Confused by your electricity bill? Here’s how to read it

Feb 8, 2016

Whether you’re deciding if you should switch electricity providers or just looking to learn more about your utility costs, understanding your electricity bill is crucial. Here’s a quick breakdown of what you’ll find on a typical bill:

Account and contact details

The bill will identify your contact information, account number and other basic details. You will also find contact details for the provider if you have any questions about your service.

Electricity plans

There are three different types of electric plans out there:

  • Fixed Plan – You lock in a rate for a given amount of time.
  • Variable Plan – Your rate can change each month based on the provider’s costs.
  • Indexed Plan – Your rate can change each month based on a published formula based on the price of a particular energy index.

If you don’t remember what you signed up for, your bill should identify what type of plan you have.

Reading electricity bills

There will be two readings here: your previous usage and your current usage. The difference between these two readings is what you are being billed for this cycle. Go back over bills from the past twelve months to see how your usage changes with the seasons.

Also, it’s worth noting that readings are not always taken each month. In many cases, a provider will estimate a reading. This is nothing to worry about, as the provider will “true-up” your account once they take an actual reading. Just make sure you aren’t getting two estimated readings in a row.

Electricity rates

Now that we have the amount of electricity used, we need to find the amount you are being charged for that electricity. The standard measurement of electricity usage is the kilowatt-hour (or kWh). A kilowatt-hour is equal to 1,000 watts being used over a period of one hour. For reference, a one-room apartment will usually draw about 500 kWh per month, while a two-bedroom house use around 1,500 kWh.

If you have a fixed-rate plan, when you signed up for your service you were quoted a certain price for kWh. You’ll find you are probably paying a little less or a little more than that number, as it figures in flat fees and charges and was based on exactly 2,000 kWh of usage. If you use less than 2,000 kWh per month your bill effective rate will be a little higher than quoted rate, while if you use more than 2,000 kWh per month your effective rate will be a little lower than the quoted rate.

All electricity providers are now required to disclose the price per kWh you paid during that billing period. Each provider lists this in a separate place on the bill, but it will usually be near the bottom or near the fees breakdown and will say “During this billing period, your average rate per kWh was XX cents.” This factors in the energy charge along with any TDU surcharges and monthly fees. Use this as your “rate to compare” when shopping for a new plan.

Charges, fees and taxes

Your bill is probably not based purely on your electricity usage, there are probably some additional charges and fees. Examples of these are transmission charges and distribution charges. As noted above, these were figured into your rate when you signed up. You will also find any applicable sales or state taxes.

Amount due

Your total due for the cycle will be based on your reading multiplied by your rate added to any other charges and taxes. There should be an itemized breakdown somewhere on the bill showing everything that makes up the total. If not, call your provider for a breakdown.

Other data

Every electricity provider has a different format for their bills and many provide helpful information beyond the basics listed above. For example, some providers provide charts showing your usage relative to the weekly temperature, hints on how to cut usage and how much carbon you kept from being released by using renewable energy.