Texas EFL Explained: Energy Charge vs TDU Fees on Bills
If you live in a competitive electricity market—especially Texas—you do not buy power from a single company that both generates electricity and runs the wires to your home. You choose a retail electric provider (REP) for the supply side of the bill. A separate transmission and distribution utility (TDU), sometimes called the local wires company, delivers that power, reads your meter, and maintains poles and lines. Your monthly statement reflects both roles, and the Electricity Facts Label (EFL) is the standardized document Texas regulators require so you can compare plans before you sign up.
This guide explains what the EFL shows, how the energy charge differs from TDU delivery fees, and how to use both when shopping, renewing, or troubleshooting a bill.
Why your Texas bill has two cost centers
In most of ERCOT—the grid region covering the majority of Texas residential customers—retail choice is not optional. Customers of investor-owned utilities in ERCOT must choose a competitive retail electric provider or be assigned one, while the local TDU still handles physical delivery (¹). Nationally, retail choice is voluntary in the states that offer it; Texas is the major exception where competitive supply is mandatory in ERCOT (²).
That split shapes every bill. REPs sell you kilowatt-hours (kWh) but do not operate the delivery network. TDUs own and maintain the infrastructure from the grid to your meter (³). In the deregulated Texas market, TDUs own the wires from generating plants to the customer meter, while REPs buy power on the open market and sell according to customer preferences (⁴).
If you are coming from a fully regulated utility—one company, one bill—the Texas layout can look like two businesses sharing one envelope. That is by design, not a billing error.
How this compares to Ohio, Maryland, and regulated markets
Maryland deregulated its electric market in 1999, allowing consumers to choose their electricity provider while utilities continue to deliver power (⁵). Ohio and several other states also offer retail choice on a voluntary basis (²). In those states, supply and delivery may appear on one bill from your utility with a separate line for a third-party supplier.
In regulated markets, a single utility typically sets bundled rates approved by state regulators. You will not see a Texas-style EFL because there is no competitive REP offering to compare. The concepts still apply—every bill has a generation or supply component and a delivery component—but only in choice states like Texas are those pieces split across companies and spelled out on a standardized label.
What the Electricity Facts Label is
The Public Utility Commission of Texas (PUCT) requires every retail electric provider to give customers an Electricity Facts Label (EFL) for each plan. The PUCT describes the EFL as similar to a nutrition label: a standardized format for comparing prices and contract terms among competitive providers (⁶). Power to Choose, the PUCT's official comparison site, defines the EFL as a fact sheet with standardized information on contract terms, pricing, fees, and renewable energy content so customers can make an apples-to-apples comparison (³).
When you shop, you should receive three core documents: the EFL, a Terms of Service (TOS) contract, and a Your Rights as a Customer disclosure (Power to Choose FAQ). The EFL is the best starting point for price comparison, but consumer advocates stress it does not replace reading the full Terms of Service, where additional fees and conditions may appear (⁷).
What the EFL must show for pricing
Under PUCT rule §25.475, each EFL must state whether the product is a fixed-rate or variable-price plan. For fixed-rate products, the label must disclose the total average price for electric service reflecting all recurring charges (excluding sales taxes and certain gross receipts reimbursements). That average price must be shown in cents per kWh, rounded to the nearest tenth of a cent, at three residential usage levels: 500, 1,000, and 2,000 kWh per month (⁸).
Those three usage anchors matter because many plans include monthly base charges or usage-tier fees that make the effective rate rise or fall depending on how much electricity you consume. A plan that looks cheapest at 2,000 kWh can be expensive at 500 kWh, and vice versa. Always compare the EFL row that closest matches your actual usage.
Small commercial customers
If you are shopping for a small business account, the same EFL framework applies but at different usage benchmarks. PUCT rules require small commercial EFLs to show average prices at 1,500, 2,500, and 3,500 kWh per month (assuming a 30 percent load factor when demand charges apply) (⁸). The energy-versus-delivery logic is identical; only the usage tiers change.
