Texas TDSP Charges Hard on Some Businesses


Mathew Tomlinson is sick of looking at his electric bill and being overcharged beyond the normal rate he has been paying his electric provider.

He is not alone as several other people in his business location have called angrily to their Piney Point Village electric company to express outrage at the higher electric rates.

Many residents have thought about drafting a petition regarding the higher electric rates and mailing it to the Electric Reliability Council of Texas to try

and do something about the higher energy costs. ERCOT has had plenty of corruption in their ranks in the past and many have wondered if the tariffs and TDSP

charges have been done with the Texas consumer in mind. Kickbacks and a network of commercial bribes have caused operations at ERCOT to look a bit like

something you might see in Russia although the corruption element at ERCOT is all supposedly cleaned up now. Many were surprised the Texas ERCOT organization

created to oversee the electric grid in Texas would come up on corruption charges. Could there possibly be something to the claim that some of ERCOT’s rules

and regulations were created from past corruption and commercial bribery. If there is any hint of truth to this then all those Texas consumers fed up with higher rates may eventually feel vindicated when they get to say, “I told you so.”

ERCOT insists they are doing as much as they can to keep electric customers costs low. The nodal system that ERCOT is implementing across the state should

alleviate some cities from paying higher congestion and line loss related charges that the bigger cities in the region cause. This will help lower costs in some areas and give an incentive for larger cities to work on improving their efficiency in the electrical within buildings, with new pole and wires infrastructure, and lowering overall KW electricity demand from business to business.

Line items on an electric bill have caused confusion underneath the TDSP charges section. Many times for commercial customers the TDSP charges can make up 50% or more of a companies electric bill. This has caused many commercial companies to have to close shop as the electricity to run the business is too expensive to continue to stay in business.

Residential TDSP charges only make up a small percentage of the electric bill. Residential electric customers spend about 2 – 3 cents kWh in TDSP charges

while the remainder of the electric rate is from the Retail electric provider. The 2 – 3 cents in TDSP charges are past through from the pole and wires

utility company with no additional markup. There is currently no law in place in Texas that does not allow marking up the TDSP charges so some electric

providers have lowered their “energy only” rate only to then raise their “TDSP charges” higher then the normal pass through with no markup. This trick has

caused many people to second guess their electric bill when changing to the supposedly cheapest electric provider in Texas.

Natural Gas has been going up steadily which makes up most of the fuel that powers the electricity generation plants in Texas. Because natural gas is tied so

closely to Texas electric rates you see a very close correlation. Natural Gas hit a 3 year high not to long ago and electric rates in Texas also hit a 3 year

high at the same time. Having more alternative power generation plants can even out the erratic Texas electric prices and give Texas consumers a cheaper electric.

Building clean coal powered electric generation facilities as well as nuclear will help stabilize the electric prices in Texas. The United States is the

Mideast of coal if you were to compare us to the amount oil the Mideast controls. Texas should start building more coal power plants that can burn the coal

and a clean way. Clean coal power is a possibility and would drastically lower the states electricity rate.

Electric rates right now are so high because of the energy commodities market but that is not to say that there could still be some funny business going on

with some the PUCT’s (Public Utility Commission) and ERCOT’s tariffs and regulations. ERCOT did have a recent history of corruption and not everything is known about what all went on. The PUCT has no corruption related charges against them and in fact enforce strict rules and penalties against electric companies that do not obey by the rules.

Jim from Texas City said, “I have an electric bill where I pay about 16 cents kWh just in TDSP charges for my business. This became so high I could no longer

afford to stay in business. I eventually had to close my bed and breakfast and work for somebody else.”

The Electric Reliability Council of Texas (ERCOT) operates the electric grid and manages the deregulated market for about 75 percent of the state

Most commercial business owners in Texas paying the amount in TDSP charges as Jim was paying would be willing to sign a petition and send it to ERCOT. The issue is that small business owners sometimes get hit with a TDSP charge that just doesn’t justify keeping the doors to their business open any more. “The electric rate for a business in this situation is just to high” says, Jim.

