REP vs. TDU in Texas: What's the Difference?

The short answer: Your REP (Retail Electricity Provider) is the company that sells you electricity — it sets your rate, signs your contract, and sends your bill. Your TDU (Transmission and Distribution Utility) is the company that delivers it — it owns the poles, wires, and meters. You can choose and switch your REP anytime your contract allows. You cannot choose your TDU; it's fixed by your address. Power outage? Call the TDU. Billing question or better rate? That's the REP.

That's the answer in 100 words. Here's why the distinction matters — and how it affects what your business actually pays.

The Three Companies Behind Your Electricity

In deregulated Texas cities, three separate entities are involved every time you flip a switch.

Your REP (Retail Electricity Provider)

Your REP is the company you have a contract with. REPs buy power on the wholesale market and sell it to you at retail. Your REP determines your energy rate, contract terms, and billing. When you "shop for electricity," you're switching REPs — there are over 100 active in Texas, from household names (TXU Energy, Reliant, Constellation) to commercial-focused suppliers you've never heard of. That competition is the entire point of deregulation.

Your TDU (Transmission and Distribution Utility)

Your TDU is the regulated monopoly that owns the physical infrastructure delivering power to your building — the lines, transformers, poles, and meters. You can't choose it, you can't negotiate with it, and it stays the same no matter which REP you pick.

ERCOT (the grid operator)

ERCOT doesn't sell electricity or own wires — it operates the Texas grid, balancing supply and demand in real time and running the wholesale market that determines the prices REPs pay. You'll rarely contact ERCOT, but its wholesale prices flow through to every quote your REP offers.

Texas TDU Territories: Who Delivers Your Power

Your address determines your TDU. The five TDUs in the deregulated ERCOT market:

So if you're in Baytown, your TDU is CenterPoint — but CenterPoint is not your electricity provider. Your provider (REP) is whichever company you signed a contract with, and that's the only piece you can shop. Note: Austin (Austin Energy) and San Antonio (CPS Energy) are municipal utilities outside deregulation — one company does everything there, and you can't switch.

TDU Delivery Charges: The Part of Your Bill Nobody Negotiates

TDU charges typically make up 30–50% of a commercial electricity bill. They cover metering, wires maintenance, and grid infrastructure, and they appear on your bill as pass-through line items from your REP. Three things businesses should know:

• They're regulated, not negotiable. The Public Utility Commission of Texas (PUCT) approves every TDU tariff. Every REP passes through identical TDU charges — a REP claiming "lower delivery fees" is misleading you.
• They change on a schedule. TDU delivery rates are typically updated twice a year, with changes commonly taking effect March 1 and September 1. If your bill rose mid-contract on a fixed plan, a TDU tariff update is the usual culprit — your locked energy rate didn't move.
• Your rate class matters. The TDU assigns your meter a rate class (by service type, voltage, and demand). Large commercial accounts pay different delivery rates than small ones. If your usage profile suggests you're misclassified, your broker can investigate with the TDU. Learn how to read each line of your bill.

On a typical commercial bill, TDU pass-throughs show up as line items like a metering charge, a distribution system charge, and transmission cost recovery — names vary slightly by territory, but the pattern is the same: a small fixed monthly component plus volumetric charges tied to your kWh and, for larger accounts, your peak kW demand. That demand-linked piece is why two businesses with identical kWh usage can pay meaningfully different delivery totals.

Who to Call for What

Why This Matters for Your Business

You Can Only Negotiate Part of Your Bill

When you compare commercial electricity in Texas, you're comparing REP energy charges only — TDU charges are identical across every quote. That's why comparing all-in delivered cost, not just the advertised energy rate, is the only honest comparison. Two REPs offering identical energy rates produce identical TDU charges; the savings live entirely in the supply side and the contract terms.

Switching REPs Never Affects Your Power

Because the TDU handles delivery and the REP handles supply, switching REPs has zero impact on the physical electricity reaching your building. Same wires, same meter, same reliability — the switch is purely administrative, typically completing within one billing cycle with no interruption. Many businesses overpay for years out of an unfounded fear of disruption; the electrons don't know which REP you're paying.

Your TDU Sets Your Rate Class

The TDU assigns your meter a rate class based on service type, voltage, and demand characteristics, and that class determines which delivery rates apply. Large commercial accounts are classed differently from small ones. If your usage profile suggests you're in the wrong class — billed at demand rates your load doesn't justify, for instance — your REP or broker can investigate with the TDU and potentially get it corrected.

Common Mistakes Business Owners Make

• Calling the TDU to negotiate rates. TDU rates are regulated and non-negotiable; rate conversations belong with REPs or a broker.
• Thinking CenterPoint or Oncor is the electricity provider. They deliver power; they don't sell it. Your provider is the company on your contract.
• Calling the REP about an outage. The REP has no trucks and no crews — only the TDU can restore power.
• Comparing quotes on energy rate alone while ignoring how fixed and variable plans treat pass-through charges. Compare all-in delivered cost.

A broker navigates all of this for you — which REPs price your load profile best in your TDU territory, which charges are negotiable, and whether your rate class is right — typically at no direct cost, since brokers are paid by the REP, not by you.

Frequently Asked Questions

Can I choose my TDU?

No. Your TDU is determined entirely by your business address — it's a regulated monopoly for your territory. The only company you can choose in the Texas market is your REP.

Who do I call during a power outage?

Your TDU, not your REP. Oncor: 888-313-4747. CenterPoint: 800-332-7143. AEP Texas: 866-223-8508. TNMP: 888-866-7456. Save your TDU's outage line in your phone — your REP can't dispatch a crew.

How often do TDU delivery charges change in Texas?

Typically twice a year, with updates commonly effective March 1 and September 1, subject to PUCT approval. These changes apply to every customer in the territory regardless of REP or contract type — even fixed-rate customers see them, because delivery charges pass through outside the energy rate lock.

What is an ERCOT REP?

A Retail Electricity Provider certified to sell electricity inside the ERCOT market — the grid covering about 90% of Texas load. If your business is in a deregulated ERCOT city, every provider you can choose from is an ERCOT REP.

The Bottom Line

REP sells, TDU delivers, ERCOT coordinates. You can't change your TDU or its charges, so all of your savings opportunity lives in the REP contract — the rate, the term, and the fine print.