My Commercial Energy Rate is Cheap, But What is this TDSP charge?

If you're a business owner, saving money is critical to the overall operation of your, well, operation. Saving on electricity can make a major difference to your bottom line. Even better, it can be done with very little effort if you work with Energy Ogre. (Shameless plug, I know, but it had to be done.)

Understanding Effective Rates and TDSP Charges

In the residential energy market, electricity is usually negotiated at "all-in" effective rates. That is, the energy charge, TDSP pass-thru charge, and any taxes or fees added together and divided by your usage. That, ladies and gentlemen, is your effective rate. (Of course, rates are often advertised by their energy charge alone, which is very misleading. But that is a post for another day.)

Now, the TDSP charge, also known as a TDU or pass-thru charge, comes from your local utility. They own the power lines, transformers, and meters that transmit and distribute energy to your home or business. The TDSPs that service the various regions of Texas are ONCOR, Centerpoint, Texas New-Mexico Power, AEP North, and AEP Central.

Working with ERCOT, the TDSPs make sure enough energy is always available to meet the consumption needs of the population. Because of the relative predictability of usage for homes, the delivery company charges for residential meters is fairly straightforward. But things are not that simple for commercial accounts.

A commercial meter can be anything from a guard light to a manufacturing plant, to a hair salon, to a car wash, to a church... You name it. If it's not a house, it's a commercial meter. As such, commercial usage, and the requisite delivery company charges vary widely. And it can get very confusing, especially if you have high energy consumption.

How Are Commercial TDSP Charges Different?

Now, let's unpack how commercial TDSP charges are assessed.

First, they create a usage profile for your account. This profile, known as 4CP, is the average of your integrated 15-minute demands at the time of the monthly ERCOT system 15-minute peak demand for the months of June, July, August, and September of the previous year.

Basically, it's the average of your usage during the hottest day in each of the four hottest months of the year. The TDSP must ensure that, at any given moment, it is ready to match and distribute your highest level of consumption demand.

Even though your usage the rest of the year can be half as much, your delivery company bills you the same way all year round, based on your usage during those 4 hottest months. (Hey, don't get mad at me. I'm just the messenger.) TDSP charges are reassessed once a year and are non-negotiable. Your retail electricity provider has no say in what you are charged, but they have all the say in how those charges are reflected in your bill. Which is where things get confusing.

Often, the charges are broken into parts, some as flat fees and some as per kWh fees. The breakdown varies from provider to provider. You can always request a full breakdown of your charges if you need clarification.

Is There Any Way to Change My Commercial TDSP Charges?

Now, I'm not just going to fill you with dread and leave you in despair. I offer some flicker of hope. If you want to lower your TDSP charges, you just have to make some adjustments within the 4CP window. Really monitor your usage during those months (as if you aren't already). Anything you can do to lower your demand for electricity will be beneficial to cutting those costs.

For instance, try to space out your usage whenever possible. Electricity is measured by the TDSP in 15-minute increments. If you can, when you open your building each morning, turn on one portion of your office -- like one AC unit or just the lights to the back office, for example -- then wait at least 15 minutes to turn on the rest. This reduces the demand for energy in one interval.

Also, fluorescent bulbs consume a lot of energy. If you haven't already, consider LED lighting to reduce both your energy charges and TDSP charges. Any upgrades to more energy-efficient tools and appliances will always help when it comes to saving money on your energy costs.

We're Happy to Help!

As much as we would love for these TDSP charges to NOT be a thing, unfortunately, they very much are. While we can't completely do away with these charges, hopefully, this article has inspired you to find new ways in which to lower the overall cost of your delivery charges. And as always, Energy Ogre is working for you to help lower your energy costs by negotiating the lowest energy rates available on the market.

Got more questions than answers? Want to hear more about a specific topic? Just want to say hi? We'd love to hear from you! Feel free to fire away in the comments section below. Until next time, stay cool, be kind, and do great things! That's the Ogre way :)