Transmission vs. Distribution: How Electricity Gets to Your Texas Home

Most Texans know they have the power to choose their electricity provider—but few know how that electricity actually makes it to their homes. From distant power plants to the outlets in your living room, electricity travels across a complex and highly coordinated system that most people never see. And at the heart of this system are the Transmission and Distribution Utilities, or TDUs.

These behind-the-scenes players don’t sell you electricity—that’s the job of Retail Electricity Providers (REPs)—but they’re the reason your lights turn on. Whether you live in Dallas, Houston, or a small Texas town, a TDU maintains the poles, wires, and meters that physically deliver energy to your home.

So why should you care? Because TDU fees are a real part of your electric bill, no matter which provider you choose. Understanding what TDUs do—and how electricity flows through Texas's deregulated energy market—can help you make smarter decisions when comparing electricity plans and understanding your costs.

In this post, we'll take you on the journey of electricity from generation to your meter, break down what TDUs actually do, and help you see why this part of the system matters just as much as the provider you pick.

From Power Plant to Plug – A Step-by-Step Journey

Electricity doesn’t simply appear in your home—it travels through a carefully engineered system with multiple stages. Each step has a purpose, and every part of this journey affects the reliability and cost of your power. Let’s break it down:

1. Generation: Power Plants Create Electricity

It all starts at a power plant. In Texas, electricity is generated using various sources like natural gas, wind, solar, coal, and even nuclear energy. The choice of generation affects both environmental impact and cost. For example, Texas leads the nation in wind power, which helps support a growing number of 100% renewable electricity plans.

Power generated at these plants comes in the form of high-voltage electricity, which isn’t safe or efficient for use in homes just yet.

2. Transmission: Moving Power Long Distances

Once the electricity is generated, it travels through high-voltage transmission lines—the tall towers you see stretching across highways and open landscapes. These lines carry power across long distances from the plant to substations closer to populated areas.

These high-voltage networks are managed by organizations like ERCOT (Electric Reliability Council of Texas), which oversees about 90% of the state's electric load.

3. Substations: Transition from Transmission to Distribution

When electricity reaches a substation, it’s converted from high voltage to lower voltages suitable for local delivery. Think of substations as the halfway point—where power is handed off from long-distance highways to your neighborhood streets.

4. Distribution: Powering Neighborhoods and Businesses

From the substation, electricity flows into distribution lines, which you often see along streets or in alleys. These are the lines that bring electricity to your neighborhood, office building, or home. This part of the system is where TDUs step in—they manage, maintain, and repair these lines.

5. The Meter: Measuring Your Electricity Usage

Finally, electricity arrives at your home and passes through your electric meter. This device tracks how much energy you use—usually in kilowatt-hours (kWh)—and sends that data to your electricity provider for billing. Your TDU is also responsible for installing and maintaining this meter.

Understanding this journey helps explain why TDU fees exist—you’re paying for the infrastructure that brings energy from miles away safely into your home. And these fees are regulated by the state to ensure fairness, which we’ll cover later in this post.

What Are TDUs (Transmission and Distribution Utilities)?

In Texas’s deregulated electricity market, many people choose their electricity provider—but not their utility. That’s because the Transmission and Distribution Utility (TDU) is determined by where you live. These companies are responsible for delivering electricity to your home, regardless of which Retail Electricity Provider (REP) you sign up with.

While REPs handle customer service, plan pricing, and billing, TDUs operate and maintain the physical grid: the poles, wires, transformers, and meters that keep the electricity flowing.

Key Responsibilities of TDUs:

• Maintain and repair distribution lines and equipment
• Read your electric meter (either remotely or in person)
• Restore power after outages or storms
• Manage service activations, disconnections, and transfers
• Monitor system reliability and report to state regulators

So, even if you switch from one electricity provider to another, your TDU stays the same—because it's tied to your location, not your plan.

Major TDUs in Texas

Each TDU covers a specific region of Texas. Here are the five main ones:

• Oncor – Serving the Dallas-Fort Worth area and much of North and West Texas
  
• CenterPoint Energy – Serving the Houston metro area
  
• AEP Texas North – Serving North and West-Central Texas
  
• AEP Texas Central – Covering South Texas, including Corpus Christi
  
• Texas-New Mexico Power (TNMP) – Covering small towns and suburban communities across Central, West, and Southeast Texas

If you're not sure who your TDU is, you can usually find it listed on your electricity bill. It's also the company you'll contact during a power outage, since they're the ones who maintain the lines—not your electricity provider.

These companies are regulated by the Public Utility Commission of Texas (PUCT), ensuring that the service they provide is fair, safe, and reliable. You can learn more about how TDUs are regulated on

the PUCT website.

TDU Charges on Your Electric Bill – What Are You Really Paying For?

When you look at your electricity bill, you’ll notice a section labeled TDU charges (or sometimes Delivery Charges). These fees aren’t set by your electricity provider—they’re set by your local utility and approved by the Public Utility Commission of Texas (PUCT). Regardless of which electricity plan you choose, these fees are unavoidable, and they play a crucial role in maintaining a reliable electric grid.

What Do TDU Charges Cover?

TDU charges pay for the infrastructure and services required to get electricity from the power plant to your home. This includes:

• Building and maintaining poles, wires, and transformers
• Emergency outage repairs and system upgrades
• Reading and maintaining your electricity meter
• Managing energy load and system reliability

These fees ensure the grid stays in working order—and your lights stay on.

