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Illustrated electricity bills with one line locked, beside the headline: What a fixed rate doesn’t fix

What a Fixed Rate Doesn’t Fix: Pass-Through Charges on Texas Electricity Bills, Line by Line

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“Fixed rate” is the most reassuring phrase in Texas electricity, and one of the most misunderstood. A fixed price locks the part of your bill your provider controls. It doesn’t lock the rest.

The short answer: on a typical Oncor-area home bill, more than 40% is utility delivery charges, and a fixed-rate plan can pass changes in those straight through to you. For businesses, the gap is bigger. On our sample business bill, the contract energy rate is only about half of what the business actually pays.

This guide walks through both bills line by line, using current Oncor delivery tariffs, ERCOT’s published fees and the state’s own rules. You’ll see what each charge is, who sets it, and whether a “fixed” price can change because of it.

Rates are current as of November 2026. Oncor’s interim surcharge ends with 2026, and large users’ 4CP transmission charges reset January 1, 2027. This article is general information, not legal or tax advice.

How a Texas electricity bill is built

Every bill in the competitive Texas market has three layers, set by three different parties:

  • Your provider’s charges. The energy charge and any monthly base charge. This is the part you shop for, and the part a fixed rate locks.
  • Delivery charges. Your local wires utility, called a TDU (such as Oncor, CenterPoint, AEP Texas, TNMP or Lubbock Power & Light), charges every provider the same regulated rates to deliver power to you. Providers pass these through.
  • Taxes and state fees. Set by law, not by your provider.
Stacked bar of an example 1,000 kWh Oncor-area home bill totaling $171.31: $94.95 (55%) locked by a fixed rate, and $76.36 (45%) for delivery charges, gross receipts tax and PUC assessment, which can change
Example 1,000 kWh home bill in the Oncor area. Energy price and base charge are illustrative. Tap the chart to enlarge.

In this example, a home using 1,000 kWh pays about $171. The provider’s price, the part a fixed rate locks, is about 55% of it, and delivery alone is about 42%. The rest can move during your contract.

A home bill, line by line

For homes and small businesses, the state defines what “fixed” means. Under the PUC’s customer-protection rule (16 TAC §25.475), a fixed-rate plan’s price, including its grid reserve (ancillary service) costs, has to stay put for the term. It can change only to reflect actual changes in three things: your utility’s delivery charges, ERCOT or Texas Regional Entity administrative fees, and new or changed fees or costs imposed by federal, state or local law that are beyond the provider’s control.

Here’s how that plays out on each line of the example bill above.

Charge Example amount Who sets it Can it change on a fixed-rate plan?
Energy charge $90.00 Your provider No. This is what “fixed” locks.
Base charge $4.95 Your provider No, it’s part of the disclosed fixed price.
Delivery charges (Oncor) $72.73 Your utility, approved by the PUC Yes. Changes in utility charges can be passed through, and Oncor’s changed at least four times in 2026.
ERCOT administrative fee Built into the price ERCOT, approved by the PUC Yes, if ERCOT changes it. It’s 61 cents per MWh (1,000 kWh) in 2026, or about 61 cents a month for this home.
Grid reserve costs (ancillary services) Built into the price The ERCOT market No. Since January 2022, the rule bars passing these through unless the PUC specifically designates a service, and in 2024 it declined to do so for ECRS, a reserve service ERCOT added in 2023.
Winter Storm Uri securitization charges Built in, or a line item on some plans ERCOT, under state law No, for fixed plans signed on or after Jan. 11, 2022 (default charges) or Aug. 1, 2022 (uplift charges), under an October 2024 PUC order.
Gross receipts tax reimbursement $3.35 State law (1.997% in cities of 10,000+; lower in smaller cities) Only if the law changes. Some providers fold it into the price.
PUC assessment $0.28 State law (one-sixth of 1%) Only if the law changes.
Sales tax $0 State and local law Homes are exempt from state sales tax and most local sales taxes.

The takeaway for households: your fixed rate protects you from wholesale price swings, but not from delivery charges. In the Oncor area, delivery for a 1,000 kWh home rose from $60.41 in March 2026 to $72.73 in October, about $12 a month, for every Oncor-area home regardless of provider. Part of the increase is an interim surcharge Oncor is collecting through the end of 2026, and the October rider changes are temporary until the PUC issues a final ruling.

The average price on an Electricity Facts Label includes the delivery charges in effect when the label was issued, but not sales tax or the gross receipts tax reimbursement. When delivery charges change, your price per kWh moves with them. Providers don’t have to warn you in advance; your bill shows the change as separate delivery lines or carries a notice.

A business bill, line by line

Business bills look different, mainly because of demand charges. Businesses on Oncor’s “greater than 10 kW” rate, generally those whose demand regularly tops 10 kW, pay most of their delivery cost on kilowatts of demand, the highest 15-minute burst of power they draw in the month, rather than on total kWh used.

Our example is a mid-size restaurant or busy convenience store in the Oncor area: 25,000 kWh a month with a 75 kW peak, in a city of more than 10,000 people. We assume a contract energy price of 6.5 cents per kWh and a contract that passes ERCOT charges through at cost. In a “fully fixed” contract, those ERCOT rows would sit inside the energy price instead.

At 75 kW, this business is above the line where the state’s fixed-rate protections end. That line is 50 kW: a single month at 50 kW or more in the past year puts you over it, and from there your contract decides what can pass through.

