How to Read Your Texas Electricity Bill

Most Texas electricity bills contain at least six distinct charges, and the one labeled 'energy charge' is rarely the largest driver of your monthly total. Understanding each line item is the only way to compare plans accurately, catch billing errors, and know whether switching providers would save money.

This guide walks through a typical Texas residential bill from top to bottom, explains what each charge is, who sets it, and what a normal range looks like.

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The Two-Part Structure Every Texas Bill Shares

Before examining individual line items, it helps to understand the architecture of every Texas electricity bill. Regardless of which retail electric provider (REP) you chose, your bill is always split into two categories.

Retail energy charges are set by your REP, the company you signed a contract with. These are the costs the provider controls and the ones you can shop around to change.

TDU delivery charges are set by your local Transmission and Distribution Utility (TDU), the regulated monopoly that owns the wires and poles in your area. These charges are identical for every customer in that territory, no matter which REP they use. The Public Utility Commission of Texas (PUCT) approves TDU rates, so they are not negotiable and do not change when you switch providers.

Knowing this distinction matters because some providers advertise very low energy rates while burying the fact that TDU delivery fees make up a substantial portion of the final bill. In 2024, TDU delivery charges in major Texas territories ranged from roughly 3.5 to 6 cents per kWh on top of the energy charge, according to PUCT-filed tariffs.

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Line-by-Line: The Retail Energy Charges

Energy Charge

This is the cost of the electricity itself, expressed as a rate multiplied by your usage in kilowatt-hours (kWh). On a fixed-rate plan, this rate stays the same throughout your contract term. On a variable-rate plan, it can change month to month based on wholesale market conditions in ERCOT (the Electric Reliability Council of Texas).

A competitive fixed energy charge in mid-2025 for a 12-month plan in the Dallas-Fort Worth area runs between 9 and 13 cents per kWh for the energy component alone, before TDU fees are added. Check the Electricity Facts Label (EFL) for your plan, a standardized document the PUCT requires every REP to publish, to find the exact energy charge rate.

Base Charge (or Customer Charge)

Many REPs assess a flat monthly fee simply for having an active account. This fee typically ranges from $0 to $9.95 per month depending on the provider and plan. A $9.95 base charge spread over 500 kWh of usage adds nearly 2 cents per kWh to your effective rate, a detail that makes low-usage plans with base charges more expensive than they appear.

Minimum Usage Fee or Bill Credit Threshold

Some plans advertise a low per-kWh rate but apply a credit only when usage exceeds a threshold, commonly 1,000 kWh or 2,000 kWh. If a household uses 800 kWh in a mild spring month, that credit disappears and the effective rate spikes. This structure is disclosed in the EFL under PUCT rules, but it is easy to miss if a consumer only reads the headline rate on a comparison site.

Renewable Energy or Green Charge

If a plan is marketed as 100 percent renewable, the cost of purchasing Renewable Energy Certificates (RECs) may be embedded in the energy rate or listed as a separate line item. Either way, it is a retail-side charge controlled by the REP.

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Line-by-Line: The TDU Delivery Charges

This section of the bill is often labeled "Oncor Delivery Charges," "CenterPoint Energy Delivery," "AEP Texas Delivery," or "TNMP Delivery," depending on the territory. These four utilities serve nearly all of the ERCOT footprint.

TDU Delivery Charge (per kWh)

This is a volumetric fee, meaning it scales with usage. As of 2025 PUCT-approved tariffs, the per-kWh delivery charge varies by utility. Oncor, which serves the Dallas-Fort Worth area, charges residential customers approximately 3.8 cents per kWh in distribution charges. CenterPoint, serving greater Houston, runs slightly higher at roughly 4.5 to 5 cents per kWh when all distribution components are combined. AEP Texas and TNMP vary by sub-territory. These figures are public record and available on each utility's PUCT-filed tariff.

TDU Base (or Customer) Charge

Separate from the per-kWh delivery fee, TDUs also charge a flat monthly customer fee. Oncor's residential base charge is approximately $3.42 per month. CenterPoint's is approximately $4.39 per month. This fee appears on the bill regardless of how much electricity the household uses.

Transmission Charge

Some TDUs break out the cost of moving power across high-voltage transmission lines as a separate line item. This is still a delivery-side charge and is still regulated by the PUCT. It is not a REP charge.

Ancillary and Miscellaneous Fees

TDU tariffs may include small fees for metering, advanced metering infrastructure (AMI) recovery, or storm recovery. These are typically under $1 per month each but are worth noting when comparing a total bill across months.

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Taxes and Government Fees

Near the bottom of most bills, readers will find a set of line items that neither the REP nor the TDU controls.

State sales tax in Texas is 6.25 percent on electricity. Local municipalities can add up to 2 percent more, making the effective sales tax rate as high as 8.25 percent in some cities.

Franchise fee or municipal gross receipts fee compensates the city for the use of public rights-of-way by the utility. The rate varies by municipality and is typically passed through to the customer.

Transition charges may appear if a utility is recovering costs from assets stranded during deregulation. These are small and have diminished over time as older bonds mature.

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How to Calculate Your True Effective Rate

The only number that matters for comparison purposes is the all-in effective rate: total dollars billed divided by total kWh used.

For example, if a bill totals $148 and the household used 1,100 kWh, the effective rate is approximately 13.5 cents per kWh. That figure already includes the energy charge, the TDU delivery fees, the base charges, and the taxes.

The PUCT requires EFLs to disclose average prices at 500, 1,000, and 2,000 kWh usage levels for exactly this reason. Use the column that matches a household's typical monthly usage, not the headline rate. EFLs are available through the PUCT's Power to Choose website at powertochoose.org.

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When Switching Providers Will Not Lower This Bill

If a bill is high primarily because of elevated TDU delivery charges, switching REPs will not solve the problem. Delivery charges are the same for every provider in a territory. The only retail-side levers are the energy charge, the base charge, and the plan structure.

Conversely, if the energy charge rate is above 14 cents per kWh on a fixed plan and local market rates have dropped, comparing offers on Power to Choose is worth the 15 minutes it takes. The EIA reported the average Texas residential retail rate at approximately 13.2 cents per kWh in late 2024, meaning any fixed plan priced well above that warrants a comparison before the contract renews.

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A Quick Reference: What Each Charge Means

A Texas electricity bill is more legible than it first appears. Once the retail and delivery sides are separated, the math is straightforward. The EFL for any plan on the market provides the numbers needed to run that math before signing a contract, not after.