Your electric bill may show a dozen lines: generation, transmission, distribution, customer charge, riders, fees and taxes. Understanding them helps you see which charges you can reduce.
Key Takeaways
- Usage is measured in kilowatt-hours (kWh); multiply by your rates to see variable charges.
- Fixed customer charges are paid regardless of usage.
- Riders and surcharges fund specific programs or costs.
- Some residential rate plans include demand charges based on peak usage.
Usage
Your bill shows kWh used in the billing period, often with a comparison to previous months.
Supply and delivery
- Supply (generation): the cost of electricity itself.
- Delivery (transmission and distribution): the cost of moving electricity to your home.
In some states, you can choose a supplier while the utility handles delivery.
Fixed charges
A monthly customer or service charge covers metering and billing.
Riders and surcharges
These fund programs such as energy efficiency, renewable energy or recovery of specific costs.
Rate structures
- Flat: same rate all the time
- Tiered: higher rates as usage increases
- Time-of-use: rates vary by time of day
Demand charges
Some plans charge based on your highest power use in a short interval during the billing period. Spreading out heavy loads reduces demand charges.
Using your bill to save
- Compare rate plans with your utility.
- Shift usage to cheaper times.
- Identify high-usage months for efficiency improvements.
A worked example
Suppose your bill shows:
- Usage: 850 kWh
- Supply charge: $0.11 per kWh
- Delivery charge: $0.09 per kWh
- Customer charge: $15
- Riders and taxes: $12
Variable charges: 850 × ($0.11 + $0.09) = $170 Total: $170 + $15 + $12 = $197
Your effective all-in rate is $197 ÷ 850 ≈ $0.23 per kWh. This effective rate is the number to use when estimating savings from efficiency upgrades or solar, because it includes both supply and delivery.
Tiered rates in practice
On a tiered plan, the first block of kWh each month is charged at a lower rate, and usage above that block costs more. If your usage regularly falls in higher tiers, reducing consumption saves more per kWh than the average rate suggests.
Time-of-use in practice
On time-of-use plans, the same kWh can cost different amounts depending on when you use it. Check your utility’s peak hours, which are often late afternoon and early evening. Running dishwashers, laundry and EV charging outside those hours lowers costs.
Using interval data
Many utilities with smart meters offer online dashboards showing hourly or 15-minute usage. Use them to:
- Spot always-on loads by checking overnight usage
- See the effect of heating and cooling
- Compare rate plans using your actual usage pattern
- Check whether demand charges are driven by specific activities
Spotting errors
Compare meter readings with previous bills, check whether readings are actual or estimated, and confirm you are on the expected rate plan. Contact your utility if something looks wrong.
Frequently Asked Questions
Why is my bill high even when I used less? Fixed charges and rate changes affect bills.
Can I lower fixed charges? Usually not.
What are budget billing plans? They spread payments evenly.
How do I find my rate plan? It is usually listed on the bill.
The bottom line
Understanding each line on your bill shows where savings are possible.