Line on the bill Amount How it’s calculated Can it change?
Energy charge $1,625.00 25,000 kWh × 6.5¢ (contract price) Fixed for the contract term
Oncor demand charges $1,021.55 75 kW × $13.62 per kW Yes, whenever Oncor’s rates change
Oncor customer and metering charges $44.99 Flat monthly Yes, with Oncor’s rates
Oncor energy efficiency charge $13.65 25,000 kWh × 0.0546¢ Yes, with Oncor’s rates
ERCOT fees and uplift, including the admin fee $34.50 $1.38 per MWh, the 2025 average Depends on your contract
Grid reserves (ancillary services) $9.75 $0.39 per MWh, the 2025 average Depends on your contract
Uri securitization charges $11.25 Roughly $0.45 per MWh (industry estimate; varies) Depends on your contract
Gross receipts tax reimbursement $55.13 1.997% (city of 10,000+) Only if the law changes
PUC assessment $4.60 One-sixth of 1% Only if the law changes
Sales tax $227.76 8.25% (6.25% state + 2% local) on energy, delivery and ERCOT charges Only if the law changes
Total $3,048.18 About 12.2¢ per kWh —

The contract price of 6.5 cents covers only about 53% of this bill. The demand charges alone are a third of it. (Your provider’s exact sales tax base may differ slightly.)

A few things about business bills catch people off guard:

  • One spike can cost you for up to 11 months. Oncor generally bills the distribution part of the demand charge on the higher of this month’s peak or 80% of your highest peak in the past 11 months, a rule called a ratchet. One hot afternoon with every unit running can keep your demand charges elevated long after. Accounts with a low annual load factor (25% or less) are exempt.
  • Delivery rates are moving fast. Oncor’s business demand rate is up from $11.27 to $13.62 per kW since February 2026. It now includes a temporary interim surcharge of about $1 per kW, and two riders were reset in October 2026 subject to refund. A 75 kW business feels each change at about $75 a month per dollar of rate.
  • Large users pay transmission differently. At Oncor, sites that have peaked at 700 kW or more pay transmission charges based on their demand during ERCOT’s four monthly summer peaks (June through September), called 4CP. Those 15-minute readings set the next year’s transmission charge, which is why big users cut back on peak afternoons.
  • Sales tax may not apply. Electricity used mainly for manufacturing, agriculture and certain other purposes can be exempt, but a business usually needs a “predominant use study” to claim it. Restaurants generally don’t qualify, because cooking food for immediate consumption is treated as a taxable use.

The fine print in business contracts

For businesses at 50 kW or more, “fixed” means whatever the contract says it means. Two offers at the same cents-per-kWh can produce very different bills depending on which of these items the provider keeps inside the price and which it passes through.

Contract term What it covers Recent cost What to ask
Delivery (TDU) pass-through Your utility’s regulated charges Oncor’s business demand rate is up from $11.27 to $13.62 per kW since February 2026 Will you pass through decreases and refunds, not just increases?
Ancillary services ERCOT’s grid reserves $0.39 per MWh in 2025; $3.74 in 2023 Is this inside my price, or billed at actual cost?
Uplift and ERCOT fees Costs ERCOT spreads across the market, such as its admin fee, reliability unit commitments and backup fuel $1.38 per MWh in 2025 Is it capped, or fully passed through?
Location (load-zone) pricing Price differences between where you use power and where the provider buys it Prices vary by zone. In 2025 the West load zone averaged about $4.65 per MWh more than ERCOT as a whole; for a 25,000 kWh West Texas business, that gap would be about $116 a month Is my price set at my load zone, or at a hub?
Securitization charges ERCOT’s Winter Storm Uri debt Roughly $0.45 per MWh (industry estimate; varies) Is this a separate line, and for how long?
Change in law or regulatory change Any new charge created by lawmakers or regulators during the term Unknown until it happens How narrowly is “change in law” defined? Can I review the charge before it’s added?
Usage bandwidth or “swing” Usage above or below an agreed range Settled at market prices, which can be higher or lower What’s my band, and is it settled monthly or annually?

The common thread: items billed per MWh look tiny on their own, but they add up, and the riskiest ones are open-ended. A congestion or change-in-law clause has no ceiling. A wide usage band settled annually is far more forgiving than a tight one settled every month.

There’s no single right answer. Some businesses prefer a slightly lower price with pass-throughs they can watch. Others pay a little more for a “fully fixed” price that keeps everything inside the rate, usually except delivery charges and taxes. What matters is comparing offers on the same terms.

Before you sign: a checklist

For homes and small businesses (under 50 kW):

  1. Compare the average price on each plan’s Electricity Facts Label at your real usage, not just at 1,000 kWh.
  2. Expect delivery charges to change during your contract. Budget for it, especially in the Oncor area this year.
  3. Check for a base charge or bill credits, which are part of the fixed price but change your effective rate at different usage levels.
  4. If you see a “market securitization” line on a fixed-rate plan signed on or after August 1, 2022, ask your provider about it.

For businesses at 50 kW or more:

  1. Ask for the list of every pass-through charge, in writing, before you compare prices.
  2. Ask whether the price is quoted at your load zone or at a hub.
  3. Check how “change in law” is defined, and whether you get notice before a new charge appears.
  4. Look at your usage band and settlement period.
  5. Review your demand history. In our example, trimming 10 kW from your monthly peak saves about $136 a month in Oncor delivery charges, more than cutting half a cent from your energy price would, as long as the lower peak holds every month and stays above your ratchet floor.
  6. If you have mostly exempt use, such as manufacturing or agriculture, ask a tax advisor about a predominant use study.

If you’d like a second set of eyes on a business contract, our team at Vault Energy Solutions reviews business electricity contracts. For homes, you can compare current plans in your ZIP code. And for why delivery charges have climbed so much, see What Winter Storm Uri Still Costs on Your Texas Electric Bill.

Vault Energy Solutions is a licensed Texas electricity broker; brokers are typically paid by the provider.

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