Oncor Rate Increase Deserves Scrutiny
FOR IMMEDIATE RELEASEJuly 29, 2025Contact:Sandie HaverlahPresident, TCA Mobile (512) 423-0913AUSTIN — As we all learned during Winter Storm Uri, investing in a resilient and fully functioning grid is critical. We also learned in the past 20 years as the Texas Miracle continues to thrive that Texas must invest in a grid that can support a growing economy.
Unfortunately, we also learned from CenterPoint’s emergency generator debacle that regulatory oversight and engagement are crucial to ensuring that customers aren’t taken advantage of by electric delivery utilities.
For the 5 million or so people living in North Texas served by Oncor Electric Delivery, the company’s June announcement of a whopping $7/month rate increase deserves serious scrutiny. And digging deeper into their announcement, there are some red flags that cause us concern:
The company says this is only a 4 percent increase in bills. While customers pay different rates due to the competitive electric market, a $7/month increase actually represents a 13% increase on average for customers in Oncor’s service area. More importantly, if this increase is approved, it will mean that Oncor’s rates have increased by nearly 33% since Winter Storm Uri in 2021.
Oncor proudly states that this is a small part of its five-year $36 billion capital plan. There’s a lot to unpack from that. First, don’t forget that customers pay for every penny of that $36 billion. So, if Oncor is raising rates by $7/month and this includes a small fraction of that total $36 billion, what will rates be in 2031 after they’re done spending? Second, that $36 billion isn’t the totality of what Oncor will spend. In fact, their actual investments could be $48 billion over that same time period, according to what they are telling investors. Again, all of that is paid for by Oncor’s captive ratepayers.
Oncor states that about 25 percent of its rate increase, or $200 million, is to safeguard its financial stability and creditworthiness. However, Oncor already holds very high ratings from national rating agencies. The real question is: what is the actual financial risk to Oncor? Unlike most utilities across the country, except those within ERCOT, the company faces no bad debt expense risk from residential or business customers. They are paid by the Retail Electric Providers (REPs) regardless of whether customers pay the REPs. The company is almost certain to fully recover storm expenses, based on this request and previous submissions to the Public Utility Commission. Additionally, unlike utilities elsewhere, Oncor bears no fuel cost risk. Finally, they enjoy a 9.7 percent return on equity—a remarkably high rate most Texans would envy in their 401(k). For a company with virtually zero risk, it’s worth questioning where that $200 million is going and whether it could be better allocated toward equipment that could help reduce future storm costs.
In the past, utilities had to complete the PUC rate review process before they could begin collecting higher rates, which generally takes six months. In many ways, the company is already collecting a significant portion of the money it is requesting. Oncor is permitted to increase rates without regulatory review up to three times per year through the Distribution Cost Recovery Factor and the Transmission Cost Recovery Factor. Those increases are all “interim” rates based on the cost of new equipment the company installs. Those interim rates were initially allowed by Texas lawmakers to help protect the financial stability and creditworthiness of the utilities.
In the last legislative session, a new law was enacted to allow Oncor and other utilities to include nearly all of the rate request in interim rates while the case proceeds through the hearing process. Oncor has, of course, requested the interim rates. Cities served by Oncor and other parties, including the Texas Consumer Association, strongly disagree. In fact, some cities have summarily rejected Oncor’s proposal and customers have started a protest.
At TCA, we want to ensure that utilities like Oncor can invest in things to keep the grid working. However, the shenanigans of CenterPoint in recent years have taught us that we all need to be diligent when a utility comes asking for an increase. Otherwise, we could end up paying for a billion-dollar albatross.
This is the first in a series of posts about the Oncor rate increase request. Rate cases are huge, complex government proceedings in just 180 days, that ultimately result in millions of pages of documents. We will be watching all of that on behalf of Texas consumers so you know what’s happening. Please check back regularly for updates or follow us on X.