“Texas commercial businesses I talked to said they would sign a petition even though they imagined it probably would do absolutely no good.” he said.

Jim, wasn’t confident that having a petition signed by several business owners in Texas would do any good but he wanted to go on record that he was not happy with electric rates for businesses in Texas.

Most people don’t say anything to the government, ERCOT or the PUCT about how they feel but I think somebody should say something to show people are beginning to take notice”, he said.

ERCOT maintains they are operating at the highest ethical and professional conduct and have done everything in their power to remove corruption in their ranks. The PUCT’s tariffs and regulations related to TDSP charges have been fashioned based upon the fairest business model they could agree upon that considers several different tiers of energy usage. Some companies demand more energy at one particular time in the day but do not use that many kilowatt hours throughout the day. These companies get hit with a TDSP charge that is made up of about 90% in demand charges. Companies that find themselves in this situation should hire an electrician to come in and audit the electrical in the building for ways to become more efficient and to lower their peak electric demand KW.

Public Utility Commissions (PUCT) Answer On "Is Deregulation Working?"

Public Utility Commission of Texas Talks Straight

The PUCT today explained why deregulation may not be working as planned in some areas of the state of Texas. There is not a whole lot of data prior to Texas deregulating the electric rates in 2002 but what information we do have has remained inconclusive at this point. Right after deregulation we saw several large electric monopolies become deregulated. “Deregulated” just means that the state of Texas has unbundled the pole and wires charges from the “retail energy rate”. The reason they unbundled the rate is because the pole and wires company is an altogether different operation from the energy trading desk that buys energy in the form of natural gas and other commodities and resells it as electricity to commercial and residential customers. Once the rate was unbundled any new Texas electric company that wanted to could open up business and sell the retail energy to customers while the same pole and wires company you have always used passes through the pole charges onto the electric bill with no markup. If you have picked an alternate electric provider since deregulation you can actually still see the pole and wires company number on the bill in case of an electric outage. The number on the bill helps to confirm to Texas energy customers that they still deal with the company they always have when it comes to the electric service infrastructure and transmission.

An Example Of A Deregulated Electric Utility

TXU Electric Company was deregulated back in 2002 and as you may or may not know they kept their same name when they became an independent Texas electric provider. That means that their pole and wires company was called TXU and their retail energy company was called TXU even though they legally could not be affiliated with the pole and wire division. They were basically two altogether separate companies because legally there could be coercion if they were still affiliated. Imagine if you switched to a different retail electric provider and “TXU” the pole and wires company decided they would get you back by raising your TDSP charges on your bill which covers the pole, wires and meter maintenance? This would be a good way to keep people from leaving TXU since pole and wires charges can sometimes make up 50% or more of your Texas electric bill.

TXU Electric Delivery Had To Rebrand

What ended up happening because of continuous fear and confusion, because the name was so similar to the old monopoly, was a complete rebrand of the pole and wires part of the company. TXU Electric Delivery had to rename themselves “Oncor Electric Delivery” in order for people to distinguish between TXU (The Retail Electric Provider) and TXU (The Pole and Wires Company or TDSP Company, now called Oncor). Even after reading this lengthy explanation many people will still have no idea that TXU just sells the electricity (a paper transaction bought and sold on commodity markets and hedged) and no longer maintains the poles, lines and meters. Even as of today you will still see TXU Electric Delivery as a brand name for Oncor Electric Delivery even though they are no longer called that. Oncor even owns the name “TXU Electric Delivery” although imagine if Microsoft found a company using their brand name even if not in the same line of work? Microsoft would sue their pants off and the company would immediately need to cease and desist all use of their brand name. This is not the case with Oncor as they use Oncor and TXU interchangeably which helps in the confusion process and brings in multiple electricity customers back to TXU Energy Retail Electricity. It would appear that Oncor using TXU as a part of their brand name is an effort to help TXU Energy Retail gather new and existing customers even though they are no longer the same company. Many people call TXU Energy to have their electricity turned on thinking they are calling the poles and wires company. TXU Energy signs the new customers up left and right because of this confusion process and there does not appear to be any end in site. The rate is usually not very competitive in comparison to other retail electric providers in Texas and neither does it need be considering that these customers are signing up on a brand they believe to be their only choice in “turning on new electric service”.

