2 Major Components of your Electricity Bill

Your monthly electricity bill has two primary sections.  The first one is the electricity charge that is assessed by your retail electric provider or (R.E.P.).  This charge is assessed according to the rate and terms set forth in the plan documents agreed to with the energy supplier or R.E.P.

Delivery Charges

The second part of your bill is the Transmission and Distribution Utility (TDU) delivery charge.  Many call this the “wires and poles” charge.  This charge is assessed by the TDU serving your area according to their tariffs as approved by the Public Utility Commission of Texas (PUCT).  Texas says that it is the energy supplier’s responsibility to bill and collect the delivery charges for the TDU.  The retail electric provider does (R.E.P.) does not have control over the TDU’s charges.   The retail electric provider is given the charges by the TDU no matter which electricity provider you choose.

Residential retail energy providers may collect these fees in different ways.  Some providers will bundle the delivery charge with their electricity charge.  The retail electric provider usually reserves the right to modify your rate if the TDU tariffs change during the term of your contract.  It is becoming more popular to pass through the delivery charges as separate line items on your electricity bill.  This pass through method is the most transparent way to bill and makes it easy to see any changes in the TDU delivery tariffs.

Delivery Charge Description

Texas  TDU delivery charges are broken up into base (per month) charges and usage (per kWh) charges.  Base charges are added to your bill no matter how much electricity you use in your home.  The base charges currently assigned to retail electric customers in Texas include the following:  Customer Charge, Metering Charge and Advanced Metering Cost Recovery Factor.  The Customer Charge is the costs for the TDU to transmit billing data to the retail electric provider (R.E.P.)  and track remittance.  The metering charge is the TDU’s cost of metering the homeowner.  The advanced metering cost recovery factor is to account for the costs of smart meters.

It is different across Texas

Line items on your electricity bill for the usage (per kWh) charges varies by TDU due to the different cost recovery factors in their PUCT rate cases.  The main factors  are:  1.  The costs associated with the operating and maintaining the transmission and distribution systems,  2.  Making any changes to the transmission system,  2.  Retiring nuclear-fueled power plants,  3.  Recouping costs due to transitioning assets to the Power to Choose market, and 4.  Energy efficiency programs costs are also charged based on your electricity usage.