Electricity Delivery Charges on Your Commercial Energy Bill
Delivery charges are the fees charged to you by your utility for delivering and servicing power to your business. Understanding these distribution charges can help you make informed energy decisions for your organization.
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Key Takeaways
Delivery charges are set by your utility to cover the cost of delivering power to your business, maintaining and upgrading infrastructure, and mitigating high energy demand. Unlike supply rates where you can choose your supplier, your business doesn’t get to choose its utility company to lower its delivery costs. Businesses can lessen the impact of these charges by becoming more energy efficient, switching suppliers, and checking their monthly bill for errors.
- There are three main categories that delivery charges fall into: transmission and distribution, maintenance and infrastructure, and service.
- Regional grid operators are requiring higher delivery charges to combat rising demand.
- Look for different fees on the delivery portion of your bill to better navigate and understand these costs.
- Switching suppliers to a lower supply rate is the most effective way to reduce the negative impact of delivery charges.
What Are Electricity Delivery Charges Actually Paying For?
Electricity delivery charges occur after power is generated, since it still needs to be transported to your business. There are three main categories that these fees fall into: transmission and distribution, maintenance and infrastructure, and service.
Transmission, distribution, and service fees fluctuate monthly since they depend on your energy consumption, local electricity demand, and different projects occurring across the regional grid. Service fees are billed at a flat, consistent rate because they handle customer service, billing, and administrative expenses.
These fees are set by your local utility company and are regulated by state commissions to ensure fairness. They make up a significant portion of your energy bill, so it’s important to understand what your business is truly paying for each month. It also ensures you’ll experience fewer surprises on your bill, be able to budget accordingly, and perform accurate cost forecasting.
Electric Delivery Charges vs. Electric Supply Charges
Knowing the difference between delivery and supply charges is important, so your business knows what it can control and what it can’t. Both charges make up your monthly energy costs.
Where to Find Delivery Charges on Your Electricity Bill
The importance of knowing where to locate the delivery charges on your energy bill cannot be understated. There are certain words you can look out for to ensure you don’t miss anything!
How to Spot These Charges on Your Bill Without Missing Them
Finding these charges is simple when you know what to look out for in the delivery portion of your utility bill. Some things to watch for include transmission charges, TDU (Transmission and Distribution Utility) charges if your business is in Texas, and distribution charges on your electric bills. These fees can be bundled or labeled differently depending on your utility company, so it’s smart to know the variations. If you’re unsure or overwhelmed, there are external third-party services or energy consultants that can help your business review its bill to better navigate these charges.
Why Do Electricity Delivery Charges Change Every Month?
Unlike supply charges that have the potential to be charged at a fixed rate each month, delivery charges change depending on your usage, seasonal demand, policy and regulatory changes, and infrastructure projects. The variability that these factors carry contributes to your monthly utility bill changing. Regardless of whether your business has a fixed-rate plan or not, delivery charges have the capability to change from month to month.
Why Delivery Charges Are Rising Across the U.S.
Delivery charges are increasing across the nation as regional grid operators look to upgrade existing infrastructure and build new transmission systems. This is being done to combat the rise of AI data centers, electrification, and grid congestion due to high energy demand.
Can Businesses Reduce Electricity Delivery Charges?
Businesses cannot directly lower their utility charges but can lessen the blow of them by utilizing off-peak timing, improving energy efficiency, and locking in a better energy rate with a different supplier. There is no way to change your utility company and its delivery charges, so it’s important to do what your business can to cut down supply costs.
How Integrity Energy Helps Businesses Navigate Rising Delivery Costs
Integrity Energy’s expert brokers and analysts are here to support your commercial business in combating high delivery charges. Our free services identify areas for your business to lower its energy expenses.
Delivery Charges Aren’t Optional, But Surprises Are
Delivery charges are an essential component for regional grid operators, and utilities need to operate effectively. Without them, they won’t be able to deliver power to your business consistently. Although they are an unavoidable piece of your monthly utility bill, being able to recognize these charges and ways to mitigate them can put your business in a position to succeed. Switching suppliers, performing energy audits, becoming more energy efficient, and consistently checking your bill minimizes the risk of being blindsided by utility bill charges.
Frequently Asked Questions About Electricity Delivery Charges
Are delivery charges the same no matter which supplier I choose?
Yes. Switching suppliers only changes your supply rate, not delivery costs. Those are handled by your utility company, which can’t be changed.
How much of my total energy bill is typically delivery costs?
It depends on the region your business resides in. However, delivery charges often range from 30-60%. It can be higher or lower depending on how high your demand charges are.
What are the TDU delivery charges on my electric bill?
TDU delivery charges are the regulated fees for delivering electricity to your Texas property. These charges, set by the local utility company, cover the maintenance and operating costs for power lines, poles, meters, and the overall grid.
Why are TDU delivery charges so high?
ERCOT is continuously investing in grid infrastructure, storm resilience, and system upgrades to support growing demand in Texas. To fund these projects, delivery charges are passed through to businesses and consumers operating within the region.
Why do delivery charges change even when my rate is fixed?
Delivery costs are not the same as supply costs. Utilities adjust delivery charges to account for infrastructure upgrades, fluctuating demand, and regulatory changes. By having a fixed rate, your supply costs remain constant, but your delivery charges can still change.
Are delivery charges higher for certain types of commercial buildings?
Yes. Delivery costs can vary based on how much electricity a business uses. If your facility often has higher demand or peak usage patterns than other businesses, it may see higher delivery costs to ensure it pays its fair share.
Take Control of the Charges You Can Control with Integrity Energy
Partner with Integrity Energy and our free services to secure long-term savings for your commercial business. Get your free quote to begin mitigating delivery costs today!
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Kat Garside
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