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Crash Course: Understanding Delivery Charges

Updated: Jan 24, 2019

Looking for ways to manage your delivery costs?

You're not alone. Here are some of our most frequently asked questions.

What are TDU Delivery Charges?

The Transmission and Distribution Utility (TDU) that services your area charges each customer for the cost of maintaining electricity poles & wires, meters, etc. These charges are approved by the Public Utility Commission of Texas (PUCT) and are passed through to you without any markup. These charges apply to all business customers; your local utility and energy supplier have no control over what’s charged for delivery.

Will delivery rates change during my contract?

Delivery rates can only change in accordance to regulatory actions or changes allowed by law. Rate schedules are updated twice per year by the PUCT.

Where can I find up-to-date TDU Rates?

Published Transmission and Distribution Rates Table.

Why is the “Total Average Price” on the contract higher than the Fixed Rate I agreed to?

The agreed upon Energy Rate only includes charges for the actual supply of electricity and does not include any delivery charges from the TDU. The Total Average Price will be higher because it includes your estimated delivery charge per kWh and your energy charge per kWh.

Total Average Price = Fixed Energy Charges per kWh + Delivery Charges per kWh

What is demand?

Demand is the amount of kW your property uses in an hour. Metered kW is the greatest amount of hourly kW used within each billing period, while peak kW is the greatest amount of hourly kW used in 11 months preceding your current billing month. Peak kW is measured so power generators know how much electricity is needed to service everyone on the grid.

Billed kW is the amount you’re billed each month based on the greater of metered kW or 80% of peak kW (demand ratchet).


How are the TDU Delivery Charges Calculated?

Delivery charges are comprised of different cost components. Some charges are billed as a per meter charge, some on a demand basis (per billed kW), while others are on a usage basis (monthly kWh). For this reason, your total delivery charges will vary each month based on how much energy you use.

Delivery charges are segmented into two distinct groups for non-IDR: demand less than or equal to 10 kW, and demand greater than 10 kW (TNMP is 5 kW). Most businesses are secondary service greater than 10 kW, unless you own and maintain the actual service meter. For a breakdown of each TDU delivery charge cost component, see Table 1.

Table 1

Delivery Charge Cost Components

Example Delivery Charge Calculation

Business located in ONCOR, 1 Meter (Secondary Service and Non-IDR), Billed Demand 23 kW, and monthly consumption is 6,000 kWh.

How do I reduce delivery costs?

Learn how different parts of your business contribute to your overall consumption. Simply changing habits or investing in energy efficiency products can lower demand and reduce consumption, thus reducing your energy bill.

  • Less than 10 kW demand: Reduce consumption through energy efficiency products such as smart thermostats and LED lighting.

  • Greater than 10 kW demand: Reduce your peak kW by investing in energy-efficient equipment, installing capacitors to fix power factor issues, downsize equipment to fit your needs, and schedule energy intensive operations so that they don’t overlap.

  • Large energy users, or those with generators can reduce delivery costs and earn revenue by participating in Demand Response. Learn more about Demand Response here.


Have more delivery charge questions? Email us by clicking the icon below.



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