Example of An Alternate Texas Residential Electric Provider To Compare With TXU: Startex Power is currently the cheapest provider: learn more and Champion Energy comes in second place.

Oncor Maintains The Poles, Wires and Meters

So what have we learned? Oncor reads your meter and maintains the electric infrastructure in North Texas. They are the ones who pass through your TDSP charges on a 1 to 1 basis on your retail electric bill. The reason they are called pass through charges is because most retail electric providers like, TXU Energy, Gexa, Startex, Spark, Champion, Bounce Energy and multiple others do not markup the TDSP charges from Oncor but pass them through on a 1 to 1 basis. There are a few Texas electric providers who do in fact markup the TDSP charges while offering a competitive retail electric rate. What ends up happening is you believe that Oncor has past through those charges with no additional markup on your bill, which is the only company who can since they own the electric infrastructure in North Texas. You receive a competitive retail electric rate with no indication, except in fine print in the energy contract, that the TDSP charges have been marked up by the retail electric provider (not Oncor). This allows a few retail electric providers to come away with extra profit margin until the PUCT of Texas makes this an illegal deceptive trade practice. Until the PUCT does something about it some electric providers will continue to do this until bad publicity catches up with them.

No Historical Data On TXU Energy Electric Rates Prior To 2002

There is not a lot of data showing what the last previous 2 years prior to deregulation showed for what electric rates were at for TXU Energy. This information would be useful in understanding what the Texas retail electric rates have done before and after with TXU since deregulation began in 2002. What we would need is the electric usage data file going back before 2002 for a particular company or residence. This can be obtained from Oncor Electric Delivery in the Dallas and East Texas area and from Centerpoint Energy in the Houston area. We would then need some corresponding electric bills prior to deregulation. Any electric bills before 2002 will prove helpful. We can then compile the data and give some estimates of what electric rates have done before and after Texas deregulation in regards to TXU Energy. We would also take into account what natural gas prices have done since deregulation began. There was a time right after deregulation when natural gas spiked up to some historical highs which caused electric rates to drastically rise. This rate spike made it look like deregulation was having the opposite effect that the state of Texas was expecting.

If you have old electric bills and usage data please feel free to fax it to 1-903-484-9222 and we can use it in our analysis. We appreciate your help in this matter.

Texas Deregulation Debate, What Is the Current Controversy?

The debate right now is whether or not Texas deregulation actually caused electric rates to go up instead of down. Many people believe that NOT breaking up the monopolies would have been a better choice. Their reasons have to do with several factors.

Factor 1

One reason has to do with the natural gas spike back in the beginning of 2002. Natural gas has a 90% correlation with electric rates in Texas. Because natural gas spiked so did Texas electric rates and this was at the same time Texas unveiled deregulation. Timing was very bad in this case in giving the Texas public the perception that deregulation works to reduce electric rates.

Factor 2

The second popular reason is that city municipalities and coops near deregulated towns often pay a few cents kWh less for their electricity then the deregulated city next door. These city owned municipalities and coops give the public the perception that deregulation has done nothing but raise rates. The factor that people are not recognizing is that the prior monopoly retail electric providers like TXU, First Choice Power, Entergy, WTU, Reliant, and CPL may have had abnormally higher electric rates then some of the smaller city owned coops and municipalities. The only way to know for sure if this is the case is to provide historical electric usage data and historical electric bills prior to 2002 from one of these retail electric monopolies also known as Texas Affiliate electric providers. You can send us your historical bills and usage data and we would be glad to investigate.

