Understanding Your Texas Electricity Bill

Your Bill Has Two Main Parts

Every Texas electricity bill is really two bills combined into one. Understanding this structure is the key to making sense of all those line items.

Part one: Energy charges. These come from your retail electricity provider, the company you signed up with. This includes your per-kWh energy rate, any base charges, and any credits or discounts your plan offers.

Part two: Delivery charges. These come from your TDU, or transmission and distribution utility. In Texas, that is Oncor, CenterPoint, AEP Texas, or TNMP, depending on where you live. These charges cover the cost of maintaining the power lines, transformers, and other infrastructure that physically deliver electricity to your home.

You chose your retail provider. You cannot choose your TDU. Everyone in a given service area pays the same TDU charges regardless of which retail provider they use.

Energy Charges: What You Chose

The energy section of your bill typically includes:

Energy charge per kWh. This is the rate you agreed to when you signed up. On a fixed-rate plan, this stays the same every month. On a variable plan, it changes. Multiply this rate by your total kWh for the month to get your energy cost.

Base charge or customer charge. Many plans include a flat monthly fee of $5-$15, regardless of how much electricity you go through. This appears on your EFL but often gets overlooked when comparing plans. Some plans have no base charge at all.

Bill credits. Some plans offer a credit when you hit a certain kWh threshold, like a $50 credit if you go through more than 1,000 kWh. These credits can make a plan look cheap at one level and expensive at another, so always check your EFL at the kWh level closest to your actual monthly number.

Delivery Charges: What Your TDU Charges

TDU delivery charges are the same for everyone in a service area, but they still have multiple line items.

Metering charge. A flat monthly fee for reading your smart meter and maintaining it. Typically $3-$5 per month.

Delivery charge per kWh. A per-kWh rate for delivering electricity to your home. This is usually 3-5 cents per kWh, depending on your TDU.

Transmission charge. A per-kWh rate for moving electricity across the high-voltage grid from the power plant to your local distribution system. This is typically 1-2 cents per kWh.

System Benefit Fund. A small per-kWh charge that funds assistance programs for low-income customers. Usually less than half a cent per kWh.

Taxes and Regulatory Fees

At the bottom of your bill, you will find state and local taxes, plus a handful of small regulatory fees.

State sales tax is 6.25% of your energy and delivery charges. Local taxes vary by city.

Regulatory charges include the ERCOT administrative fee and other small assessments that fund grid operations. These are typically pennies per month.

Your Effective Rate vs Your Advertised Rate

Here is what confuses most people. When you signed up for a plan at 10 cents per kWh, that was the energy charge only. Your actual cost per kWh, which includes delivery charges, taxes, and fees, is higher.

To calculate your true effective rate, divide your total bill amount by your total kWh. If your bill is $180 and you went through 1,200 kWh, your effective rate is 15 cents per kWh, even if your energy rate is only 10 cents.

This does not mean your provider is overcharging you. The delivery charges and taxes are the same regardless of which provider you choose. But it is important to understand the difference so you know what you are actually paying.

How to Read Your Bill Efficiently

Start from the top: check your billing period dates and total kWh. Then look at the energy charge section to make sure it matches your contract rate. Next, glance at delivery charges to confirm they are in the normal range for your TDU. Finally, check the total.

If anything looks off, call your provider. Billing errors happen, and they are usually resolved quickly once flagged. You have the right to dispute any charge, and your provider is required to investigate.