TDU Delivery Charges: What You Should Know

Every month, your electricity bill includes Transmission and Distribution Utility (TDU) Charges, also known as TDU Delivery Charges in Texas. These fees cover the cost of delivering electricity to your home—maintaining power lines, repairing outages, and ensuring reliable service.

Twice a year, in March and September, these delivery rates adjust. In March, they typically decrease, while in September, they often go up. If you notice a slight difference in your bill from one month to the next, these changes in delivery rates are likely the reason. While you can’t avoid them, understanding why they happen can help you better manage your energy costs.

By staying informed about these adjustments, you’ll have a clearer picture of what you’re paying for and how to plan for any changes in your monthly bill.

Every time you pay your electricity bill, a portion of it goes toward Transmission and Distribution Utility (TDU) charges. These fees cover the cost of maintaining the power lines, poles, substations, and meters that deliver electricity from the power plants to your home. The companies responsible for this service are called Transmission and Distribution Utilities (TDUs) or sometimes Transportation and Distribution Service Providers (TDSPs).

Why Do They Matter?

To understand TDU charges, it’s helpful to know how Texas’ deregulated energy market works. It’s made up of three key players:

1. Power generators – These companies produce electricity using different energy sources like wind, solar, natural gas, and coal
2. TDUs (Transmission and Distribution Utilities) – They operate and maintain the infrastructure that delivers electricity to homes and businesses. TDUs don’t sell electricity; they just make sure it gets where it needs to go
3. Retail Electricity Providers (REPs) – These are the companies, like Constellation, TXU and Direct Energy that sell electricity plans to consumers. Your REP buys electricity at wholesale prices from generators and then pays the TDUs to deliver it to you

While you can choose your REP in deregulated areas of Texas, TDU charges are set rates regulated by the Public Utility Commission of Texas (PUCT). No matter which REP you sign up with, your TDU charges will stay the same based on your location and utility provider. Learn more about the differences of these two pieces of Texas’ grid in our article ‘REPs vs Utilities‘. 

Your Transmission and Distribution Utility (TDU) charges aren’t random—they’re set by the Public Utility Commission of Texas (PUCT) based on several key factors. These charges help cover the cost of delivering electricity to your home, keeping the grid running smoothly, and ensuring reliable service.

Here’s what goes into calculating TDU rates:

• Energy Efficiency Cost Recovery Factor – Helps TDUs pay for energy-saving programs that improve efficiency and reduce waste.
• Transmission Cost Recovery Factor – Covers the costs of maintaining, repairing, and upgrading power lines and other infrastructure.
• Accumulated Deferred Federal Income Tax Credit – Accounts for the timing difference between when utilities collect taxes and when they pay them to the government.
• Transition Charges – Helps pay for the shift from a regulated electricity market to Texas’s competitive energy market.

Now, you won’t see all these details spelled out on your bill. Instead, your TDU delivery charge appears as a simple rate, which varies depending on where you live. Texas has six TDUs, each responsible for a specific region.

It’s pretty straightforward: your electricity usage (in kilowatt-hours) is multiplied by your TDU’s delivery rate. For example, if you live in an area served by AEP Texas Central and use 1,000 kWh, your delivery charge would be:

1,000 kWh × $0.055254 = $55.25

While you can’t change TDU rates, understanding how they’re set can give you a better idea of what you’re paying for—and why your bill might fluctuate throughout the year.

The picture above shows an EFL for a typical fixed-rate electricity plan. The EFL shows any base charge the REP applies (in this case, none), their energy charge (the rate they charge for electricity – 9.7474¢), and the TDU delivery charges for this TDU (Oncor). All Texas TDSPs/TDUs charge a rate per kilowatt hour and a base monthly fee. At 5.1248¢, the TDU electricity charge is over 50% of the cost of the REP’s electricity charge, and the $4.23 base fee adds another small monthly cost.

In Texas, Transmission and Distribution Utility (TDU) delivery rates officially change twice a year—on March 1 and September 1. These rates, which cover the cost of delivering electricity to your home, aren’t set at random. They must be reviewed and approved by the Public Utility Commission of Texas (PUCT) before taking effect.

If you notice a slight difference in your bill around these times, it’s likely due to a change in TDU charges. Your electricity provider can break down the details, so if something seems off or you just want more clarity, don’t hesitate to reach out to them. Understanding these changes can help you stay on top of your energy costs and avoid surprises on your bill.

Ever wonder what makes up the TDU Delivery Charges on your electric bill? These fees aren’t just a random number—they help cover the cost of getting electricity from power plants to your home. Here’s a breakdown of what goes into them:

• Transmission Cost Recovery Factor (Rider TCRF) – Covers the cost of maintaining and expanding power lines that transport electricity across Texas.
• Energy Efficiency Cost Recovery Factor (EECRF) – Helps fund programs that improve energy efficiency and reduce overall electricity demand.
• Accumulated Deferred Federal Income Tax (ADFIT) Credit – A tax-related adjustment that can impact how much you’re charged.

Most Retail Electric Providers (REPs) simplify these costs on your bill, so you won’t see each charge listed separately. Instead, they’re bundled together under TDU Delivery Charges to make things easier to read.

There are six TDUs that currently serve Texas:

In Texas, electricity gets to your home through Transmission and Distribution Utilities (TDUs)—the companies responsible for maintaining power lines, handling repairs, and ensuring reliable service. Right now, these TDUs operate across the state:

• AEP Texas Central – Serving South Texas, including Corpus Christi and the Rio Grande Valley
• Lubbock Power & Light (LP&L) – Recently integrated into the ERCOT grid, serving Lubbock
• Oncor Electric Delivery – The largest TDU, covering Dallas-Fort Worth and much of North and Central Texas
• AEP Texas North – Covering areas in West and Central Texas
• Texas-New Mexico Power (TNMP) – Delivering electricity to smaller communities across Texas
• CenterPoint Energy – Powering Houston and surrounding regions

Your TDU depends on where you live—you can’t choose your provider, but knowing who delivers your electricity can help if you ever have an outage or need service updates.