Decoding Your Texas Electricity Bill:
Understanding Transmission and Distribution Charges

When you receive your monthly electricity bill in Texas, you might notice various charges contributing to the total amount due to your electricity provider. While it is easy to focus on the overall cost of your bill, it’s important to understand the individual line items so you are aware of where your money is going. While the ‘Energy Charges’ on your bill are determined by the contract you signed with your electricity provider, there are other line items that are controlled by other governing bodies, such as ERCOT, the PUCT, and your local electric utility.

If you have studied your electricity bill, you have probably noticed that a significant portion of the overall bill amount comes from a line item called ‘Energy Delivery Charges’. Some customers don’t realize that this portion of the bill is determined by those previously mentioned governing bodies and not the electricity provider you selected. The ‘Energy Delivery Charges’ line item, also known as TDSP charges, covers the transmission and distribution services provided by your electric utility.

Transmission Charges

Transmission charges refer to the cost associated with the transportation of electricity from power generators to local distribution networks. Texas has a vast and intricate power grid, and these charges cover the expenses incurred in transmitting electricity across long distances because power plants are often located far from populated areas. Maintaining, upgrading, and expanding the high-voltage transmission lines is expensive and a portion of the ‘Energy Delivery Charges’ are used to cover this expense.

Distribution Charges

Distribution charges pertain to the local infrastructure that delivers electricity from the transmission lines to your doorstep. This includes the maintenance and operation of poles, wires, transformers, and other equipment that make up the distribution system. Distribution charges also cover the investment made by your local utility to upgrade and modernize their infrastructure. As demand for electricity grows, these providers need to enhance their systems to meet the needs of their customers.

Why are these charges separate?

Separating the ‘Energy Delivery Charges’ and other line items on a bill allows for a more transparent and accountable billing system. It enables consumers to understand the specific costs associated with different aspects of the electricity supply chain and encourages efficiency in the management of the power grid. It is important to understand that your ‘Energy Delivery Charges’ will be the same regardless of which electricity provider you select. That line item is calculated and provided to your electricity provider. Your electricity provider is simply consolidating all the charges line items onto the invoice.

Understanding the various line items on our bill empowers consumers to recognize the broader factors shaping the Texas energy infrastructure and ultimately influencing their monthly electricity bill.