Most people glance at the total and pay it. That works fine until your bill jumps and you don't know why. Understanding what you're actually being charged for takes about five minutes and makes you a significantly better electricity shopper.
The Two Main Sections
Every Texas residential electric bill is split into two fundamental parts: the energy charge and the delivery charge. These are billed together but they come from two different entities, and only one of them is negotiable.
The energy charge is what you pay your retail electric provider (REP) — companies like Reliant, TXU, Verde Energy, or hundreds of others — for the actual electricity you used. This is the part you can shop.
The delivery charge comes from your local utility — Oncor, AEP Texas, CenterPoint, or TNMP, depending on where you live. This covers the cost of maintaining the poles, wires, and infrastructure that bring electricity to your meter. You can't change this. It's the same regardless of which provider you choose.
Breaking Down the Energy Charge
The energy charge on your bill is typically your per-kWh rate multiplied by your monthly usage in kilowatt-hours. If your plan is 11 cents per kWh and you used 1,100 kWh last month, your energy charge is $121.
Some plans also include a monthly base charge — a flat fee (usually $5–$10) billed regardless of your usage. This matters more than people realize. A plan with a low per-kWh rate but a $9.95 base charge can end up costing more than a plan with a slightly higher rate and no base charge, particularly if your usage is on the lower end.
Some plans offer a bill credit when you use above a certain threshold — for example, a $50 credit if you use more than 1,000 kWh in a month. These can be genuinely valuable for high-usage households but misleading for anyone who falls under the threshold most months.
The TDU Delivery Charges
TDU stands for Transmission and Distribution Utility — the company that owns the wires in your area. Your delivery charges typically include both a fixed monthly customer charge and a variable charge based on usage (cents per kWh). Oncor's delivery rates in the Dallas area, for example, include a customer charge of around $3–$4 per month plus a usage-based component.
Because these charges are pass-throughs from your utility, your REP has no control over them. When you see advertisements for electricity rates, those rates almost never include the TDU charges — which is why your all-in cost per kWh is always higher than the advertised rate.
Your Usage in Kilowatt-Hours
Your bill will show your total usage in kWh for the billing period, along with the number of days in the cycle (usually 28–32 days). Some bills also show your average daily usage, which is helpful for spotting unusual months.
Average residential usage in Texas runs around 1,100–1,200 kWh per month, but this varies significantly by home size, insulation, and thermostat habits. Central Texas homes running heavy AC in August can easily hit 2,000+ kWh. Knowing your typical monthly usage is essential for comparing plans accurately — the per-kWh rate at 500 kWh and at 2,000 kWh can be very different on the same plan.
Taxes and Fees
Texas has no state income tax, but electricity bills include a few smaller line items: a state sales tax of 6.25% on the taxable portion of your bill, plus any applicable city or municipal tax if you're within city limits. These add a few dollars to most residential bills and aren't something you can shop around.
Some providers also charge a late payment fee or a service reconnection fee — these show up as separate line items if applicable and are worth reviewing if your bill is unexpectedly high.
What the Electricity Facts Label Tells You
Every plan sold in Texas comes with an Electricity Facts Label (EFL) — a standardized document that shows your all-in average price at 500, 1,000, and 2,000 kWh. This is the document your bill is a real-world version of. The EFL is required by the PUCT (Public Utility Commission of Texas) and is the most honest way to compare plans side-by-side.
If you want to know whether your current plan is still competitive, find your current EFL, look up your actual monthly usage, and compare that all-in rate to what's currently available. That gap — if there is one — is what you could save by switching.
The Part You Can Control
The delivery charges on your bill are fixed. Taxes are fixed. The only lever you have is the energy charge — your per-kWh rate and any associated base charges from your REP. Shopping your rate regularly, understanding your plan's structure, and locking in at the right time of year are the moves that determine whether your electric bill is optimized or just something you pay without thinking about.
Most Texas residents could lower their energy charge meaningfully just by comparing what they're currently paying to what's available today. The bill you're holding tells you exactly where to start.