Please call us at 1-800-971-4020

Factor 3

Another point to consider in regards to factor 2 is that not all city owned municipalities and coops have cheaper electric rates then the deregulated Texas electric providers. Take for instance the city of Garland Texas. The city of Garland has many times had higher electric rates in comparison to competitive Texas electric companies like Champion Energy or Startex Power. There are several other municipalities that have historically had much cheaper electric rates then the competitive Texas electric providers in the deregulated counties of the state. One such provider is in the cities of Longview and Marshall Texas. SWEPCO also known as AEP is not deregulated in these areas and is a few cents cheaper then cities just outside of it like Tyler Texas. The only explanation as to why they are able to provide a cheaper electric rate would be related to less advertising dollars spent at competing against multiple other electric companies. Texas has made the record books at being the most competitive electricity market in the world and AEP SWEPCO has avoided the issue of needing to compete with other providers by having absolutely no competition in this area of Texas. They also have the added pressure of needing to keep the rate low so that the city does not decide one day to deregulate the area because of being overcharged by their monopoly electric company. Longview must also contend with the fact that by deregulating the area they could bring in new businesses and jobs to the city which gives them more tax dollars. In the end a Texas city or county may decide to deregulate because the electric rates would be cheaper, they could add tax revenue and new jobs, and the possibility that Texas Energy lobbyists have swayed them.

TDSP Charges | Terms To Understand


TDSP (Transmission Distribution Service Provider) Glossary

A | B | C | D |E | F | G | H | I | J | K | L | M  N | O | P | Q | R | S | T | U | V | W | X | Y | Z

ACTUAL METER READING. A Meter Reading whereby Company has collected information from the Meter either manually or through a direct reading, through telemetry, or other electronic communications.

AFFILIATED RETAIL ELECTRIC PROVIDER. A retail electric provider that is affiliated with or the successor in interest of an electric utility certificated to serve an area.

BILLING DEMAND. Demand used for billing purposes as stated in the applicable Rate Schedule or Rider.

BILLING DETERMINANTS. Measured, calculated, or specified values used to determine Company™s Delivery Charges that can be transmitted to the CR on an approved TX SET electronic transaction. These values may include, but are not limited to, measurements of kilowatt-hours (kWh), actual monthly Non-Coincident Peak (NCP) Demand, annual NCP Demand, annual 4-CP Demand (coincident peak for four summer months), Billing Demand, Power Factor, fixed charges, number of lamps, Rate Schedules, and rate subclass.

COMMISSION, PUC, or PUCT. The Public Utility Commission of Texas.

COMPANY’S DELIVERY SYSTEM. The portion of the Delivery System that is owned by Company.

COMPETITIVE RETAILER (CR). A Retail Electric Provider, or a Municipally Owned Utility, or an Electric Cooperative that offers customer choice in the restructured competitive electric power market or any other entity authorized to provide Electric Power and Energy in Texas. For purposes of this Tariff, a Municipally Owned Utility or an Electric Cooperative is only considered a Competitive Retailer where it sells retail Electric Power and Energy outside its certified service territory.

CONSTRUCTION SERVICE CHARGE. Commission authorized charges to recover costs associated with Construction Services.

DELIVERY. The movement of Electric Power and Energy through Company’s electric lines and other equipment, including transformers, from the Point of Supply to the Point of Delivery.

DELIVERY CHARGES. Commission authorized rates and charges for the use of Company’s Delivery System. Delivery Charges comprise Delivery System Charges and Discretionary Charges.

DELIVERY SERVICE. The service performed by Company pursuant to this Tariff for the Delivery of Electric Power and Energy. Delivery Service comprises Delivery System Services and Discretionary Services.

DELIVERY SERVICE AGREEMENT. The standard, pro-forma document set forth in this Tariff in which Company and Competitive Retailer agree to be bound by the terms and conditions of Company’s Tariff.

DELIVERY SYSTEM. The electric lines, and other equipment, including transformers, owned by Company and the Meters, including Non-Company Owned Meters, used in the Delivery of Electric Power and Energy.

DELIVERY SYSTEM CHARGES. Commission authorized charges to recover costs associated with Delivery System Services.

