Quick Answer
Your Texas electric bill comes from your REP, but your power comes through your TDU. Understanding this split is the key to comparing plans and avoiding billing surprises.
The Two Companies Behind Your Electricity
Every Texas electricity customer in a deregulated area deals with two companies:
| Company Type | Examples | What They Do |
|---|---|---|
| REP (Retail Electric Provider) | Reliant, TXU, Gexa | Handle your bill, set your rate, customer service |
| TDU (Transmission & Distribution Utility) | Oncor, CenterPoint, AEP Texas, TNMP | Own power lines, deliver electricity |
Key difference:
- You choose your REP (and can switch anytime)
- You cannot choose your TDU (assigned by address)
What Your REP Does
Your Retail Electric Provider handles the business side of your electricity service. They purchase wholesale electricity from the ERCOT market and resell it to you at the rate you agreed to in your contract.
REPs are responsible for:
- Setting your electricity rate (the part you can shop)
- Sending your monthly bill
- Customer service for billing questions
- Contract terms, early termination fees, renewals
- Marketing and promotional offers
The good news: You choose your REP. Unhappy with rates or service? Switch to a different provider—usually within a few days and at no cost (unless you break a contract early).
What Your TDU Does
Your Transmission and Distribution Utility handles the physical delivery of electricity. They own and maintain the power lines, transformers, and Smart Meters that bring electricity from power plants to your home.
TDUs are responsible for:
- Power line maintenance and repairs
- Outage response and restoration
- Smart Meter installation and reading
- Connecting and disconnecting service
- Tree trimming near power lines
The catch: You cannot choose or change your TDU. Your address determines which one serves you. Switching REPs does not affect your TDU—and does not affect your reliability. Same wires, same equipment, regardless of who bills you.
TDU Charges on Your Bill
TDU charges appear on your electric bill as delivery fees or transmission/distribution charges. Regulated by the PUCT and the same regardless of which REP you use.
Typical TDU charges:
| Charge Type | Typical Amount |
|---|---|
| Monthly base fee | $3-$10 depending on TDU |
| Per-kWh delivery | 3-5¢ per kWh |
| Transmission charges | Passed through from ERCOT |
Bottom line: These charges are not negotiable. Every customer in a TDU territory pays the same TDU fees. Only ways to reduce:
- Use less electricity
- Move to a different TDU territory
Why This Matters for Shopping
Understanding TDU vs REP matters because it affects how you compare plans.
Watch out for deceptive pricing:
- Advertised rate of "9¢/kWh" usually includes TDU charges
- Some plans advertise energy charge only (the REP portion)
- TDU charges then get added on top → actual rate 4-5¢ higher
The solution: Use the Electricity Facts Label (EFL). It shows your total rate at 500, 1000, and 2000 kWh usage levels. This includes all charges—REP energy costs plus TDU delivery fees.
Compare EFL rates, not advertised rates, to know what you'll actually pay.
The Reliability Myth
Many Texans worry that switching electricity providers will affect their reliability. This is a myth. Your TDU—not your REP—determines reliability.
Nothing changes when you switch REPs:
- Same Oncor crew responds to your outage (Reliant or TXU customer)
- Same CenterPoint Smart Meter reads your usage
- Same power lines serve your home
- Same equipment, same reliability
What switching REPs actually changes:
- Who bills you
- What rate you pay
- Customer service contact
The only exception: Brief transition period (usually 1-2 days) where your meter reading transfers between companies. Even then, your power stays on continuously.
Frequently Asked Questions
Can I choose my TDU in Texas?
| TDU | Service Area |
|---|---|
| Oncor | Dallas-Fort Worth |
| CenterPoint | Houston |
| AEP Texas | South and West Texas |
| TNMP | Parts of Gulf Coast |
Will switching REPs affect my power reliability?
Why do TDU charges vary by location?
Are TDU charges included in advertised electricity rates?
Looking for more? Explore all our Understanding Deregulation guides for more helpful resources.
About the author
Consumer Advocate
Han helps consumers in deregulated states understand their electricity options. He breaks down confusing rate structures, explains how to read an EFL, and identifies which plans save money versus those that just look cheap upfront.
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Topics covered
Sources & References
- Public Utility Commission of Texas (Public Utility Commission of Texas): "Texas TDU regulations and rate structures"Accessed Dec 2025
Last updated: December 31, 2025
