Oncor Files Rate Review

If approved by the PUCT, the new rates would result in an increase of approximately $7 per month for a residential customer using 1,000 kilowatt-hours (kWh) of electricity per month. This represents an approximate 4.7% increase to that customer’s total monthly energy bill.

Oncor does not generate power or bill retail customers directly. Customers buy electricity from their Retail Electric Provider (REP) and receive their bills from that REP. Oncor simply charges the REP for the delivery of that electricity. The REP directly bills customers for both the total cost of the electricity used and the Oncor delivery charges.

Oncor’s charges are often referred to as “delivery,” “wires,” or “transmission and distribution” charges on electric bills. A customer’s total bill is based on Oncor’s charges to deliver their electricity and the rate charged by their REP, which varies based on the REP and the rate plan the customer selected.

For residential customers under existing rates, Oncor’s charges to the REP for delivering electricity include two components: a fixed monthly amount of $4.23, and a charge for the amount of electricity (kilowatt hour; “kWh”) used by the customer (and delivered by Oncor) during the month. The number of kWhs used by the customer is multiplied by approximately 5 cents.

Under newly proposed rates, the fixed monthly amount would decrease to $4.06 and the number of kWhs used by the customer would be multiplied by approximately 6 cents.

Oncor’s 2025-2029 capital plan is the largest five-year capital plan in company history; it calls for Oncor to invest approximately $36.1 billion over the next five years to fund projects that would support the unprecedented population, economic and load growth across Texas. For reference, $36.1 billion is more than four times greater than the amount of Oncor’s five-year capital plan in 2018, and more than double Oncor’s five-year capital plan in 2022.

Some of the major components of Oncor’s latest five-year capital plan include:

·       Oncor’s first-ever System Resiliency Plan;

·       Projects in the Permian Basin Reliability Plan;

·       Transmission projects in the Delaware Basin Load Integration Plan and West Texas 345 kV Infrastructure Plan;

·       Interconnection of generation and large commercial and industrial (LC&I) customers with executed agreements; and

·       Distribution upgrades and other capital needs.

It is worth noting that Oncor anticipates its capital plan will grow further over the 2025 through 2029 period due to incremental opportunities that were subject to regulatory approvals and/or customer commitments as of the February 2025 announcement of its five-year capital plan.

For instance, Oncor’s 2025-2029 capital plan only includes the company’s expected spend for major transmission projects that had obtained all regulatory approvals as of February 2025. Additionally, it only includes LC&I projects for which interconnection agreements with Oncor had already been executed as of February 2025. With this in mind, Oncor has identified potential additional capital opportunities from 2025-2029 that are likely to exceed $12 billion. In other words, it is likely that Oncor’s capital investments over the next five years will soar well beyond $36.1 billion.

In recent years, Oncor has placed heightened emphasis on improving the resiliency of its electric grid. Oncor has made several significant technology investments that have positioned its system to better withstand and recover from major events, such as severe weather and cyberattacks.

These investments include distribution automation and other Smart Grid technologies that enable Oncor devices to automatically sense local operating conditions and make adjustments to minimize outage impacts. As of the beginning of 2025, Oncor has deployed automated devices across 70 % of its distribution system with a plan to reach 90 %. Oncor has also implemented enhanced storm restoration tools and processes that have improved its ability to respond to weather-induced outage events. 

Oncor is also making progress on implementing its first-ever System Resiliency Plan (SRP), which aims to substantially reduce the impact and duration of severe weather outages and mitigate other risks to our electric grid. Oncor was the first utility to receive PUCT approval for its SRP.

While no utility can economically deliver electricity without interruption, Oncor has a strong record for continuity of service and responding swiftly when service interruptions do occur. We recognize that an outage of any length is a challenge to our customers, and our teams work around the clock, year-round to respond to outages and implement preventative measures that prevent or reduce outage impacts. Oncor uses the System Average Interruption Duration Index (SAIDI), a well-known and widely used metric in the utility industry, to measure its reliability performance. SAIDI measures the average time that a customer is out of service in a year due to outages of a non-major event. Oncor’s SAIDI performance has been trending positively and currently compares favorably to other Texas utilities.

The SRP, as approved by the Public Utility Commission of Texas (PUCT) in November 2024, is Oncor’s plan to invest approximately $3 billion in the resiliency of our distribution system through 2028. The accelerated grid upgrades and enhancements implemented through the plan are designed to allow our system to better withstand and more quickly recover from a range of extreme weather and other events.

Most notably, these efforts should help decrease the amount of infrastructure damage that can lead to customer outages, and improve our ability to get power back on faster after an outage. Additionally, they should decrease long-term costs for customers by reducing expensive emergency repairs after severe weather events.

Oncor’s rate request is based on 2024 cost data and therefore only includes a very small portion of SRP costs. 

Oncor’s service area covers nearly one-third of the state and includes a highly variable range of geographic, climatic, and vegetative regions. This can result in a diverse possibility of extreme weather conditions, including extreme heat and extreme cold, thunderstorms, tornadoes, ice storms, wildfires, floods and hail events. While the company works year-round to prepare for and respond to potential weather and seasonal impacts, any major storm or severe weather event can result in restoration costs for transmission and distribution utilities (TDUs) like Oncor, such as covering what is needed to repair and restore service.

These costs are recovered in customer rates through Oncor’s self-insurance reserve fund. Oncor currently recovers $122 million in rates every year to pay for storm-related costs and other self-insured losses, with expenses over that amount funded by Oncor’s investors and held for future recovery as a deficit in the fund. This fund serves to smooth the rate impact of such losses because the costs are recovered from ratepayers over time as opposed to immediately following a severe weather or other event.

From 2021 to 2024, Oncor spent an average of over $350 million each year on these costs, leading to a significant cumulative deficit of more than $750 million. In light of the fact that over the past three years, Oncor has experienced an average of 31 major storm events annually or about one major storm event somewhere in the Oncor service territory every 12 days, Oncor has also requested an increase of $231 million in rates going forward to better align actual storm restoration experience with what is collected in rates and prevent large deficits from continuing to accrue each year. 

Oncor’s mission has long been to provide safe and reliable electric delivery service, and to provide that service in an efficient and cost-effective manner. We recognize the pressures that rising utility bills may have on our customers and make every decision regarding rate adjustments with that potential impact in mind.

Furthermore, even as Oncor faces unprecedented growth in electricity demand and works to improve the resiliency of its system, we maintain operation and maintenance (O&M) costs that compare favorably to other utilities in the industry. Oncor’s O&M cost per customer is well below the industry median, and our O&M cost per megawatt-hour (MWh) delivered is low compared to other utilities.

Some cities in Oncor’s service territory have retained original jurisdiction over Oncor’s rates, and some cities have ceded that jurisdiction to the PUCT. The PUCT also has jurisdiction over Oncor’s rates in areas outside a municipality, and has exclusive appellate jurisdiction to review an order or ordinance of a municipality exercising exclusive original jurisdiction.

Rate review proceedings are expected to last at least six to nine months. Oncor intends to ask for a partial interim adjustment of rates to begin to recover some of the increased costs while the case is pending, subject to refund to the final rates approved by the PUCT.