DELIVERY SYSTEM SERVICES. Delivery Services whose costs are attributed to all Retail Customers that receive Delivery Service from Company and charged to Competitive Retailers serving Retail Customers under the Rate Schedules specified in Section 6.1.1,

DELIVERY SYSTEM CHARGES. Delivery System Services are all Tariffed Delivery Services provided by Company that are not specifically defined as Discretionary Services.

DEMAND. The rate at which electric energy is used at any instant or averaged over any designated period of time and which is measured in kW or kVA.

DISCRETIONARY CHARGES. Commission authorized charges to recover costs associated with Discretionary Services.

DISCRETIONARY SERVICES. Customer-specific services for which costs are recovered through separately priced Rate Schedules specified in Chapter 6.

ELECTRIC POWER AND ENERGY. The kWh, the rate of Delivery of kWh, and ancillary services related to kWh that a Competitive Retailer provides to Retail Customers.

ELECTRIC SERVICE IDENTIFIER or ESI ID. The basic identifier assigned to each Point of Delivery used in the registration system and settlement system managed by ERCOT or another Independent Organization.

ERCOT. The Electric Reliability Council of Texas, Inc.

ESTIMATED METER READING. The process by which Billing Determinants are estimated when an Actual Meter Reading is not obtained.

FACILITY EXTENSION POLICY. The Company policy that covers such activities as extensions of standard facilities, extensions of non-standard facilities, extensions of facilities in excess of facilities normally provided for the requested type of Delivery Service, upgrades of facilities, electric connections for temporary services, and relocation of facilities.

FACILITY EXTENSION AGREEMENT. The Service Agreement pursuant to this Tariff that must be executed by Company and the entity (either a Retail Customer or Retail Electric Provider) requesting certain Construction Services before Company can provide such Construction Services to the requesting entity.

KILOVOLT AMPERES or kVA. 1000 Volt-Amperes.

KILOWATT or kW. 1000 Watts.

KILOWATT-HOUR or kWh. 1000 Watt-hours.

LOAD FACTOR. The ratio, usually stated as a percentage, of actual kWh used during a designated time period to the maximum kW of Demand times the number of hours occurring in the designated time period.

METER or BILLING METER. A device, or devices for measuring the amount of Electric Power and Energy delivered to a particular location for Company billing, CR billing and as required by ERCOT. Meters for residential Retail Customers shall be Company owned unless otherwise determined by the Commission. Commercial and industrial Retail Customers required by the Independent Organization to have an IDR Meter may choose a Meter Owner in accordance with P.U.C. SUBST. R. 25.311, Competitive Metering Services and other Applicable Legal Authorities.

METER DATA. All data contained within the Meter.

METER OWNER. Entity authorized by the Retail Customer to own the Meter. Entity could be Retail

  Customer, Competitive Retailer, or other entity designated by the Retail Customer as permitted by

  Applicable Legal Authorities. If the Retail Customer is not eligible for competitive metering or does not

  choose to participate in competitive metering the Meter Owner shall be Company.

METER READING. The process whereby Company collects the information recorded by Meter. Such

  reading may be obtained manually, through telemetry or other electronic communications, or by

  estimation, calculation or conversion in accordance with the procedures and practices authorized under

  this Tariff.

METER READING SCHEDULE. No later than December 15 of each calendar year, Company shall post

  its schedule for reading each meter on its website so that Competitive Retailers and Retail Customers may access it. Company shall notify Competitive Retailer of any changes to this schedule 60 days prior

  to the proposed change. Company is responsible for reading the Meter within two Business Days of the

  date posted in this schedule.

METERING EQUIPMENT. Required auxiliary equipment that is owned by Company and used with the

  billing meter to accurately measure the amount of Electric Power and Energy delivered. Metering

  equipment under this definition does not include communication, storage, and equipment necessary for

customer access to data.

MUNICIPALLY OWNED UTILITY. A utility owned, operated, and controlled by a municipality or by a

  nonprofit corporation, the directors of which are appointed by one or more municipalities, as defined in

  PURA §11.003(11).

