Revenues

9 Months Ended

Sep. 30, 2022

Revenues [Abstract]

REVENUES

3. REVENUES

General

Our revenue is billed monthly under tariffs approved by the PUCT and the majority of revenues are related to providing electric delivery service to consumers. Tariff rates are designed to recover the cost of providing electric delivery service to customers including a reasonable rate of return on invested capital. As the volumes delivered can be directly measured, our revenues are recognized when the underlying service has been provided in an amount prescribed by the related tariff. We recognize revenue in the amount that we have the right to invoice. Substantially all of our revenues are from contracts with customers except for alternative revenue program revenues discussed below.

Reconcilable Tariffs

The PUCT has designated certain tariffs (primarily TCRF and EECRF) as reconcilable, which means the differences between amounts billed under these tariffs and the related incurred costs are deferred as either regulatory assets or regulatory liabilities. Accordingly, at prescribed intervals, future tariffs are adjusted to either repay regulatory liabilities or collect regulatory assets.

Alternative Revenue Program

The PUCT has implemented an incentive program allowing us to earn energy efficiency program performance bonuses by exceeding PUCT-approved energy efficiency program targets. This incentive program and the related performance bonus revenues are considered an “alternative revenue program” under GAAP. Annual performance bonuses are recognized as revenue when approved by the PUCT, typically in the third or fourth quarter each year.

Disaggregation of Revenues

The following table reflects electric delivery revenues disaggregated by tariff:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Operating revenues
Revenues contributing to earnings:
Distribution base revenues	$	710	$	650	$	1,888	$	1,708
Transmission base revenues (TCOS revenues):
Billed to third-party wholesale customers		237		220		707		649
Billed to REPs serving Oncor distribution customers, through TCRF		132		120		394		355
Total transmission base revenues		369		340		1,101		1,004
Other miscellaneous revenues		49		19		89		54
Total revenues contributing to earnings		1,128		1,009		3,078		2,766
Revenues collected for pass-through expenses:
TCRF – third-party wholesale transmission service		291		261		862		770
EECRF		19		16		40		36
Total revenues collected for pass-through expenses		310		277		902		806
Total operating revenues	$	1,438	$	1,286	$	3,980	$	3,572

Customers

Our distribution business customers consist of REPs (approximately 100 at September 30, 2022) and certain electric cooperatives in our certificated service area. The consumers of the electricity we deliver are free to choose their electricity supplier from REPs who compete for their business. Our transmission base revenues are collected from load serving entities benefiting from our transmission system. Our transmission business customers consist of other distribution companies, municipalities and electric cooperatives. REP subsidiaries of our two largest customers collectively represented 29% and 26% of our total operating revenues for the three months ended September 30, 2022 and 26% and 24% of our total operating revenues for the nine months ended September 30, 2022. No other customer represented more than 10% of our total operating revenues for the three and nine months ended September 30, 2022.

Variability

Our revenues and cash flows are subject to seasonality, timing of customer billings, weather conditions and other electricity usage drivers, with revenues being highest in the summer. Payment of customer billings is due 35 days after invoicing. Under a PUCT rule relating to the Certification of Retail Electric Providers, write-offs of uncollectible amounts owed by REPs are recoverable as a regulatory asset.

Pass-through Expenses

Revenue equal to expenses that are allowed to be passed-through to customers (primarily third-party wholesale transmission service and energy efficiency program costs) are recognized at the time the expense is recognized. Franchise taxes are assessed by local governmental bodies, based on kWh delivered, and are not a “pass-through” item. The rates we charge customers are intended to recover the franchise taxes, but we are not acting as an agent to collect the taxes from customers; therefore, franchise taxes are reported as a principal component of “taxes other than amounts related to income taxes” instead of a reduction to “revenues” in the income statement.