Base Fee charge for electricity in Texas : What is a base charge on my electric bill?

Many retail electric providers (REPs) add a base fee charge for electricity (base charge) as part of their service cost. So, what does base charge mean? What is a base charge on electric bills? And how does a base charge affect the price of your electricity? Our guide helps understand what a base fee charge is, how a base charge is different to the minimum use fee, whether base charges can be avoided, and if a plan is really worth an added base fee charge.

Base fee charge (base charge) meaning 

A base fee charge, according to the Public Utilities Commission, is a "flat fee applied each month regardless of the amount of ... kWh used". The amount is usually intended to cover administrative costs associated with providing customer service and/or billing. Most retail electric providers (REPs) that charge such a base cost do so on a monthly basis ($/month), though some REPs charge a daily base charge (¢/day) to customers on prepaid plans.

Note that a base fee charge is different from a "base energy charge" which refers to the cost (in ¢) of your electricity supply (in kWh).

All Transmission & Distribution Utility companies (TDUs) charge a base fee. As of Fall/Winter 2020, TDU base fees range anywhere from $3.42/month to $7.85/month depending on which TDU. The TDU base fee is sent to retail electric providers (along with the kWh usage fee) which is then passed on to consumers.
Even though the TDU base fee must be charged, REPs can leverage this mandatory TDU base fee by offering a competitive kWh rate and/or choosing to not charge consumers a base fee of their own.

Breaking down base fee charges and affect on the average electric bill in Texas

It's because of the total base fee charges (from the TDU and, if implemented, the REP) that the 500-1000-2000 kWh layout appears to make a higher expenditure of kWhs cheaper by the kWh. A couple of factors allow REPs to play with these kWh marks and base fees are a tricky one, so let's look at how they work (with and without the TDU charges in an Oncor area).

If you don't know what your monthly consumption is, check out our estimation tool!

High base fee charge in plan

Let's start off with retail electric provider, TXU Energy Retail Company LLC, that not only charges a usage fee (per kWh) but also opts to charge a base fee (like the TDU's pricing system). TXU's Energy Simple Value 12 Plan lists the energy cost rate at 5.9¢/kWh and a base charge of $9.95 per month.

Here we have both companies billing consumers with four costs: the TDU and REP both charging an energy usage rate and a monthly base fee.

TXU's customers would see their end pricing as following :

• Total energy charge (5.9¢ / kWh + 3.92¢ / kWh) = 9.82¢ per kWh
• Total monthly base fee charge ($9.95 + $3.42) = $13.37 per month

The monthly base fees added by Oncor & TXU, in the same language of a rate and as a percentage of the overall (pre-tax) bill, would look like this:

Low base fee charge in plan

Now, let's look into Infuse Energy LLC's Essential Infusion 12 Plan. Infuse boasts an energy charge of 4.855¢/kWh while incorporating a base charge fee of $2 per billing period (we will use monthly for simplicity).

Again, the TDU and REP both charge an energy usage rate and a monthly base fee, albeit a lower REP base fee charge than in TXU's plan, above.

Together with Oncor's fees on delivery, the total charges are:

• Total energy charge (4.855¢/kWh + 3.92¢/kWh) = 8.775¢ per kWh
• Total monthly base fee charge ($2.00 + $3.42) = $5.42 per month

As a percentage of the overall (pre-tax) bill, the base fee charges account for:

Zero base fee charge in plan

FInally, BULB, who prides their energy rate of 5.06¢/kWh, has no base fee within their Simply-Flex Plan (the only plan offered). As opposed to the two plans above, from TXU Energy and Infuse Energy, a plan with Bulb involves only three costs since this provider chooses not to charge consumers with the base fee charge.

When combined with the standard TDU rates, BULB customers see the total rate and charge as:

• Total energy charge (5.06¢/kWh + 3.92¢/kWh) = 8.98¢ per kWh
• Total monthly base fee charge ($0 + $3.42) = $3.42 per month

Since Oncor's base fee of $3.42 per month is the only monthly fixed charge to consider here, the total base fee impact on Bulb's bill is one of the lowest on the market:

Base Fees Charges Side-by-Side

For easier comparison, below is a table of the analysis performed on plans with base fee charges.

In the end, even a nominal base fee charge of 2 bucks each billing period can be broken down into an overall cost of one-tenth of a cent if consuming a monthly total of 2,000 kWh. Needless to say, even low base fee charges can easily slip under the radar and onto the bill.

The intended course of a base fee charge is that it becomes less noticable as electricity consumption climbs and a subsequently shrinking chunk of the total monthly bill. However, for smaller households and energy-conserving customers, REPs adding base fees to their offered plans have got to be especially competitive with attractive energy rates.

Your best betKnow the kWh range that suits your lifestyle best and shop from there.
Check out a current or recent electricity bill to see consumption through the seasons and over the year to avoid minimum usage fees (below) or make the most of base fees that are attached to an attractive energy rate.

How is a base fee charge different from a minimum usage fee charge?

Some retail electric providers only charge a fee when customers consume under a certain threshold or charge varying fees for different usage levels. In this case the added charge is defined as a "minimum usage fee". It's important to note that the base fee has nothing to do with how much energy is consumed as it is purely a time-based cost (again, usually on a monthly basis and unassociated with energy consumption).

You can find more information about minimum usage fees on our dedicated page, but -in short- a minimum usage fee is a charge to customers who use less than a certain kilowatt hours (kWh) of electricity in a defined timeframe. So even if you're trying to keep your bill low by using the least amount of electricity you possibly can, several providers still find a way to make an extra buck off those who are cautious about power consumption.

Who benefits from a base fee charge & who should avoid base fee charges?

Several retail electric providers in Texas offer rates without base charges. Although a plan without base charges from the provider sounds ideal, keep an eye on their slightly higher rates!

A trade-off exists: a plan that's free of base fees but with an increased usage rate or plans that include a base fee or minimum usage fee but with a lower rate. So, depending on your energy usage, you may actually be better off paying a base fee.

In general, customers who consume around 2000 kWh or more each month are better off paying a lower rate that includes a base fee and/or minimum usage fee, as the savings on the lower rate are more likely to compensate for the fixed base charge.

Lower power-consuming customers should check which appealing energy plans charge base fees, and whether the charge varies with consumption levels. Paying a slightly higher rate with no base fee involved would be optimal for customers not expecting to consume higher amounts of electricity. It is crucial, however, to compare a few cost estimates before coming to a final decision.

Eligible for utility bill assistance? Discover the national and Texan Energy Assistance programs available to financially help with your electricity bill payments, their requirements, and how you can apply!