Look at your Texas electricity bill. There's a line called "TDU Delivery Charges" or something similar, and it's probably 30-40% of your total bill. You didn't choose the company charging it, you can't shop for a cheaper one, and depending on where you live, that same amount of electricity delivered would cost a different Texan somewhere else in the state up to 25% more or less. Welcome to the strangest part of Texas's deregulated electricity market.
This guide explains exactly what your TDU charges, why the four Texas TDUs charge different amounts, and — most importantly — what you can actually control about it. If you've ever wondered why moving from Dallas to Houston made your bill go up even at the same usage, this is why.
What a TDU actually is (in plain English)
In most states, one utility company handles everything: generating electricity, moving it across power lines, and selling it to your home. In Texas's deregulated market, those three functions are split apart.
The generators produce the electricity at power plants. The Retail Electric Providers (REPs) — companies like TXU, Reliant, Gexa, Direct Energy, and dozens of others — sell it to you and send you a bill. And in between, the Transmission and Distribution Utility (TDU) owns the poles, wires, substations, and meters that physically move the electricity from the generators to your house.
You don't get to choose your TDU. It's determined by your service address, and every home in Texas is inside exactly one TDU's service territory. You can shop your REP freely — that's the whole point of deregulation — but the TDU is a regulated monopoly. Whichever TDU serves your ZIP code is the one you're stuck with.
Why this matters: When you switch REPs to get a cheaper energy rate, you're only affecting the "energy charge" portion of your bill. The TDU delivery charge stays the same regardless of which REP you use. This is why comparing the "average price per kWh" across REPs can be misleading — everyone in your ZIP pays the same delivery charge on top.
How to find your TDU in 30 seconds
Three ways:
- Look at your current bill. Every Texas electricity bill lists your TDU somewhere. Look for a line labeled "Delivery Charges," "TDU," or "TDSP" (transmission and distribution service provider) — that's your TDU.
- Look up your ZIP. The Public Utility Commission of Texas maintains a service area map. Search "PUCT service area map" and enter your ZIP.
- Check by city. Most Texas cities fall into predictable TDU territories, described below.
The four main Texas TDUs at a glance
Four TDUs cover the vast majority of deregulated Texas. Here's how they stack up.
| TDU | Territory | Approx. rate/kWh | Monthly fee |
|---|---|---|---|
| Oncor | DFW, North Texas, East Texas | 4.27¢ | $5.25 |
| CenterPoint | Houston, Galveston | 4.78¢ | $4.39 |
| AEP Texas Central | South Texas, Corpus Christi, Rio Grande Valley | 4.97¢ | $5.94 |
| AEP Texas North | West Texas, Abilene, San Angelo | 5.18¢ | $5.94 |
Note: these rates are approximate residential rates as of mid-2026. Small pass-through fees and riders can add a few tenths of a cent. The PUCT reviews and updates TDU rates every 3-5 years through a "rate case" process, so exact numbers shift over time.
Also note: Texas has smaller deregulated TDUs beyond these four — including Texas-New Mexico Power (TNMP) serving parts of West and East Texas, and a handful of small cooperatives. And large chunks of Texas — Austin, San Antonio proper, El Paso, and much of Lubbock — are served by municipal or cooperative utilities and are NOT in the deregulated market. If you live in one of those areas, you can't shop REPs at all.
Deep dive: Oncor Electric
Oncor is the largest TDU in Texas by customers served — over 3.7 million residential and business accounts. Their territory is centered on the Dallas-Fort Worth metroplex and extends north to the Oklahoma border, east to Tyler, and south to Waco.
Oncor has the lowest residential TDU rate among the four major TDUs. This is partly because their service territory is geographically dense (lots of customers per mile of wire), and partly because their infrastructure has been in continuous investment cycles longer than the Southern coast utilities that had to rebuild after Hurricane Harvey.
If you live in Dallas, Fort Worth, Plano, Frisco, Arlington, Garland, Irving, or McKinney, Oncor is your TDU.
Deep dive: CenterPoint Energy
CenterPoint is the second-largest Texas TDU, serving roughly 2.6 million customers across the Houston metropolitan area and the upper Texas Gulf Coast. Their territory includes downtown Houston, the surrounding suburbs, and reaches south to Galveston and east into Beaumont's edge.
CenterPoint's TDU rate runs about 12% higher than Oncor's. Some of this reflects the higher cost of maintaining infrastructure in the hurricane-prone coastal environment — they've had to rebuild significant portions of their grid multiple times since 2005. Their monthly customer charge is actually the lowest of the four ($4.39), but the per-kWh rate more than offsets that for typical residential usage.
If you live in Houston or its inner-ring suburbs, CenterPoint is your TDU. Note that some outer Houston suburbs (like The Woodlands or parts of Katy) may be in different TDU territories or served by cooperatives.
Deep dive: AEP Texas Central
AEP Texas Central covers a large geographic area of South Texas including Corpus Christi, Laredo, the Rio Grande Valley, and portions of the Austin area suburbs. Their service territory is more spread out than Oncor's or CenterPoint's, which contributes to higher per-mile infrastructure costs and, in turn, higher TDU rates.
Residents in this territory typically face two compounding cost factors: higher TDU rates than DFW, plus longer air-conditioning seasons than most of Texas due to the region's subtropical climate. This makes shopping for the cheapest REP energy rate especially valuable for households in AEP Central territory — every 1¢/kWh saved on the energy side matters more when your annual usage is high.
If you live in Corpus Christi, Laredo, Brownsville, McAllen, or parts of the Austin suburbs, AEP Texas Central is your TDU.
