TDU vs. REP vs. TDSP: what’s the difference in Texas?

The short answer

A TDU (transmission and distribution utility, sometimes called a TDSP—transmission and distribution service provider) owns and operates the physical infrastructure: the poles, wires, transformers, and meters that carry electricity to your home. A REP (retail electric provider) is the company that sells you an electricity plan and handles your retail billing. In most competitive Texas markets, you can choose your REP, but you cannot choose your TDU. Your TDU is determined by geography.

TDU vs. REP at a glance

What a TDU does—and what it charges

The TDU is responsible for the physical delivery of electricity from the high-voltage transmission grid to the meter at your property. It reads the meter, restores service after most local outages, and maintains the local distribution system. It does not sell you electricity; it provides the infrastructure through which electricity travels.

TDU charges are regulated by the PUCT and are the same regardless of which REP you choose. They typically appear on your bill as a combination of:

• A fixed monthly customer charge (applies even if you use no energy)
• A per-kWh delivery charge on the energy you consume
• Various riders—PUCT-approved cost-recovery mechanisms for infrastructure programs, storms, or policy mandates

Because TDU rates are regulated, they are the same for every residential customer in a given TDU territory at the same usage level—regardless of which REP you select.

What does TDSP mean? Is it the same as TDU?

Yes—TDSP (transmission and distribution service provider) is an alternate name for the same concept. Both terms refer to the entity that owns and operates the wires and delivery infrastructure. You may see “TDU delivery charges” or “TDSP delivery charges” on the same type of bill. The terms are used interchangeably in the Texas electricity market and in PUCT filings.

What a REP does—and how you choose one

The REP sells you electricity at a competitive retail rate. It procures power on the wholesale market, manages risk, and charges you according to the plan you select. In competitive Texas markets, REPs compete on price, plan structure, contract terms, and services.

Every REP licensed in Texas is required to publish an Electricity Facts Label (EFL)—a standardized disclosure showing the effective price per kWh at stated usage levels (typically 500, 1,000, and 2,000 kWh/month). The EFL includes the bundled TDU delivery charges so you can compare all-in costs across plans at a given usage level.

You can shop and switch REPs at Power to Choose, the PUCT’s official comparison website. Your TDU does not change when you switch REPs.

Can you choose a different TDU than the one assigned to your area?

No. TDU service territories in Texas are geographically exclusive. The TDU that serves your address is determined by where the physical wires and infrastructure were built. Residential customers cannot select or switch TDUs. If you move to a different address, you may end up in a different TDU territory.

The major TDUs in competitive ERCOT areas are Oncor (most of the Dallas–Fort Worth region), CenterPoint Energy (Houston and surrounding areas), AEP Texas (parts of West Texas, South Texas, and the Panhandle), and TNMP (scattered service areas including parts of the Texas Panhandle and other communities).

Why do TDSP delivery charges vary between utilities?

Each TDU files its own rate cases with the PUCT, reflecting that utility’s infrastructure investment, storm-recovery costs, territory size, customer density, and cost-recovery riders. A TDU serving a densely populated urban area may have different per-kWh delivery charges than one serving a rural or low-density territory. Because delivery rates are TDU-specific and PUCT-regulated, they are not something a REP can negotiate or change. They are a fixed input into every plan on the market within that territory.

Why this matters if you are considering solar

The TDU/REP distinction is directly relevant to solar economics because solar can reduce the energy component of your bill but may not eliminate TDU delivery charges.

• Delivery charges are not bypassable by going solar. Your TDU’s fixed monthly customer charge and per-kWh delivery fee apply to consumed energy regardless of where that energy originated. Even if solar covers all of your energy production needs, you typically remain a delivery-service customer with a monthly fixed charge.
• REP plan structure affects solar economics significantly. Buyback rates for energy exported to the grid vary by plan. Some REPs offer solar buyback plans with credited export rates; others pay avoided-cost or wholesale-indexed rates considerably below the retail import price. The EFL you read for an energy-only price does not tell you the export value—you need to check the REP’s solar or buyback terms specifically.
• Texas does not have traditional net metering. Unlike many states, Texas does not mandate retail-rate net metering. Export value is determined by your REP’s plan, which means the financial value of exported solar energy can vary substantially across providers and can change when you switch plans.

When evaluating solar payback estimates, it is important to model both the energy savings from self-consumption and the export value under realistic REP plan terms, not just the headline retail rate.