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Energy Saving Basics – Understanding Your Electric Bill

You are already used to receiving your electric billing statement every month. But, with a lot of jargons and numbers, do you understand or even know where to begin when reading your electric bill? Understanding your electric bill is crucial not only because you want to see to it that you are paying the correct amount for electricity, but also because learning how to decipher your bill can be a good start if you want to save money by cutting down your energy use.

The Basics

Electricity consumption in businesses and households is measured in kilowatt-hours (kWh). In turn, customers are charged for electricity use in cents per-kWh rate.

You should pay attention to the amount of energy you use per kilowatt-hour. Just as it’s critical as well to make sure that the reflected meter readings are accurate. The information you see on your electric bill varies depending on your provider. But, generally an electric bill is comprised of the following:

Account Summary

This section gives an overview of the account, the status, previous balance, previous payments made, and the amount of new balance for the current billing period.

Billing Details

This is where you will see the breakdown of your electricity charges. Generally, in this section you’ll see this information:

  • Customer Charge – The fee that covers billing, meter reading, and equipment maintenance costs.
  • Distribution Charge – This covers the cost for the utilization of transmission lines, substations, and transformers, along with other distribution equipment for the delivery of electricity for your consumption.
  • Generation Charge – This is the charge that covers the cost involved in the production of electricity.
  • Transmission Charge – This one is based on federally regulated charges and covers the costs of moving high voltage current from the generation facility to the distribution lines.
  • Price to Compare Rate – Your bill should include PTC or the price to compare rate, which is the per-kWh rate your electricity provider charges for their service. You can use this information to compare costs and see if you can get better deals from other power distribution companies (if there are other suppliers available) in your area.

Usage Profile

In most cases, utility providers include a monthly usage profile section, which shows the total consumption each month over the past year of the customer. This section should provide you a comprehensive visual representation of how much you consume and make a comparison of your past electricity usage.

Reading Your Electric Bill

If you previously don’t give your electric bill much thought – except maybe to lament how high it is – it’s time you give your bill a second look, and save money on your utility bill. Check out this video on how to read your electric bill.