Energy charge: what you pay for the power itself
On your bill and in PUCT billing rules, the energy charge is defined simply: a charge based on the electric energy (kWh) consumed (⁹; ¹⁰). This is the supply portion—the cost of the electrons your REP procures on the wholesale market and sells to you.
Your REP sets this rate through the plan you select: fixed-rate, variable-rate, indexed, time-of-use, or prepaid. REPs sell electricity to customers but do not generate power, read meters, or maintain transmission and distribution wires; all REPs must be certified by the PUCT (³).
Base charges and recurring REP fees
Separate from the per-kWh energy charge, many plans include a base charge—a flat fee applied each month regardless of kWh used (³). PUCT billing guidance treats a base charge as a recurring charge assessed each billing cycle without regard to consumption (¹⁰).
The EFL's average price columns fold recurring charges like base fees into the all-in cents-per-kWh figure at each usage level. That is why a low advertised energy rate plus a high monthly fee can still produce a mediocre average price at your usage tier. Consumer Reports noted early in Texas competition that companies did not always calculate EFL averages identically—some excluded base charges from the displayed average—which is why regulators now require all recurring charges in the EFL total (⁷).
Minimum usage fees
Some plans penalize low consumption. If you use less than a plan's minimum kWh threshold—often 500 or 1,000 kWh in a billing period—you may be charged a minimum usage fee that might not appear as a separate line on the bill (Power to Choose FAQ). Check the EFL for these triggers before signing, especially for vacation homes, apartments, or energy-efficient households.
Time-of-use and indexed plans
Time-of-use plans price power differently depending on when you consume it. Power to Choose warns that average prices on TOU EFLs rely on each REP's estimate of how much energy you use during discounted versus premium hours—and if you do not shift usage, your bill can increase (³). Indexed plans tie rates to a public index and can move substantially month to month (³). In both cases, the energy charge mechanics differ, but TDU delivery pass-throughs still apply.
TDU delivery charges: what you pay for the grid
TDU delivery charges cover the cost of moving electricity from the generation plant to your home over poles, wires, transformers, and related TDU facilities (⁹). PUCT billing rules define TDU delivery charges as the total amounts assessed by a TDU for delivery over poles and wires, excluding discretionary charges (¹⁰).
The TDU—formerly called the local wires company or transmission and distribution utility—is responsible for delivering electricity to your area, reading your meter, and maintaining infrastructure (³). The PUCT regulates transmission and distribution for safety and reliability (³).
You cannot shop away TDU fees
Here is the critical shopping rule: TDU delivery rates are set by your local TDU and approved by the PUCT, not by your REP. When you switch REPs, your energy charge changes but the TDU portion for your service area stays the same. Everyone on the same TDU system pays the same delivery tariff, though total delivery dollars still scale with your kWh usage when charges are volumetric.
Retail providers may bundle all charges into one price per kWh, or they may separate REP supply charges from TDU pass-through charges on the bill (⁹). If a REP separately lists a TDU charge on the bill, the amount billed cannot exceed the TDU's approved tariff charge (¹⁰).
What else can appear under TDU-related lines
Beyond the core delivery charge, PUCT guidance lists other TDU-linked items you may see: meter charges, advanced metering charges, transmission and distribution surcharges, energy efficiency cost recovery, nuclear decommissioning fees, and transition charges tied to the move to competition (⁹). These are regulated pass-throughs, not discretionary markups from your REP.
Delivery costs have grown as a share of total electricity costs nationally. EIA analysis cited by Utility Dive found delivery costs rose from 2.2 cents/kWh in 2006 to 3.2 cents/kWh in 2016, reflecting grid maintenance, customer service, and infrastructure investment (¹¹). Texas TDUs periodically file rate cases to recover storm damage, inflation, and capital spending; when regulators approve higher TDU tariffs, those increases pass through on delivery lines regardless of which REP you chose (⁴).
How the EFL combines energy and TDU costs
The headline numbers on an EFL—those average prices at 500, 1,000, and 2,000 kWh—are all-in recurring costs, not the energy charge alone. For fixed-rate plans, the total average price reflects all recurring charges the REP must include in the label, which incorporates TDU pass-throughs that are part of your electric service (⁸).
