What are Dallas TDSP and TDU Charges?

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Find out more about Dallas TDSP and TDU charges. Shop and compare the best electricity in Dallas, TX, and save!
Find out more about Dallas TDSP and TDU charges. Learn the best way to cut Oncor rates with the best electricity in Dallas!

Why am I paying transmission/distribution charges in Dallas?

Electricity customers in Texas pay separate charges for their electricity supply and the electricity’s transmission and distribution. Transmission and distribution charges on your bill cover the cost of maintaining the poles and wires on the local grid. That way, your electricity gets to your home or business safely and reliably. But while TDSP or TDU charges show up on your Dallas electric bill, customers are often never really sure what they are.

For residential customers, TDSP or TDU charges are just the transmission and distribution charges listed on your bill. They reflect these two charges:

  • A fixed-rate customer charge. This charge includes the cost of maintaining an account with Oncor and a metering charge for measuring your usage.
  • The second is the transmission/distribution charges per kWh you used during the past month.

The transmission/distribution charges can add 1/3 or more to your monthly bill because they depend on how much electricity you use to power your Dallas area home.

Why Are TDSP/TDU Delivery Charges So High?

Oncor operates the local transmission and distribution grid. It’s expensive to maintain and, of course, they don’t do it for free. The Public Utility Commission of Texas (PUCT) oversees the rates that all TDUs charge their customers. The same rate, called a tariff, is the same for all Dallas residential electricity customers, no matter who their retail electric provider is.

But why are there two acronyms for the same thing? That’s because twenty years ago, light companies in Dallas and throughout Texas got sloppy and used the terms interchangeably. The fact is that “TDSP” and “TDU” reflect the jobs of two major Texas energy regulators.

“TDSP” and “TDU” Meaning

“TDSP” or “Transmission/Distribution Service Provider” is mainly used by ERCOT. According to ERCOT, TDSPs own/operate, for compensation, the equipment/facilities to transmit and/or distribute electricity in Texas. That’s the poles, wires, high tension towers, and control centers moving bulk power from one end of the state to the other.

TDSPs include:

  • Bulk transmission companies (high tension lines that move hundreds of megawatts across the state)
  • Rural Electric Cooperatives (RECs)
  • Municipal-Owned Utilities (MOUs)
  • Investor Owned Utilities (IOUs) that operate a Transmission and Distribution Utility (TDU) in Texas.

“TDU” or “Transmission/Distribution Utility”is mainly used by the PUC of Texas. According to PUCT, a TDU is the local utility company (originally one of the monopoly IOU companies) that handles the local transmission and distribution to local customers within its service territory. They also track the customer usage in the local grid, who their supplier is, and report usage to that supplier. In short, they handle the local distribution to home and business users. They also track the usage and help maintain the equipment to bill everyone.

TDUs include:

  • Oncor
  • Centerpoint
  • AEP (North and Central)
  • TNMP
  • Sharyland Utilities

Two Different Terms for Two Different Jobs

  • ERCOT takes care of the day to day bulk transmission/distribution operations on the Texas grid PLUS runs the electricity markets. Consequently, they deal with transmission/distribution service providers to send the electricity the communities it needs to go and when.
  • The PUCT regulates and approves the local transmission/distribution rates set by the different utilities such as MOUs and IOUs. Once the electricity gets to the local city/town level, it becomes a TDU’s job to deliver the electricity to homes and businesses at the PUC approved tariff amount.

Even though the PUCT regulates TDUs, those TDUs that operate in ERCOT territory must abide by ERCOT’s operational rules. In Texas, all the main TDU companies also operate major transmission lines in the state. That also makes them TDSPs.

So, it’s not surprising that twenty years ago, TDSPs and TDUs became interchangeable terms among folks who weren’t totally clear about the distinction between the two roles. Ironically, “TDSP” shows up in a number of PUCT reports about local transmission/distribution companies dating before 2006 and there is no use of “TDU” at all.

Dallas TDU Charges

Technically speaking, since customers must pay the local distribution rate, it’s accurate to call these charges “TDU distribution charges”. Unfortunately, that distinction is taking a long time to be universally adopted. Beginning sometime in 2006, the PUCT began using “ Transmission and Distribution Utility” or “TDU” in its orders and rulings. In one PUCT rule-making case in 2006, “TDU” is used 679 times throughout the report but “TDSP” is used only once.

How To Reduce Oncor Electricity Delivery Charges

If you’ve heard that you can reduce your monthly Oncor charges, you need to pay attention this important fact:

Residential electricity customers in the Oncor service area all pay the same distribution charge rates no matter where who their retail electric provider is.

 Residential electricity customers generally do not use the same volume of electricity as businesses. Consequently, they don’t need to worry about juggling demand charges, demand ratchets, or time of use charges that business, commercial customers, and places of worship do.

That means, the only way for residential customers to reduce their monthly TDU charges is to reduce the electricity they use. Unfortunately, if you’ve signed up for a tiered rate plan that penalizes you for using less electricity, cutting your usage each month might cost you more.

The other way to cut your monthly bill is to shop for a new Dallas energy company that has plans and low rates that don’t gouge you for using less energy. That’s the best way to avoid paying high TDU charge!

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