Deep dive: AEP Texas North
AEP Texas North serves the West Texas region — a sparsely populated area covering roughly the western third of the state's deregulated territory. Cities like Abilene, San Angelo, and portions of West Texas Hill Country fall in this territory.
AEP Texas North has the highest TDU rate of the four major TDUs. The reason is straightforward geography: fewer customers spread over larger distances mean higher infrastructure cost per household. Their territory also has to accommodate significant wind generation infrastructure that connects to the ERCOT grid.
Silver lining: because AEP North's territory overlaps with major Texas wind energy production, some renewable-focused REP plans offer competitive rates in this area that reflect the local wind generation surplus.
What TDU charges actually cover
When you pay your TDU delivery charge, you're paying for four things bundled together:
- The physical wires and poles. Every mile of wire, every pole, every substation, and every transformer that carries electricity from the generator to your meter.
- Meter reading and maintenance. The smart meter on the side of your house, plus the systems that read it, are TDU responsibility.
- Grid resilience and storm recovery. When ice storms, hurricanes, or freezes damage the grid, the TDU is responsible for restoring service. The costs of that work get baked into future rate cases.
- Ongoing grid investment. Adding capacity for population growth, connecting new renewable generation, and hardening infrastructure against climate risks.
What your TDU charge does NOT cover: the electricity itself. That's your REP's job to source and sell to you.
Why TDU charges vary between utilities
Four main reasons the rates you see above differ by about a cent per kWh:
1. Customer density
Oncor serves the densest population centers in Texas. More customers per mile of wire means the infrastructure cost is spread across more billing units. AEP Texas North's much sparser West Texas territory means fewer customers per mile of wire, so each customer bears more of the fixed infrastructure cost.
2. Storm and climate exposure
CenterPoint and AEP Central serve hurricane and tropical storm territories. When Hurricane Harvey hit Houston in 2017, CenterPoint spent hundreds of millions on grid restoration. Those costs eventually flow through into rate cases and TDU charges.
3. Infrastructure age and investment cycles
All Texas TDUs are in active investment cycles for grid modernization — replacing aging transformers, adding smart-grid capabilities, hardening substations against climate risk. Each rate case adjusts charges to reflect these investments.
4. Renewable generation integration
Texas is the largest wind energy state in the U.S. Integrating that generation into the grid requires transmission infrastructure that gets paid for through TDU charges. AEP North's higher rate partly reflects the West Texas wind belt.
The one thing to remember when shopping REPs
Your TDU charge is going to be the same no matter which Retail Electric Provider you choose. Every REP is required to pay the same TDU delivery charge to send electricity to your home. That's not something they can undercut each other on.
What that means practically: focus your shopping on the energy charge portion of the bill, not the total. An EFL that shows "average price of 11.5¢/kWh" already has the TDU charge baked into it. Two REPs in Oncor territory both include the same 4.27¢ TDU baseline — the difference in their advertised rate is entirely about their energy charge, contract structure, and any bill credits.
Practical implication: A "9.5¢/kWh" plan in Oncor territory implies about 5.2¢/kWh going to the REP for energy. The same "9.5¢/kWh" plan in CenterPoint territory implies about 4.7¢/kWh going to the REP for energy. Same headline, different underlying reality. Understanding this helps you compare plans across TDU territories fairly.
What you can and cannot control
You can control:
- Which REP you use, and therefore your energy charge per kWh
- Your usage — running less AC, better insulation, smart thermostat, etc.
- Whether you choose a fixed-rate or variable plan
- Whether you fall into bill credit trap plans (see our Bill Credit Trap guide)
You cannot control:
- Which TDU serves your address
- The TDU's per-kWh delivery charge
- The TDU's monthly customer charge
- The pass-through fees and riders the PUCT adds to bills (Nuclear Decommissioning Fee, etc.)
The practical takeaway: focus your energy and effort on the shoppable parts. The unshoppable TDU part will be what it will be, and no amount of REP-hopping will change it. What varies dramatically between households is their energy charge plus their usage discipline — and both of those you can influence.
When TDU charges change
TDU rates aren't set annually. They change through PUCT-approved "rate cases," which are formal regulatory proceedings that happen every 3-5 years for each utility. During a rate case, the TDU petitions the PUCT for a new rate structure, PUCT staff and consumer advocates review the request, and eventually a settlement (usually smaller than the original ask) gets approved and takes effect.
Most Texas TDUs went through rate cases in 2023-2025. This is why many Texans noticed their bills going up in mid-2025 even though their fixed-rate contracts hadn't changed — the TDU charges baked into every plan increased.
The next round of major Texas TDU rate cases is expected in 2028-2029. Between now and then, expect your TDU charge to be relatively stable outside of pass-through adjustments.
The bottom line
Your TDU is a fixed cost of living where you live. The rate case cycle means it changes rarely, and when it does, it affects everyone equally in that TDU's territory. Shopping REPs won't change it. Switching plans won't change it. Moving might change it (as many people who relocate from Dallas to Houston discover).
The good news: even with an unavoidable TDU charge, the shoppable portion of your bill is significant enough that switching REPs still typically saves Texas households $200-500 per year. Use our plan comparison tool to see the cheapest available energy rates in your ZIP, and know that whatever TDU charge you're seeing is the same across all of them.
The best long-term move: pair a low fixed-rate REP plan with usage discipline (smart thermostat, efficient appliances, seasonal awareness). That's where the real savings live — the TDU part is just the cost of being connected to the grid at all.