Types of TDU Charges

TDU fees are typically split into two categories:

• Monthly Base Charge – A flat fee you pay every month, no matter how much electricity you use
• Per kWh Delivery Charge – A variable fee based on how many kilowatt-hours you consume

So, for example, a TDU might charge $3.50 per month as a base charge, plus 3.8 cents per kWh used. If you use 1,000 kWh, that’s $38 in delivery charges—on top of what you pay for your electricity rate.

Why It’s Important to Understand These Charges

TDU fees can make a big difference in your total monthly cost—especially if your usage is high. That’s why it’s important to:

• Check whether a provider includes TDU charges in the advertised rate
• Always read the Electricity Facts Label (EFL) before enrolling in a plan
• Use comparison tools like Ladybug Energy’s electricity search platform to see the full breakdown of costs

Some plans may look cheaper upfront but leave out delivery charges in the promo rate. Others may bundle them into a fixed price. Knowing the difference helps you avoid bill shock—and shop smarter.

Why Understanding This Matters

For many Texans, electricity shopping comes down to one thing: the price per kilowatt-hour. But what most people don’t realize is that this number only tells part of the story. Understanding how electricity is delivered—and what TDUs do—gives you the full picture of your bill and helps you avoid common pitfalls when choosing a plan.

Smarter Shopping Starts with Smarter Knowledge

When you understand that TDU fees are fixed by your utility and not your provider, you can better compare electricity plans without being misled by flashy advertising. For example:

• A plan that lists a “super low rate” may not include TDU charges in that price
• Another plan might offer a higher rate but bundle all fees together, making your bill more predictable

Without this context, it’s easy to assume one plan is cheaper when it may actually cost you more after fees.

TDU Zones Affect Plan Availability

Since TDUs are location-based, they also determine which electricity plans are available to you. A plan offered in CenterPoint’s Houston territory may not be available in Oncor’s Dallas-Fort Worth region. Knowing your TDU helps you narrow down your options quickly.

You can see which plans are available in your area by entering your zip code on our electricity rate comparison tool. We make it easy to see the real cost of electricity, including delivery fees, so you can choose with confidence.

It Also Helps During Outages and Emergencies

Knowing the role of your TDU is helpful when the power goes out. If you experience an outage, you shouldn’t call your electricity provider—you need to report it to your local utility, since they’re the ones who manage the lines and fix outages.

In short, understanding the transmission and distribution system gives you more control over your electricity choices—and your costs.

Common Misconceptions About Electricity Delivery

Texas’s deregulated energy market gives consumers the power to choose their electricity provider—but it’s also led to plenty of confusion about how electricity actually works. Many Texans aren’t sure what their provider does versus what the utility does, or why they’re charged by both. Let’s clear up a few common myths:

“My electricity provider gives me power.”

Not exactly. Your Retail Electricity Provider (REP) sells you a plan, but they don't deliver electricity to your home. That job belongs to your Transmission and Distribution Utility (TDU).

Your provider handles customer service, billing, and rates. But when it comes to fixing power lines, restoring outages, or maintaining meters, that’s all on the TDU—regardless of which REP you choose.

“I can avoid TDU charges by switching providers.”

Nope. TDU charges are regulated by the state, not set by your electricity provider. These fees are standard within each service zone and apply to every customer—whether you’re with a big-name REP or a local startup.

While some plans roll these charges into their advertised rate, others list them separately. That’s why it’s so important to compare plans side by side using tools that show both energy rates and delivery fees.

“All electricity plans are the same.”

Far from it. Plans differ in:

• Rate structure (fixed, variable, time-of-use)
• Contract length and cancellation fees
• Renewable energy content
• How they handle TDU fees

Even if two plans show the same base rate, the total cost can vary depending on how they include—or exclude—delivery charges. And if you don’t read the Electricity Facts Label (EFL), you might end up with unexpected fees or terms you didn’t expect.

“Only my provider can fix a power outage.”

Actually, the provider can’t help with outages at all. Your local TDU is the one responsible for restoring power. If your lights go out, check your TDU’s outage map and report it directly to them. You can find links to each utility’s contact info on our Utilities page.

Clearing up these misunderstandings empowers you to be a smarter shopper—and to know who to contact when things go wrong.

Stay Informed, Shop Smart

Electricity may be invisible, but the way it gets to your home—and how you’re charged for it—shouldn’t be a mystery. In Texas, understanding the difference between transmission, distribution, and retail energy providers gives you the power to make better energy choices.

We’ve followed the path of electricity from power plants through transmission lines, into your local distribution system, and finally to the meter on your home. Along the way, you’ve learned that:

• TDUs are responsible for maintaining the lines, poles, and meters—not your electricity provider
  
• TDU charges are regulated, mandatory, and essential to grid reliability
  
• These charges appear on every electricity bill, no matter which REP you choose
  
• Knowing your TDU can help you find available plans, compare costs more accurately, and respond appropriately in case of a power outage

Electricity shopping doesn’t have to be confusing. With the right information and the right tools, you can confidently choose a plan that fits your usage, your budget, and your values.

Ready to see which plans are available in your area—with TDU fees clearly broken down? Enter your zip code on our electricity rate comparison tool to explore your options and make your next electricity decision your smartest one yet.