NON-COMPANY OWNED METER. A Meter on the ERCOT-approved competitive Meter list that is

  owned by an entity other than the Company. Unless otherwise expressly provided herein, a Non-

  Company Owned Meter shall be treated under this Tariff as if it were a Meter owned by the Company.

POINT OF DELIVERY. The point at which Electric Power and Energy leaves the Delivery System.

POINT OF SUPPLY. The point at which Electric Power and Energy enters the Delivery System.

POWER FACTOR. The ratio of real power, measured in kW, to apparent power, measured in kVA, for

  any given load and time, generally expressed as a percentage.

PREMISES. A tract of land or real estate or related commonly used tracts, including buildings and other

  appurtenances thereon.

PROVIDER OF LAST RESORT (POLR). A REP certified in Texas that has been designated by the

  Commission to provide a basic, standard retail service package to requesting or default customers.


RATE SCHEDULE. A statement of the method of determining charges for Delivery Service, including the

  conditions under which such charges and method apply. As used in this Tariff, the term Rate Schedule

  includes all applicable Riders.

REGISTRATION AGENT. Entity designated by the Commission to administer settlement and Premises

  data and other processes concerning a Retail Customer’s choice of Competitive Retailer in the

  competitive retail electric market in Texas.

RETAIL CUSTOMER. An end-use customer who purchases Electric Power and Energy and ultimately

  consumes it. Whenever used in the context of Construction Services, the term Retail Customer also

  includes property owners, builders, developers, contractors, governmental entities, or any other

  organization, entity, or individual that is not a Competitive Retailer making a request for such services to

  the Company.

RETAIL CUSTOMER’S ELECTRICAL INSTALLATION. All conductors, equipment, or apparatus of any

  kind on Retail Customer’s side of the Point of Delivery, except the Meter and Metering Equipment, used

  by or on behalf of Retail Customer in taking and consuming Electric Power and Energy delivered by


RETAIL CUSTOMER’S ELECTRICAL LOAD. The power and energy required by all motors and other

  electricity-consuming devices located on Retail Customer™s Premises that are operated simultaneously

  using Electric Power and Energy delivered by Company.

RETAIL ELECTRIC PROVIDER or REP. As defined in PURA §31.002(17), a person, certificated

  pursuant to PURA §39.352, that sells Electric Power and Energy to Retail Customers.

RIDER. An attachment to a Rate Schedule that defines additional service options, pricing, conditions,

  and limitations for that class of service.

SCHEDULED METER READ DATE. Date Company is scheduled to read the Meter according to the

  Meter Reading Schedule.

SERVICE AGREEMENT. Any Commission-approved agreement between Company and a Retail

  Customer or between Company and a Competitive Retailer, which sets forth certain information, terms,

  obligations and/or conditions of Delivery Service pursuant to the provisions of this Tariff.

SERVICE CALL. The dispatch of a Company representative to a Delivery Service address or other

  designated location for investigation of a complete or partial service outage, irregularity, interruption or

  other service related issue.

SWITCHING FEE. Any fee or charge assessed to any Retail Customer or Competitive Retailer upon

  switching the Competitive Retailer that does not relate to recovering any utility cost or expenses already

  included in Commission-approved Delivery Charges included in Chapter 6 of this Tariff.

TAMPER or TAMPERING. Any unauthorized alteration, manipulation, change, modification, or diversion

  of the Delivery System, including Meter and Metering Equipment, that could adversely affect the integrity

  of billing data or the Company’s ability to collect the data needed for billing or settlement. Tampering

  includes, but is not limited to, harming or defacing Company facilities, physically or electronically

  disorienting the Meter, attaching objects to the Meter, inserting objects into the Meter, altering billing and

  settlement data or other electrical or mechanical means of altering Delivery Service.

TARIFF. The document filed with, and approved by, the PUC pursuant to which Company provides

  Delivery Service. It is comprised of Rate Schedules, Riders, and service rules and regulations. The

  service rules and regulations include definitions, terms and conditions, policies, and Service Agreements.

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