Understanding Your Electric Bill
Electricity is something that has become a staple in our daily lives. Throughout our day, there are very few things we use that don’t require electricity. This demand for electricity has played a role in determining the cost of power and what we pay on our monthly electric bill. We’re here to help you better understand what exactly goes into the items listed on your monthly electricity bill.
How is Electricity Measured?
It is essential to understand how companies will measure power on our electric bill to get started. More than likely, your bill will measure electricity in kilowatt-hours (kWh). This measurement is how much power, or watts, is consumed in an hour. The initial number of watts will be divided by 1,000 to give you your kWh. Once your kWh has been determined, you will pay a certain amount per kWh used. The rate that you pay will vary based on your location and power plan.
Delivery and Supply on Your Electric Bill
Now that we know about kWh, we can break down the rest of your electric bill. Typically, your utility company will split a bill into two sections: one for delivery and one for supply.
Delivery is the way electricity is transported from the place it is generated to your location. These rates are typically fixed and set by the utility company and help maintain the infrastructure that makes power available. It may not be detailed on your electric bill, but these charges will go towards maintaining power lines, gas pipelines, other electricity infrastructures. Your power company will break down the charges further into individual charges within your delivery rate section. Some of these charges include:
- Customer Charge – A fixed cost to cover fixed costs of the utility company. These company costs can include administration costs, billing, and serving customers.
- Distribution Charge – This is the cost to deliver electricity from the source to your location.
- Transition Charge – These charges are typically a fixed cost that goes towards costs the company had to pay to meet specific legal requirements. This charge on your electric bill will vary from state to state.
- Transmission Charge – These charges go towards the cost to deliver power from its generation source to the distribution center. These rates are determined by the Federal Energy Regulatory Commissionand not by the company.
The supply section of your electric bill is based on the charges from your actual energy consumption. Depending on your location and whether or not the state is deregulated, you may or may not have a choice in how your electricity is supplied to you. Each energy supplier can decide their rates for kWh. In deregulated states, you will be able to compare and shop for the best rate for you.
Once your rate is set, it will appear on your bill in kWh. The supply portion of your bill will include this rate and how much energy you used during the period to determine the total for this section of your electric bill.
Pulling Your Electric Bill Together
Your electric bill will pull together both your delivery and supply charges to give you your total for the period. It’s important to remember that your bill could vary month to month depending on your supplier and the demand throughout the year. At Astral Energy, we get rid of the guesswork on your electric bill. We create a custom plan based on your energy needs that won’t change no matter how much energy you use! Contact us today to find out how you can start enjoying power without limits.