Oncor and North Texas Cities Reach Settlement on Electric Rate Hike
Residents across North Texas and beyond should prepare for higher electricity bills following a settlement agreement filed by Oncor Electric Delivery Company regarding its base rate review. The agreement, submitted to the Public Utility Commission of Texas (PUCT) on January 29, 2026, resolves a contentious months-long dispute between the utility provider and a coalition of cities that had previously opposed the company’s initial rate hike proposal.
Under the terms of the new settlement, an average residential customer using 1,000 kilowatt-hours of electricity per month can expect an overall bill increase of approximately 3%, or roughly $4.64 per month. This figure represents a compromise from earlier projections; throughout late 2025, member cities within the Oncor Cities Steering Committee passed resolutions denying an initial request that could have raised residential rates by as much as 12.3%.
Deep search data from the filing indicates the settlement establishes an annual revenue requirement for Oncor of approximately $6.975 billion. This reflects an 8.8% increase over the company’s adjusted annualized present revenues. Additionally, the agreement sets a return on equity (ROE) of 9.75% and allocates $200 million annually for a storm and self-insurance reserve, a critical component following a period of severe weather events in the region.
Oncor maintains that the rate adjustment is necessary to fund “hyper-growth” in its service territory. The utility provider, which maintains the poles and wires but does not sell electricity directly to consumers, has cited the need to invest billions in infrastructure upgrades, grid modernization, and transmission projects to support the state’s rapidly expanding population and energy-intensive industries, such as data centers.
Despite the settlement being labeled as “unopposed” by the parties involved, objections regarding the affordability of essential services remain a central theme in the regulatory process. During the negotiation phase, consumer advocacy groups like AARP Texas intervened, warning that any increase places an undue burden on older adults and low-income families living on fixed budgets. City officials had also expressed concern that frequent rate hikes—this being one of several adjustments in recent years—were becoming unsustainable for local residents.
The settlement is not yet final; it requires official approval from the PUCT. A decision is expected in the first half of 2026. If approved, Oncor plans to implement a temporary adjustment to cover the difference between current rates and the new rates starting from January 1, 2026, spreading the cost out to minimize the immediate monthly shock to consumers.
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citiesservedbyoncor.org
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