How to read your utility bill
A utility bill may not seem difficult to understand at first glance. Generally, most people would be looking at the total amount to pay at the bottom and settle that amount. But if you’re looking to dive deeper into your utility cost and figure out how it all adds up, you have to understand each component of your bill. It’s also worth noting that your bill will depend on your location and your utility company, although we will explain the common components that you will come across on your electricity bill.
Know your billing system
Billing systems vary between locations and utility companies and can bundle bills from your municipality. The easy way to identify what you are being billed for is to look for these units of measurement:
- Electricity usage is measured in kilowatt-hours (kWh).
- Water consumption is measured in gallons.
- Gas Usage is measured in British Thermal Units (BTUs).
Knowing these units will help you understand your consumption of each utility and what certain sections of your bills are listed.
You also need to understand how your monthly billing plan works. There are different billing plans that utility plans offer to their customers.
- The most straightforward billing method is monthly usage. You’ll be billed for the number of kWh your household has used in the past month.
- Another method is the budget billing plan. This billing method works by taking the amount of kWh you consumed the previous year and using that amount to create a monthly average to pay. The amount will remain the same no matter your electricity usage per month, although this can change next year.
Normally, you’ll see a supply/generation charge which covers the cost of generating the electricity. Along with a transmission/distribution/delivery charge which covers the costs of delivering the electricity to you. When your electrical bill is broken down in detail, there are additional charges that can be seen.
Some of them cover the maintenance and service of the electrical grid and the labor involved. Additional ones can include a consumer charge, taxes, fees, renewable energy, and energy efficiency charges. Certain areas also have demand charges or time-of-use rates on top of the existing charges. This happens when demand is high over a season or during certain times of the day.
Figuring out your electricity usage
Calculating your electricity usage each month can be a bit confusing, as many bills would show your daily usage over an entire month, or monthly usage compared to an entire year. You want to note and examine your usage during your current billing cycle. Be sure to check if you’re on a daily rate or monthly rate.
Your billing method may even have a tiered structure that charges a different price once your electricity usage passes a certain amount. For example, your first 250 kWh will be set at one price. When your electricity usage has passed more than 250 kWh, you will go into the next tier with a different price. Your bill will show how much electricity you have used at each tier, and total the amounts all together.
To calculate how much you pay for electricity, you will first know your total amount of electricity consumed over the month, and the total amount of your bill. Divide the billed amount by the month’s electricity consumption, the result will be the rate per kWh.
For example, a monthly bill of $76.52 divided by 298 kWh of electricity would equal roughly $0.26/kWh. You will now be able to compare the cost of your electricity. Although, this won’t apply to budget billing plans, as they used a set amount that isn’t affected by your monthly usage.
How is solar energy shown on my utility bill?
When you install a solar energy system into your home, your utility company will implement the net-metering policy into your electricity bill. Net metering is when your excess electricity is sent into the electricity grid, this will earn you credits on your electricity bill. These credits will be used when your solar energy system isn’t producing enough power during rainy days or nights for example.
Your electricity bill will show the amount of energy your system has sent to the grid compared to the amount of energy you have pulled from the grid. If your electricity usage is greater than the electricity you have generated. You will be charged the net amount you have consumed from the grid. Although if you have generated an excess amount of electricity over the entire month, the Excess Generation amount will be shown on your bill as a negative value. This is your solar net metering credit. You will also be billed a net metering distribution charge depending on the size of your solar energy system.
Save on your utility bill with solar energy
If you’re ready to save on your electricity bill, we can help you make the transition to solar energy. Our website also has a free online estimate tool that generates a personalized report for you from a simplified questionnaire. That report will contain the potential savings you can net, and the cost of a solar energy system installed on your property. You can also contact us directly via phone at +1 (602) 363-8919 or via email at Scott@elitesolarenergy.org for more information regarding solar energy for your property.