Your Texas electric bill is made up of two separate charges, and only one of them can be lowered by switching providers. The supply charge covers the electricity itself, the actual kilowatt-hours your household consumes. The delivery charge covers the poles, wires, and meters that bring that electricity to your home. Retail Electric Providers (REPs) compete on supply. Your local utility monopoly controls delivery. Knowing which is which changes how you shop.
The Two Parts of Every Texas Electric Bill
Texas deregulated its electricity market in 2002 under Senate Bill 7, separating the generation and retail functions from the wires and infrastructure. That separation shows up directly on your bill. The Public Utility Commission of Texas (PUCT) requires REPs to present charges clearly, but the labeling varies by provider. You may see terms like "energy charge," "generation charge," "TDU delivery charge," or "pass-through charges." Beneath the different labels, every residential bill in a deregulated Texas service territory breaks into the same two buckets.
The first bucket is supply. The second is delivery. Together they make up the vast majority of what you pay each month, before any taxes or small regulatory fees.
What Is the Supply Charge?
The supply charge, sometimes called the energy charge or generation charge, is the cost of the electricity your household uses. It is priced in cents per kilowatt-hour (cents/kWh) and set by the REP you choose. This is the number you see advertised when providers quote rates on the Power to Choose website maintained by the PUCT.
According to the U.S. Energy Information Administration (EIA), the average retail electricity price in Texas was approximately 14.3 cents/kWh for residential customers in late 2024, though rates vary significantly depending on contract type, term length, and the specific plan structure.
Some plans price supply as a flat per-kWh rate. Others use tiered pricing, where the rate changes once you cross a certain usage threshold, commonly 500 kWh or 1,000 kWh per month. A handful of plans include bill credits at specific usage levels, which can make the effective rate look very different from the advertised rate. The Electricity Facts Label (EFL), a standardized disclosure the PUCT requires every REP to publish, shows the all-in average price at 500, 1,000, and 2,000 kWh per month. Reading the EFL at your actual usage level is the most reliable way to compare supply costs across plans.
Because supply is competitive, this is where switching providers can produce real savings. A household using 1,200 kWh per month that moves from a 14-cent plan to an 11-cent plan saves roughly $36 per month, or $432 over a 12-month contract.
What Is the Delivery Charge?
The delivery charge, formally called the Transmission and Distribution Utility (TDU) charge, pays for the physical infrastructure that carries electricity from generators to your home. This includes high-voltage transmission lines, local distribution wires, transformers, meters, and the crews who maintain and repair them.
Your TDU is determined by where you live, not by which REP you choose. Oncor serves the Dallas-Fort Worth area and most of West Texas. CenterPoint Energy serves Houston. AEP Texas serves a large swath of West and Central Texas. TNMP (Texas-New Mexico Power) covers smaller communities in the Panhandle and near Houston. You cannot switch TDUs. If you live in Oncor territory, Oncor delivers your power regardless of which REP you pick.
TDU delivery charges typically appear on your bill in two components. The first is a fixed monthly customer charge, a flat fee that applies regardless of how much electricity you use. Oncor's residential customer charge, as approved by the PUCT, has been in the range of $3 to $5 per month. The second component is a variable per-kWh charge that scales with your consumption. As of recent PUCT-approved tariffs, combined TDU delivery rates across the major utilities range from roughly 4 to 6 cents/kWh when the fixed and variable pieces are averaged at typical household usage levels.
Because TDU rates are set by PUCT proceedings, not market competition, no REP can offer you a lower delivery charge. Any REP that advertises "lower TDU fees" is either passing through the same regulated rate or bundling costs in a way that deserves careful scrutiny on the EFL.
How the Two Charges Show Up on Your Bill
Most Texas REPs itemize delivery charges directly on your statement, either as a passthrough line or as a subtotal labeled "TDU charges" or "delivery charges." Some REPs present a single blended per-kWh rate on their marketing materials but still separate the components on the actual bill. If your bill does not clearly separate supply from delivery, contact your REP and ask for a breakdown. The PUCT requires that information to be available.
A representative monthly bill for a Dallas-area household using 1,000 kWh might look like this:
- Energy/Supply charge: 8.5 cents/kWh x 1,000 kWh = $85.00
- Oncor delivery (variable): ~4.6 cents/kWh x 1,000 kWh = $46.00
- Oncor customer charge (fixed): ~$3.42
- Miscellaneous fees and taxes: ~$5.00
- Total: approximately $139.42
The supply portion represents roughly 61 percent of the total in this example. The delivery and fixed portions account for the remaining 39 percent. That ratio shifts depending on your REP's rate structure and your monthly usage, but in most Texas households, supply accounts for somewhere between 55 and 70 percent of the total bill.
Where You Can and Cannot Save
Switching REPs affects only the supply portion of your bill. If a cheaper supply rate saves you 3 cents/kWh and you use 1,000 kWh per month, your savings are $30 per month. The delivery charge stays exactly the same.
That distinction matters when evaluating switching decisions. A plan advertised at 9 cents/kWh is not automatically cheaper than one advertised at 11 cents/kWh if the 9-cent plan has a high fixed monthly fee or a tiered structure that raises the effective rate at your actual usage level. Always compare at your household's typical monthly consumption using the EFL, not the headline rate.
On the delivery side, the main levers available to households are efficiency measures that reduce total consumption. Lower consumption means a lower variable TDU charge. Programmable thermostats, LED lighting, and weatherization all reduce the kWh total that both supply and delivery charges are applied to.
When Switching Providers Is and Is Not Worth It
Switching makes sense when your current contract is expiring, when you are on a month-to-month holdover rate (which tends to run higher than fixed-rate plans), or when market conditions have pushed competitive supply rates meaningfully below what you are currently paying. The PUCT's Power to Choose website at powertochoose.org lists all available plans in your zip code with standardized pricing.
Switching is unlikely to produce significant savings if you are in the middle of a contract with an early termination fee that exceeds the projected savings, or if the difference in supply rates between your current plan and available alternatives is less than 1 cent/kWh.
Understanding the supply versus delivery split is the foundation for all other electricity decisions in Texas. Once you know which number is negotiable and which is fixed, comparing plans becomes a straightforward math exercise rather than a confusing marketing puzzle.