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How to Reduce Your TDU Delivery Charges

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Did you look at your recent electric bill and wonder why ‘the average price per kWh you paid for electric service this month’ is not what you signed up for? Did you ask yourself, ‘I thought I signed up for a fixed rate contract. Why is it not the same? Why am I paying more?’ Well, there is good reason for the rate increase. All thanks to a not-so-little charge called a TDU Delivery Charge that gets added to every single bill whether or not you see it on your bill.

Let’s explore what is a TDU, how come you’re being charged a TDU Delivery Charge, and what you can expect moving forward.

What is a TDU?

Transmission and Distribution Utility (TDU) companies are responsible for the transmission of electricity from power plants, and then delivering it to your home or business. They own all of the electricity infrastructure that you commonly see, including the poles, wires and electric meter at your premise.

In addition to maintaining all of that infrastructure, TDUs also read your meter each month and report it back to your electricity provider for billing purposes. Additionally, they are the first to respond in the event of a power outage or emergency and are charged with restoring power to the grid.

What are TDU Delivery Charges?

There is a cost associated with running the TDU’s operations. Some common services a TDU provides includes:

  • maintaining the poles and wires
  • reading and replacing meters
  • restoring power after major storms
  • rolling out the trucks in times of emergency

They also provide other service like tree-trimming or digging ditches to bury unsightly wires in densely populated or urban areas.

In order to cover these costs, your local TDU adds two charges. One is a fixed, flat, monthly fee, and the second is variable, usage-based. This second charge could be a large or small amount depending upon how much electricity you have used.

Sample bill showing an adjustment made for the TDU Delivery Charges since they are bundled in the Energy Charge

Understanding your electric bill in Texas

When you pay an electricity bill in Texas, there are two major cost components and, technically, two different companies are getting paid for their services.

Cost of energy (or energy charge): this is the actual electricity that is used to power your home or business. In Texas, when you sign up for electricity service with Honest Gorilla, you are signing one contract and that is with a retail electric provider (REP). The REP handles billing and customer service to end-use customers like you and me. They also facilitate payments on your behalf to other entities like power generators, TDUs (as explained below), and providers of Renewable Energy Credits (REC) if you signed up for a green plan.

Cost of transmission and delivery (TDU Delivery Charges): this is the cost of getting the electricity to your home or business. Think of the immense network and thousands of miles of wires, poles and substations that the electricity has to travel through to get to you. Starting at the power plant and ending at your premise. This includes everything it takes to keep the infrastructure operational and when tragedy hits to bring everything back up and running. This cost is passed-through to end users as a flat fee and usage-based fee each month.

Is my TDU allowed to charge these delivery charges?

Yes. Matter of fact, the TDU Delivery Charges are regulated and approved by the Public Utility Commission of Texas. Sometimes these charges are included in your energy charge and other times, depending on the energy provider and the plan that you sign up for, you may see them displayed as separate line-item charges. Either way, the TDU bills your electric company and they pass along these charges to you without any markup — that way you’re not paying more than you should for electricity.

It is important to note that your electricity provider has no control over TDU charges. Your electric provider bills the TDU Delivery Charges along with their energy charges, and pays the delivery portion back to the TDU.

What makes up the TDU Delivery Charge?

The TDU Delivery Charge is actually quite complicated as you will see. Believe it or not, but a lot of work and infrastructure goes into delivering power to your house safely and reliably.

Here is a breakdown of everything that is considered TDU Delivery Charge:

  1. Transmission and Distribution Charges:
    1. Customer Charge
    2. Metering Charge
    3. Transmission System Charge
    4. Distribution System Charge

2. Nuclear Decommissioning Charge (NDC)

3. Transmission Cost Recovery Factor (TCRF)

4. Energy Efficiency Cost Recovery Factor (EECRF)

5. Rate Case Expense Surcharge (RCE)

6. Remand Surcharge (RS)

7. Capital Structure Refund (CSR)

8. Distribution Cost Recovery Factor (DCRF)

9. Tax Refund Factor (TRF)

You will see that most energy providers will summarize these TDU Delivery Charges on your electric bill each month. That way you see a couple line-items, if any at all. Rarely will you see this level of detail on your monthly residential bill.

If you’d like to learn more about each of these components, then you can check out the PUCT’s website where they maintain official copies of the Tariffs for Service for each TDU. This is public information and is available for download. Beware, they are 200+ pages long.

