area regardless of who provides the electricity. 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).

The TDU delivery areas in Texas that participate in deregulation are: Oncor, CenterPoint, AEP Texas Central, AEP Texas North, and Texas-New Mexico Power (TNMP).

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.

In English:

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.

When do TDU Delivery Rates Change?

TDU delivery rates change twice a year — March 1 and September 1. The delivery rates are regulated so rate changes must be approved by the Public Utility Commission of Texas (PUCT). March 1 and September 1 are the official dates that any of these approved changes go into effect. There may also be off cycle delivery rate changes that do not require rate case hearings such as the expiration of certain rates, but these are less common.

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, effective September 1, 2018.

Charge/FeeTypeAmountDescription
Customer Charge per monthper month$1.62000Standard customer charge per retail customer per month
Metering Charge per monthper month$3.85000Standard metering (meter-reading) charge per retail customer per month
AMS Surchargeper month$0.00000Additional payment for the implementation of Advanced Meters in Houston
Energy Efficiency Cost Recovery Factor (EECRF)per kWh Usage$0.000728Charge for the TDU's cost recovery of energy efficiency programs
Transmission System Chargeper kWh Usage$0.00844Charge for electricity transmission from the generating plants to electrical substations
Distribution System Chargeper kWh Usage$0.01649Charge for electricity distribution (local electric wiring)
Transition Charges (Schedule TC2, TC3, SRC, and TC5)per kWh Usage$0.007563Charges assessed by a TDU for the costs associated with the transition to a competitive, deregulated market
Nuclear Decommissioning Chargeper kWh Usage$0.00001A fee that covers the cost of safely removing a nuclear generation facility from service
Transmission Cost Recovery Factor (Rider TCRF)per kWh Usage$0.008758A fee (or credit) that accounts for changes in wholesale transmission rates without the need of a TDU rate case
Accumulated Deferred Federal Income Tax (ADFIT) Creditper kWh Usage$-0.000213A credit to provide customers federal income tax benefits associated with Hurricane Ike restoration costs
Distribution Cost Recovery Factor (Rider DCRF)per kWh Usage$0.000762A 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. For instance, the above TDU delivery rates for CenterPoint Energy as of September 1, 2018 will look like this on your next electric bill:

  • CenterPoint Monthly Charge: $5.47
  • CenterPoint Charges per kWh: 4.2536¢ * kWh used

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.

TDU Delivery Rate Confusion

When delivery rates change, it’s confusing not only for consumers, but for REPs too! They have regulatory teams that read these 200+ page tariffs to figure out the newly approved delivery charges.  Then the REPs update their pricing and web sites, and check each other’s work to see if someone else has a different number than they have. Usually within 3 weeks, all the REPs have come to the same conclusion on the new delivery rates, and you’ll start to see that consistency across their web sites.

But know this — the reality is, whether their Electricity Facts Label and website reflect the new delivery rates or not, you WILL pay the current delivery rates on your bill, however it’s structured, since they are always passed through.

How Much Did TDU Rates Increase (Or Decrease) From March 1, 2018 to September 1, 2018?

The chart below shows the new charges for each delivery company.

Delivery CompanySept 1, 2018March 1, 2018Net Change
Centerpoint$5.47 per month; 4.2536¢/kWh$5.47 per month; 4.1084 ¢/kWhUP .1452¢/kWh
Oncor$3.49 per month; 3.8271¢/kWh$5.25 per month; 3.4556 ¢/kWhDOWN $1.76/mth;     UP .3715¢/kWh
AEP TX Central$9.00 per month; 4.1602¢/kWh$9.00 per month; 4.0746 ¢/kWhUP .0856¢/kWh
AEP TX North$10.53 per month; 3.8807¢/kWh$10.53 per month; 3.8331 ¢/kWhUP .0476¢/kWh
TNMP$8.65 per month; 3.6961¢/kWh$8.65 per month; 3.2779 ¢/kWhUP .4182¢/kWh

For most customers the changes in the TDU delivery rates are not significant. Customers that use on average 2000 kWh/month will see about an $2 – $8 increase in their monthly electric bill depending on which utility delivery area they live.