Why electricity prices change with usage in Texas

The deregulated Texas market

Texas has a deregulated electricity market, which means you can choose your retail electricity provider (REP). Providers compete on pricing structures, not just a single rate.

Fixed charges matter

Most electricity plans include fixed monthly charges that don't change with usage:

• Base charge: The provider's monthly service fee (often $5-10)
• TDSP charge: Your utility company's delivery fee (set by regulators, not the provider)

Because these fixed charges are spread over your usage, your average price per kWh drops as you use more electricity.

Example: How fixed charges affect your rate

The energy charge stays 10¢ per kWh, but your average price drops because the fixed $15 is spread over more usage.

What about the "average price" in ads?

Electricity providers in Texas are required to publish average prices at 500, 1,000, and 2,000 kWh on their Electricity Facts Label (EFL). These show how the average price changes with usage.

However, if your actual usage is 750 kWh or 1,500 kWh, your average price will be different from what's advertised. That's why comparison tools need to calculate your specific cost.

TDSP charges: The delivery fee you can't escape

Your TDSP (Transmission and Distribution Service Provider) charges are set by the Public Utility Commission of Texas and passed through by your retail provider without markup. These charges include:

• A fixed monthly charge (around $4-6)
• A per-kWh delivery charge (around 4-6¢ per kWh)

Your TDSP depends on your location. The major TDSPs in Texas are:

• Oncor (Dallas/Fort Worth area)
• CenterPoint (Houston area)
• AEP Texas (Corpus Christi, West Texas)
• TNMP (scattered areas)