Resources: Utilities vs. REPs

Market Basics

Utilities vs. REPs: Who Does What

In Texas, delivering your electricity and selling it to you are two different jobs, handled by two different companies. Knowing which one does what saves you time when something goes wrong and money when you’re comparing plans.

Two Companies, One Bill

When you flip on the lights at your business, two separate companies made that possible. One owns the poles, wires, and transformers that physically carry electricity to your building. The other bought that electricity on the wholesale market and sold it to you under contract. Texas deregulated its electricity market in 2002 under Senate Bill 7, splitting what used to be a single monopoly utility into these two distinct roles: delivery and supply.

There’s actually a third player in this system, the generation companies that produce the electricity itself, whether from natural gas, wind, solar, or nuclear plants. But you never deal with them directly. ERCOT, the Electric Reliability Council of Texas, operates the grid and runs the wholesale market where generators sell power to REPs. You’ll rarely if ever contact ERCOT, but the wholesale prices it sets flow through to every rate your REP quotes you.

For your business, only two of these three players matter day to day: the TDU that delivers your power, and the REP that sells it to you. Knowing which one does what is the difference between calling the right number during an outage and wasting an afternoon on hold, and it’s also what lets you shop intelligently. You can negotiate and switch your REP. You cannot do either with your TDU.

The TDU: Who Delivers Your Power

Your Transmission and Distribution Utility, or TDU, owns and maintains the physical infrastructure that carries electricity from the grid to your building. Poles, wires, transformers, substations, and your meter all belong to the TDU. They are the ones who show up when a line goes down or a transformer fails.

You do not choose your TDU. It is fixed by your service address, just as you cannot choose which company owns the sidewalk in front of your building. Texas has six primary TDUs, and which one serves you depends entirely on where your business is located:

Oncor covers North and Central Texas, including Dallas and Fort Worth
CenterPoint Energy covers the Houston area
AEP Texas Central and AEP Texas North cover South and West Texas
TNMP (Texas-New Mexico Power) covers scattered territories across the state
LP&L (Lubbock Power & Light) covers the Lubbock area

TDU charges cover delivery, not the electricity itself, and they typically make up 30 to 50 percent of a commercial bill. These rates are set by the Public Utility Commission of Texas (PUCT) and reviewed twice a year, in March and September. No REP can negotiate them down, and no REP profits from them. They are pass-through costs, billed to your REP at the exact rate the TDU charges, then passed on to you.

The REP: Who Sells You Power

Your Retail Electric Provider, or REP, is the company you actually have a contract with. REPs buy electricity on the wholesale market, price it into plans, and sell it to businesses like yours. They set your energy rate, issue your monthly bill, and handle customer service.

Unlike your TDU, you choose your REP, and you can switch at the end of your contract term (or sooner, depending on your agreement). Texas has more than 100 active REPs, ranging from large national names to smaller suppliers who focus specifically on commercial accounts. This is the layer where shopping around actually changes what you pay. Contract length, rate structure, and renewable energy content are all decisions your REP controls, and all things you can negotiate or compare before signing.

How the Two Work Together on Your Bill

Even though two separate companies are involved, you only deal with one of them directly. Your REP sends a single monthly bill that bundles both charges: the energy charge for the electricity you used, and the TDU delivery charge for getting it to you. The REP collects the full amount and forwards the delivery portion to the TDU. This is why a bill can go up even when your REP’s rate hasn’t changed. If the TDU adjusts its delivery rate during one of its biannual reviews, that increase flows straight through to your total, regardless of what you’re locked into with your REP.

Switching REPs does not affect your service. Your TDU keeps delivering power throughout the transition, which typically takes one to two billing cycles. There is no equipment swap, no service interruption, and no need to notify the TDU yourself. Your new REP handles that on your behalf.

Who to Call When Something Goes Wrong

A good rule of thumb: if the problem is that your power is out, call your TDU. If the problem is your bill, your rate, or your contract, call your REP.

Power outage or downed line: TDU
Billing question or dispute: REP
Rate or contract negotiation: REP
Meter issue or damaged equipment: TDU
Requesting a new service connection: REP initiates it, TDU completes it

FAQ: Quick References

No. Your TDU is determined entirely by your business address. The only thing you can shop for and switch is your REP.

Your REP bundles both charges into one bill for convenience. The TDU delivery portion is a pass-through cost your REP is required to bill you for and forward directly to the TDU, without any markup.

No. Your TDU continues delivering power throughout the switch, which usually takes one to two billing cycles. Your new REP manages the transition.

Your TDU. They own and maintain the physical infrastructure, so outages, downed lines, and equipment failures are their responsibility to fix.

No. TDU charges are regulated by the PUCT and passed through to you at cost. Your REP’s profit comes from the energy charge, not the delivery charge.

Check a recent electric bill, it’s typically listed as a separate line item, or contact your REP directly and they can confirm it for you.