When you receive your electricity bill, it needs to be clarified. There are so many charges, numbers, and symbols that it’s easy to miss a few essential details. For example, your electricity bill shows you what you use on a per-kilowatt-hour basis and what your rate structure is.
Rates
The most considerable portion of your home energy bill results from the rates your utility charges. These are determined based on your kWh usage and pricing structure. Most residential consumers use appliances like dishwashers and clothes dryers, electronics, and light bulbs that add up to a monthly kilowatt-hours of consumption. The amount owed is calculated by multiplying the utility’s supply & delivery rate per kWh by your monthly electricity usage. Some plans also include energy rates that vary by time of day, such as Time of Use (TOU) or peak demand rates, designed to discourage large electricity consumption when utility plants need to run at maximum capacity to meet demand. The best way to understand these charges is to look at the breakdown of energy costs on a sample electric bill or a bill from your electric company in Dallas. You’ll see that the homeowner energy charges are broken down into several different types of home energy rates, which can vary from one electricity company to another.
Fees
For some utilities, rates and charges are relatively straightforward. For others, like electricity, things get a little more complicated. It’s especially true when understanding the two primary electric charges on your bill, the supply charge and the transmission and distribution (or “poles and wires”) charge. Your home energy usage is tracked by an electronic meter that records how much electricity you use monthly. Each billing period, your electric utility company reads the meter, calculates your monthly usage, and then bills you for kilowatt-hours. Electricity suppliers purchase power from electricity generators wholesale and resell it to customers. The utility then transports the energy to the customer’s homes and businesses over high-voltage lines. The price of the electricity, shown as a cost per kilowatt-hour on the electric bill, is set by state regulators and can change from one month to the next.
Various fees are charged on the electric bill to cover costs such as maintaining and reading meters, customer education about the bill, shopping for energy, and other administrative expenses. You may also pay taxes and fees based on your home, business location, or chosen rate plan. It’s essential to understand the components of your home energy bill to help you compare prices and make the best choice for your budget.
Meter Readings
Electric bills are confusing terms and fees that stack on each other, nickel-and-diming you to death. The production, sale, and distribution of electricity is one of the most regulated markets in America, and, as such, there are a ton of moving pieces that need to be tracked by your utility company. One thing that could make things easier is having a section on your bill where the account details, plan details, and electricity consumption are visible. Having this info on your bill reminds you of the plan you’re currently enrolled in (and your contract length), and it makes it much easier to see how each month’s total was calculated. It also helps to list your meter readings as they come in, especially if you have an older dial/clock meter. This way, you can ensure your meter is correctly read each month. It’s important to note that there are three different ways a meter is read: actual, when someone from your utility comes and does so; customer submitted; and estimated. These methods have pros and cons, but the most crucial aspect is that they are all used to get your monthly total. This readily available information on your bill will help you avoid over or undercharges.
Customer Service
The electric industry is one of the most regulated markets in existence. This means that there are tons of different regulations that must be followed at all times. Because of this, it’s a good idea to always read your entire bill from beginning to end. This will help you better understand your kWh usage and might even allow you to cut costs by fine-tuning your energy consumption. When reading your bill, you should first check to see what plan you’re enrolled in and what contract length you signed up for. It may seem like a small detail, but having this information readily available on your bill will make it much easier to compare electricity plans. After that, you should look at the total on your account. This will help you determine the cost per kilowatt-hour (kWh) and, if your utility uses a tiered billing structure, how many hours you’ve used in each tier. A kWh measures energy – how much work 1,000 watts can do in one hour. Finally, you should also be familiar with the charges included in your electric bill. This consists of the state- and federally-mandated accounts for financial assistance, energy efficiency, and renewable energy programs. These charges are based on your energy and other factors such as season and demand.