Think of the EFL average price as: (REP energy-related charges + recurring REP fees + TDU delivery pass-throughs + other recurring line items) ÷ kWh, calculated at each standard usage level.
That is why comparing only a REP's quoted energy rate can mislead you. Two plans with identical energy charges but different base fees—or different treatment of TDU line items on the bill—will show different EFL averages.
Fixed-rate plans still allow TDU changes
A fixed-rate plan locks in your REP's energy price for the contract term, with defined exceptions. Power to Choose notes that a fixed per-kWh price will not change during the contract except for changes in transmission and distribution fees, ERCOT or Texas Regional Entity administrative fees, or fees imposed by law beyond the REP's control (³). PUCT rules similarly allow fixed-rate products to adjust for actual changes in TDU charges and certain regulatory fees (⁸).
So "fixed" means fixed on the supply side you chose—not frozen delivery infrastructure costs for three years.
Variable-rate EFL disclosures
For variable-price products, the EFL shows the total average price for the first billing cycle and must warn that subsequent prices may change at the REP's discretion or within defined limits, while TDU and regulatory pass-through changes can also apply from the first bill (⁸). Treat the EFL variable price as a starting point, not a ceiling.
Reading your monthly bill after you enroll
Once you are a customer, your bill must include specific information: billing period, amount due, kWh reading and total usage, toll-free numbers for billing questions and outages, and whether usage was estimated (¹²). Your due date must be no earlier than 16 days from the bill date or postmark (¹²).
PUCT billing rules also require a line labeled "The average price you paid for electric service this month," calculated as total fixed and variable recurring charges (excluding sales tax and certain other items) divided by kWh consumed (¹⁰). Compare that figure to the EFL average at your usage tier. Large gaps may mean minimum usage fees, rate changes, or seasonal usage shifts.
Consumer Reports notes that most electric bills combine a usage-based charge (kWh) with mandatory fixed or semi-fixed components (¹³). In Texas, some of those fixed elements are TDU-related; others are REP base charges disclosed on the EFL. Low-usage customers feel fixed and minimum fees more acutely because the cost spreads across fewer kWh (¹³).
If you dispute a charge, PUCT customer guidance says to pay the undisputed portion, ask your provider to investigate, and file with the commission if needed (¹²).
A practical shopping and renewal checklist
1. Know your usage. Pull 12 months of kWh history if possible. Match it to the closest EFL column—500, 1,000, or 2,000 kWh—not a provider's marketing graphic.
2. Compare EFL average prices, not teaser rates. The PUCT requires standardized average pricing at defined usage levels precisely because headline cents-per-kWh quotes omit recurring fees (⁸).
3. Read the Terms of Service. The EFL is necessary but not sufficient. Consumer Reports recommends reading the full TOS for cancellation fees, variable-rate mechanics, and billing requirements (⁷).
4. Confirm fixed vs. variable. Variable plans can change monthly at the REP's discretion, subject to PUCT disclosure rules (⁸). Fixed plans still pass through TDU changes (³).
5. Check contract expiration rules. If your contract has three or more months remaining, your REP must notify you before it expires so you can renew or switch without landing on a month-to-month variable product (Power to Choose FAQ). You may cancel a new switch within three business days after receiving the Terms of Service without penalty (Power to Choose FAQ).
6. Remember TDU fees are shared. Switching REPs changes the energy charge portion you control. Delivery charges in your TDU territory apply regardless of which certified provider you pick (⁹).
7. Use official tools. Compare offers on Power to Choose and verify you received the EFL, TOS, and YRAC before the cancellation window closes (¹⁴).
Bottom line
The Texas EFL exists because supply and delivery are separate businesses in ERCOT. The energy charge is what your REP bills for the power you consume. TDU delivery charges are regulated pass-throughs for the grid that brings that power to your meter. The EFL merges both into average prices at 500, 1,000, and 2,000 kWh so you can compare plans fairly—if you read the label at the usage level you actually hit each month.
Shop the all-in EFL number, read the Terms of Service, and treat TDU lines as immovable for your address. That is how you avoid overpaying on the part of the bill you can actually change.