How to read your Texas commercial electricity bill

Two companies, one piece of paper

The single most useful thing to know about a Texas commercial electricity bill is that it comes from one company but contains charges from two.

Your Retail Electric Provider (REP) — the company you signed a contract with — bills you for the energy itself. But the wires, poles and meters belong to your Transmission and Distribution Service Provider (TDSP): Oncor, CenterPoint, AEP Texas or TNMP, depending on where you are. The TDSP's charges are regulated by the PUCT, are the same no matter which REP you use, and are passed through on your REP's invoice.

Once you can mentally split the bill into "the part I negotiated" and "the part that's regulated pass-through," everything else gets easier.

The energy charge

This is the part your contract actually covers: your usage in kWh multiplied by your contracted rate in ¢/kWh (or $/MWh on larger accounts). On a fixed-rate contract this number per kWh shouldn't move for the life of the term — subject to the contract's swing or bandwidth provisions. On an index or block & index structure, part or all of it floats with the wholesale market.

Check three things: the rate matches your contract, the kWh matches your meter, and the read is actual rather than estimated. Estimated reads happen, and the true-up that follows can produce a startling month.

TDSP delivery charges

The delivery section usually includes a per-kWh delivery charge, a metering charge, and — for larger accounts — transmission-related charges driven by your demand. For big loads, your share of transmission cost is heavily influenced by your consumption during ERCOT's four coincident peaks (4CP) in June through September, which is why peak-window management matters.

Two things are worth knowing about this section:

• TDSP rates are published and regulated. Every TDSP files its tariff with the PUCT. Your bill's delivery lines should reconcile to that published tariff — at cost, with no markup.
• "Pass-through" is a process, not a guarantee. The numbers are transcribed into billing systems by humans and software, against meter data, multipliers and rate classes that can each be wrong.

Demand charges

Many commercial accounts pay not just for energy used (kWh) but for the highest rate at which they used it — peak demand, billed in $/kW, usually measured over 15-minute intervals. A facility that draws hard for one 15-minute window can set a demand charge that haunts the whole month, and under ratchet provisions, for many months after.

This is where load factor — the ratio of your average demand to your peak demand — earns its place on a one-page bill review. A low load factor means you're paying for capacity you rarely use, and it's often improvable with operational changes rather than capital spending.

Taxes and fees

The tail of the bill: state and local sales tax where applicable, a miscellaneous gross receipts tax reimbursement in some service areas, PUC assessment, and assorted small fees. Mostly mechanical — with one large exception. Texas exempts electricity used directly in manufacturing from sales tax, subject to a predominant-use study. Manufacturers who have never commissioned one are often paying tax they don't owe, and refunds can reach back years.

So what's a "reasonable" TDSP share to question?

There's no universal percentage — the delivery share of a bill depends on your load size, voltage level, rate class and load factor, and it moves when the PUCT approves new TDSP rates. The useful questions aren't about hitting a magic ratio; they're:

• Do the TDSP line items reconcile to the TDSP's published tariff, at cost, with no markup?
• Is the meter multiplier right? A wrong multiplier scales every single charge on the bill.
• Is the demand figure real, and is an old ratchet still inflating it?
• Has the delivery share of your bill crept up while your usage stayed flat? That trend is a prompt for a review, not proof of an error — but it's how errors get found.

Where overcharges hide

In our experience the recurring culprits are: bundled "all-in" rates that bury the components you'd otherwise check; estimated reads and their true-ups; incorrect meter multipliers; demand ratchets that outlive the event that set them; holdover or month-to-month rates that begin quietly when a contract expires unnoticed; and sales tax applied to exempt manufacturing load.

None of these announce themselves. All of them are findable from the bill — if someone actually reads it.

The fastest way to check

Reading one bill carefully takes an hour the first time. If you'd rather not spend it, that's exactly what UPG's free Energy Health Check is for: send one recent bill and we'll review the contract rate, the TDSP pass-through, demand and load factor, and the tax treatment — and send back a written summary of anything worth questioning.

Bottom line

Your bill is two companies' charges on one page. Negotiate the energy. Verify the delivery. Watch the demand. And never assume "pass-through" means "checked."