Supply vs. Delivery Charges: How to Read Your Electric Bill
Your electric bill isn’t one charge — it’s two. Every bill in every state, whether regulated or deregulated, includes a supply charge (the cost of the electricity itself) and a delivery charge (the cost of transporting it to your home). Understanding the difference is the key to reading your bill correctly and — in deregulated states — knowing exactly what you can shop for.
Supply Charges vs. Delivery Charges Explained
| Supply Charge | Delivery Charge | |
|---|---|---|
| What it pays for | Generating the electricity (fuel, power plants, wholesale markets) | Transporting it (wires, poles, transformers, meters, maintenance) |
| Who sets the rate | Your electricity supplier/provider (or default utility) | Your local utility (regulated by state PUC) |
| Can you shop for it? | Yes, in deregulated states | No — determined by your address |
| How it’s charged | Per-kWh rate + possible fixed monthly fee | Per-kWh rate + fixed monthly customer charge |
| What it’s called (varies by state) | Supply, generation, energy charge | Delivery, distribution, transmission, T&D, wires charge |
How Supply and Delivery Work by State
The terminology and structure vary significantly by state. Here’s how the major deregulated markets handle supply and delivery:
| State | Supply Term | Delivery Term | Billing Structure |
|---|---|---|---|
| Texas | Energy charge | TDU delivery charge | Single bill from your REP (includes both) |
| Pennsylvania | Generation charge | Distribution charge | Two separate sections on one utility bill |
| Ohio | Generation charge | Distribution/transmission | Utility bill with supplier charges itemized |
| New York | Supply charge | Delivery charge | Utility bill with ESCO charges itemized |
| Illinois | Supply charge | Delivery charge | Utility bill (ComEd/Ameren) with supplier section |
| Connecticut | Generation services | Delivery services | Utility bill with generation line items |
| Massachusetts | Supply/generation | Distribution/transmission | Utility bill with competitive supplier section |
Anatomy of an Electric Bill
Here’s what a typical deregulated-state electric bill includes, broken down into its supply and delivery components:
Supply Side (What You Can Shop For)
| Line Item | What It Is | Typical Range |
|---|---|---|
| Energy charge | Per-kWh rate for the electricity itself | 6–18¢/kWh |
| Base charge / customer fee | Fixed monthly fee from your provider | $0–$10/month |
| Renewable energy surcharge | Cost of renewable energy certificates (if on a green plan) | $0–$5/month |
| Bill credits | Credits applied at certain usage thresholds | -$25 to -$75 (varies) |
Delivery Side (Fixed by Your Utility)
| Line Item | What It Is | Typical Range |
|---|---|---|
| Distribution charge | Local wires, poles, transformers | 2–5¢/kWh |
| Transmission charge | High-voltage lines from plants to substations | 0.5–2¢/kWh |
| Customer charge | Fixed monthly fee for being connected | $3–$15/month |
| Transition/stranded cost charge | Legacy costs from deregulation transition | 0–1¢/kWh |
| System benefit charge | State-mandated programs (efficiency, assistance) | 0.1–0.5¢/kWh |
Why This Matters for Shopping
Understanding the supply/delivery split is critical when comparing electricity plans:
Real Example: Breaking Down a $150 Bill
Here’s how a $150 monthly electric bill typically breaks down for a Texas customer using 1,000 kWh:
| Component | Calculation | Amount | % of Bill |
|---|---|---|---|
| Energy charge (supply) | 1,000 kWh × 9.5¢ | $95.00 | 63% |
| Provider base charge | Flat fee | $4.95 | 3% |
| TDU delivery (per-kWh) | 1,000 kWh × 4.3¢ | $43.00 | 29% |
| TDU monthly charge | Flat fee | $3.42 | 2% |
| Taxes & fees | Various | $3.63 | 3% |
| Total | $150.00 | 100% |
In this example, the customer can shop for the $99.95 supply portion (66% of the bill). The $46.42 delivery portion plus taxes (34%) are fixed regardless of which provider they choose.
What Happens in Regulated States?
In regulated states (like Florida, Georgia, or Alabama), you can’t shop for your supply rate. The same utility handles both generation and delivery, and rates are set by the state public utility commission. Your bill still has supply and delivery components, but they’re bundled into a single rate from a single company — you have no choice.
This is why deregulated markets exist: they split the supply function away from the delivery monopoly so customers can choose from competing suppliers, driving down the generation cost through competition.
If you live in a deregulated state, compare supply rates in your area to see how much you could save by switching providers.
Sources
State public utility commission rate filings (PUCT, PA PUC, PUCO, NY PSC, ICC), EIA residential electricity rate data, utility tariff schedules. Last updated March 17, 2026.
