TDU pass-through charges are the delivery fees on your electricity bill that cover moving power from the generation source to your home. In a deregulated market, your retail electric provider collects them on behalf of your local transmission and distribution utility and forwards the money without adding a markup. They typically make up 25% to 40% of your total monthly bill, and because they’re the same no matter which provider you choose, real savings when shopping for electricity come from the energy rate, not the delivery side.
Two Companies Behind One Bill
Deregulated electricity markets split the work 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 monthly bill. The transmission and distribution utility (TDU) owns the physical infrastructure: high-voltage transmission lines, local distribution wires, poles, transformers, and your meter.
You pick your REP. You don’t pick your TDU. The TDU serving your address is determined by geography, since only one company manages the grid in any given area. It’s the one you call during a power outage, and it’s the one that reads your meter and maintains the lines running to your house.
The word “pass-through” matters. Your REP is legally required to collect TDU fees and send them to the utility without taking a cut. It’s acting as a billing agent for the delivery side of your bill. So switching providers changes your energy rate but does nothing to your delivery charges.
What’s Actually in the Delivery Portion
TDU charges break into two pieces: a fixed monthly fee and a variable charge based on how much you use.
The Fixed Monthly Fees
The fixed portion shows up every month regardless of whether you use a single kilowatt-hour. It usually includes a customer charge (for billing and account maintenance) and a metering charge (for the meter and the reading). Together these generally run about $3 to $8 per month depending on your TDU. Small, but it means even a vacant home with the power on still generates a TDU bill.
The Variable Per-kWh Charges
The variable portion is assessed per kilowatt-hour and scales directly with your consumption. It has two main components:
- A transmission charge, which covers moving high-voltage power across long distances from generating plants to local substations.
- A distribution charge, which covers the final leg through the lower-voltage local network of wires and transformers that connect to homes and businesses.
Combined variable delivery charges commonly fall in the range of 4¢ to 7¢ per kWh. At 1,000 kWh of monthly usage, that’s roughly $40 to $70 in delivery charges before the fixed fees are added. Higher consumption means proportionally higher delivery costs, which is why the delivery portion of a bill can surprise customers who focus only on their energy rate.
Surcharges and Riders That Tag Along
Beyond the core delivery charges, your bill may include several smaller line items that are also passed through by your REP. These riders are approved by the state’s utility commission and recover costs for specific programs or obligations.
- Transition or securitization charges. When electricity markets deregulated, some utilities had long-term investments they could no longer recover through competitive pricing. To handle these stranded costs, regulators allowed utilities to issue bonds backed by a dedicated surcharge on customer bills. These charges are non-bypassable, meaning every customer pays them regardless of which REP they use.
- Energy efficiency cost recovery. Many jurisdictions require utilities to fund energy efficiency programs, recovered through a small per-kWh surcharge that’s often a fraction of a cent.
- Nuclear decommissioning charges. Utilities that operated nuclear plants pass along the cost of eventually dismantling those facilities.
- System benefit charges. Some deregulated markets fund low-income assistance, renewable energy research, and affordability programs through a dedicated per-kWh charge.
Individually these are small. Together they can add a noticeable amount to your delivery total.
Why the Delivery Portion Can Change Mid-Contract
TDUs operate as regulated monopolies. Because you can’t choose a competing delivery company, the state’s public utility commission controls what a TDU is allowed to charge. Rates change through formal rate cases, where the utility files a request supported by detailed financial documentation and the commission reviews it, hears from consumer advocates and ratepayers, and either approves it, reduces it, or denies it.
Once a new tariff takes effect, your REP is required to adjust its billing accordingly. That’s why TDU charges on your bill can change even if you locked in a fixed energy rate. Your contract fixes the commodity price. The delivery price is set by the regulator and can move independently.
How to Use TDU Charges When Comparing Plans
This is where most shoppers get tripped up. A plan advertising “8¢ per kWh” is quoting the energy charge only. The actual per-kWh cost includes delivery on top of that number. When delivery runs 4¢ to 7¢ per kWh, an “8¢ plan” really costs you 12¢ to 15¢ per kWh all-in. Comparing plans on the energy rate alone is like comparing car prices without accounting for mandatory fees at the dealership.
Many deregulated markets require providers to publish standardized disclosure documents showing the total average price per kWh at typical usage levels, such as 500, 1,000, and 2,000 kWh per month. Those totals include delivery charges, which makes them far more useful than headline energy rates. Compare plans at the usage level closest to your actual monthly consumption. A plan with a low energy rate but high base charges can look cheap at 2,000 kWh and expensive at 500.
Because TDU delivery charges are identical for every REP in the same service territory, they act as a constant in your comparison. The variables are the energy rate, any base charges the REP adds, and the contract terms. Your utility commission’s website typically publishes current TDU rate schedules, and many comparison shopping sites build delivery charges into their plan calculators.
What to Do If Your TDU Charges Look Wrong
Because TDU charges are regulated and published, you can verify them yourself. Pull the current tariff schedule from your utility commission’s website and compare the line items on your bill against the approved rates. If the fixed fees or per-kWh delivery charges don’t match, your first call should be to your REP, since they’re the ones generating the bill. Billing errors on the delivery side are uncommon but not unheard of, particularly right after a rate case changes the tariff.
If your REP can’t resolve the issue, you can file a complaint directly 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 accurately. Keep copies of your bills and note the specific line items that don’t match the published tariff. A concrete discrepancy backed by the commission’s own rate schedule gets attention much faster than a general complaint about high bills.
One thing that won’t help: calling the TDU directly about billing. In deregulated markets, your billing relationship is with the REP. The TDU handles the physical infrastructure and outages, not your account.