Understanding Your Electricity Bill
A plain-English walkthrough of the charges on a deregulated-market electricity bill — supply, delivery, base charges, taxes, and fees — and why the total can shift even when your rate does not.
An electricity bill can look intimidating at first glance: multiple line items, unfamiliar acronyms, and a total that seems to move around each month. In a deregulated market, that structure exists for a reason. Once you know what each section represents, the bill becomes a straightforward summary of two services stacked on top of each other — the electricity itself, and the delivery of that electricity to your home.
## Two Services, One Bill
In a deregulated market, one company generates or sources the electricity you use, and a separate utility delivers it over the local poles and wires. Both show up on your statement. Some states combine everything onto a single utility-issued bill; others let the supplier bill you directly. Either way, the charges break down into a small number of predictable categories.
## Supply / Generation Charges
This is the cost of the electricity itself. It is set by the supplier you chose (or by your default service rate if you never shopped) and is typically expressed as a price per kilowatt-hour (kWh). If your plan is 12.5 cents per kWh and you used 900 kWh, the supply portion is roughly $112.50 before other charges.
Supply charges are the competitive part of the bill. They depend on:
- The rate on your plan (fixed or variable) - How many kWh you used during the billing cycle - Any bill credits or usage tiers built into the plan
Because supply is the piece you can shop for, this is usually where meaningful comparisons between plans happen.
## Delivery / TDU Charges
Delivery charges pay for moving electricity from the grid to your meter. In Texas these are called TDU (Transmission and Distribution Utility) charges; in other states you may see them labeled delivery, distribution, transmission, or "poles and wires" charges. They are regulated by the state and are the same regardless of which supplier you choose.
Delivery charges usually include:
- A fixed monthly delivery service charge - A per-kWh delivery rate that scales with usage - Approved riders for grid maintenance, storm recovery, or energy efficiency programs
Because these are set by the regulator, they change on a schedule announced by the utility, not by your supplier.
## Base Charges and Minimum Usage Fees
Many plans include a base charge — a flat monthly amount that applies regardless of how much you use. Some plans also add a minimum usage fee if your consumption falls below a certain threshold in a billing cycle, or a bill credit if it rises above one. These are all defined in the plan's Electricity Facts Label or terms of service, and they can make two plans with the same headline rate behave very differently for a small household versus a large one.
## Taxes, Public Benefit, and Regulatory Fees
The last group of line items is set by state and local rules. Depending on where you live, this can include sales tax, a gross receipts reimbursement, a PUC assessment, city franchise fees, and public benefit or energy efficiency surcharges. Suppliers do not set these amounts; they are passed through on the bill.
## Why a Deregulated Bill Looks Different
In a regulated state, one utility handles everything, so the bill often shows a single bundled rate. In a deregulated market, that rate is unbundled into supply, delivery, and pass-through charges. The total cost of service is not necessarily higher or lower because of this structure — it is just displayed with more line items so customers can see where each dollar is going.
That transparency is what makes shopping possible: because supply is broken out, you can compare it against other suppliers' offers without guessing what portion of a bundled rate is actually competitive.
## Reading Your Bill in Practice
When you open your statement, look for four things in this order:
1. Usage in kWh for the billing period 2. Supply charges (rate × usage, plus any base charge or credits from your plan) 3. Delivery / TDU charges from the utility 4. Taxes and regulatory fees
Those four sections explain almost every dollar on the bill. Everything else is usually a subtotal or a summary line pulling from them.
## FAQ
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Frequently Asked Questions
Why does my bill have two different charges?
In a deregulated market, generating electricity and delivering it are handled by two different companies. Supply charges come from the supplier you chose, and delivery charges come from your local utility. Both show up so you can see what each service costs.
What are TDU delivery charges?
TDU stands for Transmission and Distribution Utility. These charges pay for maintaining the poles, wires, transformers, and meter that bring electricity to your home. They are set by the state regulator and are the same no matter which supplier you use.
Why did my bill go up even though my rate did not change?
The rate on your plan is only one input. Higher usage during hot or cold months, changes in regulated delivery charges, seasonal riders, and taxes tied to the bill total can all push the amount up even when the per-kWh rate stays the same.
Are taxes and fees set by my supplier?
No. Taxes, public benefit charges, and regulatory fees are set by state and local rules and passed through on the bill. They apply regardless of which supplier you choose.
Where can I see my exact rate and plan terms?
Every plan has a facts label or terms-of-service document that lists the rate, base charges, contract length, and any credits or fees. Reviewing it alongside your bill is the fastest way to reconcile the two.