What is the current TDU Delivery Charge?

If you noticed a change in your average price per kWh on your most recent electric bill, that is because the new TDU Delivery Charges went into effect on September 1st. Depending on your where you live and your local utility, your rate could be different.

TDU Monthly
Charge
$/kWh Change
Oncor $3.42 $0.044076
Centerpoint $4.39 $0.049454
AEP Central $5.88 $0.051079
AEP North $5.88 $0.046985
TNMP $7.85 $0.054741

Please continue to check this page from time-to-time as we will be maintaining and updating the list above with the most recent TDU Delivery Charges currently in effect.

How can I find out if my energy company charges a TDU Delivery Charge?

Almost every single energy provider will pass along a TDU Delivery Charge. You may see this as a separate line item on your electric bill, or it may be bundled in your rate, but it is always being accounted for. If it is bundled, you will want to confirm that by checking the Electricity Facts Label (EFL) of the plan you intended to sign up for.

Why are the TDU Delivery Charges shown as 2 separate line-items on my light bill?

This is done to make your bill easier to understand exactly what you’re paying for. The idea is that it removes any suspicion of hidden fees or additional fees that may not have been mentioned or disclosed during your enrollment.

Why are my TDU Delivery Charges bundled on my bill?

In some cases, your electric company may opt to bundle your TDU Delivery Charges into your energy charge. This is done to keep your electricity bill simple and not have it read like a CVS Pharmacy receipt. Some studies have shown that including line-item charges for each and every charge may make you feel confused or overwhelmed and question what may look like additional charges.

How often does the TDU Delivery Charge change?

TDUs either increase or decrease their delivery charges twice a year. These charges are separate and different than the price you pay for electricity. Unfortunately, these charges are unavoidable and non-negotiable since they are approved and closely regulated by the PUCT. You cannot shop around to find a cheaper offer on TDU Delivery Charges.

TDU Delivery Charges usually change twice a year:

  • September 1st: TDU Delivery Charges typically tend to increase
  • March 1st: TDU Delivery Charges have shown to decrease

Be sure to ask your energy provider for details if you have any billing related questions.

Am I able to shop for TDU Delivery Charges?

The short answer is no. Since the TDU Delivery Charge are tariff-based and regulated by the Public Utility Commission of Texas (PUCT), they must approve any changes to the TDU Delivery Charges. Because these rates are tariff-based, all residential customers must pay them regardless of size. It is important to note that, no matter which energy provider you choose, the price you for TDU Delivery Charges will be the same.

I signed up for a fixed rate contract. Why is my average price per kWh different each month?

When you sign up for a fixed rate contract, you are locking in the price of electricity. The energy charge component (for the electricity itself) that your electric provider is offering is in-fact fixed. However, the cost of transmitting and delivering the electricity over power lines from the power plant to your home or business is variable and largely dependent on how much electricity is used. This cost component is referred to as TDU Delivery Charges.

Therefore, when you add up the two cost components of your energy bill — the energy charge and the TDU Delivery Charges — you will see that the average price per kWh will vary from one month to the next.

Why do I have high TDU Delivery charges?

There are two components to the TDU Delivery Charge. The first is a flat fee, monthly rate. And the second is usage based (per kWh). When you add these two up, you will notice that the total amount you pay for TDU Delivery Charges will vary each month depending on how much electricity you use. Therefore, the more electricity you use, the higher your TDU Delivery Charges will be. So if you see a higher than usual TDU Delivery Charge on any given month, now you know that is because you used more electricity that month.

How can I lower my TDU Delivery Charges?

The less electricity you use each month, the lower your TDU charges will be. You can check your current usage anytime via Smart Meter Texas or via your energy provider’s online billing portal or dashboard, if they have one.

For commercial however, there are strategies you can employ to help reduce your the demand portion of your delivery charges. Because demand charges are irrelevant for residential customers, it’s not like you’re using heavy machinery or running a machine shop out of your house, this does not apply

If you’d like to lower your monthly usage and, in turn lower your TDU Delivery Charges and electric bill altogether, try these tips to save

  • When doing laundry, wash your clothes in cold water to cut energy usage per load in half
  • Unplug unused electronics, especially when leaving for an extended period of time
  • Switch your thermostat from an analog or digital programmable to a smart thermostat that can be remotely managed from your smart phone device

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