TDU pass-through charges are the delivery fees on your electricity bill that pay your local transmission and distribution utility for moving power across its wires to your home. In deregulated markets, they usually account for 25% to 40% of the total monthly bill. Your retail electricity provider collects them and forwards the money to the utility without adding a markup, which is why they’re called pass-through. Every provider in your area bills the same TDU rates, so switching providers changes the energy portion of your bill and leaves the delivery portion alone.
The Two Companies Behind One Bill
Deregulated electricity splits the job of getting power to your home between two separate companies. Your Retail Electric Provider (REP) sells you the energy, handles customer service, and sends the bill. The Transmission and Distribution Utility (TDU) owns the physical grid: the high-voltage transmission lines, the local distribution wires, the poles, the transformers, and your meter.
You choose your REP. You don’t choose your TDU. Only one utility operates the grid in any given area, and that’s the one assigned to your address by geography. It’s also the company you call when the lights go out, because your REP has nothing to do with the wires.
The word “pass-through” is doing real work here. Your REP is legally required to collect TDU fees and hand them to the utility without keeping a cut. On the delivery side of your bill, the REP is functioning as a billing agent, not a seller.
What’s Actually in the TDU Portion
TDU charges come in two parts: a fixed monthly fee and a variable charge tied to how much electricity you use.
Fixed Monthly Fees
The fixed portion appears every month whether you use a single kilowatt-hour or none at all. It typically covers a customer charge for billing and account maintenance plus a metering charge for the meter itself and reading it. Together these usually run about $3 to $8 per month depending on the TDU. Small, but it means even a vacant home with the power on generates a TDU bill.
Variable Delivery Charges
The variable portion is assessed per kilowatt-hour and scales with your usage. It has two main components:
- A transmission charge that covers moving high-voltage power over long distances from generating plants to local substations.
- A distribution charge that covers the final leg through the lower-voltage local network of wires and transformers into homes and businesses.
Combined, variable delivery charges commonly land somewhere between 4¢ and 7¢ per kWh. At 1,000 kWh of monthly use, that’s roughly $40 to $70 in delivery alone before the fixed fees. The more electricity you use, the larger the delivery share of your bill, which is why the number can catch people off guard when they’ve focused only on their contracted energy rate.
The Smaller Riders That Ride Along
Your bill may also carry several smaller line items that your REP passes through. Each one is approved by the state’s utility commission to recover the cost of a specific program or obligation.
- Transition or securitization charges recover “stranded costs” from the shift to deregulation, where utilities held long-term investments they could no longer recover through competitive prices. Regulators allowed those utilities to issue bonds repaid through a dedicated surcharge. These are non-bypassable, so every customer pays them no matter which REP they use.
- Energy efficiency cost recovery funds utility-run efficiency programs, usually through a per-kWh charge that runs a fraction of a cent.
- Nuclear decommissioning charges recover the cost of eventually dismantling nuclear plants that once served the market.
- System benefit charges fund things like low-income bill assistance, affordability programs, and renewable energy research in some markets.
Individually the riders are small. Together they add a noticeable amount to the delivery total, and they can shift when the utility commission approves new rates or when a bond repayment schedule changes. That’s one reason the delivery portion of your bill can move even when your energy contract is locked.
Why Delivery Charges Can Change Mid-Contract
TDUs are regulated monopolies. Because you can’t pick a competing delivery company, the state’s public utility commission controls what the TDU is allowed to charge. The utility files a rate case with the commission, backs it up with financial documentation on infrastructure investment, maintenance, and operations, and has to show its requested rates are just and reasonable. The commission can approve the request, cut it, or deny it.
Once the commission approves a new tariff, your REP has to adjust its billing to match. Your fixed-rate energy contract locks the commodity price. It does not lock the delivery price, and it can’t, because the delivery price isn’t your REP’s to set.
Comparing Plans Without Getting Fooled by the Headline Rate
Here’s where most shoppers get tripped up. A plan advertising “8¢ per kWh” is quoting the energy charge only. Delivery gets added on top. With variable delivery at 4¢ to 7¢ per kWh, that “8¢ plan” is really costing you something like 12¢ to 15¢ all-in.
Many deregulated markets require providers to publish standardized disclosure documents showing the total average price per kWh at set usage levels, typically 500, 1,000, and 2,000 kWh per month. Those disclosures fold in delivery charges, which makes them far more useful for comparison than the advertised energy rate. Compare plans at the usage level closest to what you actually use each month. A plan with a low energy rate but high base charges can look cheap at 2,000 kWh and expensive at 500 kWh.
Because TDU charges are identical for every REP in your service territory, they’re the constant in any comparison. What varies is the energy rate, any base fees the REP tacks on, and the contract terms. You still need the delivery number to calculate a realistic monthly cost. Your utility commission’s website publishes the current TDU rate schedules, and many shopping sites build delivery into their plan calculators.
What to Do If Your TDU Charges Look Wrong
Because TDU rates are regulated and published, you can check them yourself. Pull the current tariff schedule from your utility commission’s website and match the line items on your bill against the approved rates. If the fixed fees or per-kWh delivery charges don’t line up, call your REP first, since they generate the bill. Delivery-side billing errors aren’t common, but they do happen, especially right after a rate case changes the tariff.
If your REP can’t resolve it, you can file a complaint with your state’s public utility commission. The commission has authority over both the TDU’s rates and the REP’s obligation to pass them through correctly. Keep copies of your bills and point to the exact line items that don’t match the published tariff. A specific discrepancy backed by the commission’s own rate schedule gets a faster response than a general complaint about a high bill.
One thing not to do: call the TDU about your billing. In a deregulated market, your billing relationship is with the REP. The TDU handles the wires and the outages, not your account.