Electricity fixed charges and minimum bills

What the fixed charge pays for

Utilities split their costs into two kinds when they design a residential rate. Some grow with the energy customers use: fuel, purchased power, much of the wear on the grid. Others exist for every connected home whatever it uses: the meter and reading it, the service line to the house, issuing a bill every month, handling payments and calls. The fixed charge is the part of that second group the utility’s regulator lets it recover as a flat monthly amount; it goes by many names on bills, among them customer charge, basic service charge, service availability charge and facilities charge.

From the billing side, it is the simplest line on the bill: the same amount every month, independent of the meter reading. Some tariffs set it per day rather than per month, so it moves slightly with the number of days in the billing period; on this site it is converted to a monthly figure. It does not usually cover all of those costs: regulators often keep it low and let the rest be recovered through the price per kWh, so the split between the two varies a lot from one utility to the next.

How much utilities charge

Half of the 230 plans charge $15.00 a month or less; 55 charge $20 or more. The lowest is $4.20 on NorthWestern Energy’s REDS-1 plan, and the highest $41.01 on Entergy Mississippi’s RS-40C. Time-of-use plans have a median fixed charge of $15.00 against $15.00 for flat and tiered plans: the clock-based price rarely changes the fixed part of the bill.

The fixed charge says little on its own about whether a utility is cheap. A utility with a high fixed charge can have a low energy price, and the other way round; what matters is the total for your use. That is why each utility page on this site shows a typical bill and an all-in price per kWh that folds the fixed charge in.

Why a small home pays more per kWh

Divide the whole bill by the kWh used and you get the price you really pay per kWh. The fixed charge is the same whatever you use, so the fewer kWh you use, the more of it lands on each one. We priced each utility’s standard plan for two homes in its own state, with the same hourly pattern of use: the state’s typical home, and a small home using 300 kWh a month.

At the median utility, the small home paid 16% more per kWh than the typical one, all-in. The fixed charge was a median 23% of the small home’s yearly bill, against 9% of the typical home’s. The gap was widest at CEMC (Tennessee): 24.0¢ per kWh for the small home against 14.2¢ for the typical one on RS. It was narrowest at Anaheim Public Utilities (California), 17.8¢ against 19.4¢, where the typical home’s use reaches dearer tiers that the small home never touches.

For a small home, then, comparing utilities or plans on the energy price alone can mislead. A plan with a lower fixed charge and a slightly higher energy price often comes out cheaper at low use, and the rate plan comparator shows it directly when you enter your own monthly kWh.

Minimum bills

A minimum bill is a floor: if the fixed charge plus the energy charges come to less than it, you pay the minimum instead. 88 of the 230 plans list a minimum equal to the fixed charge or below it, which in practice never changes a bill, since the fixed charge alone already reaches it. Only 8 of the 230 plans here set a minimum above the fixed charge, at LADWP, FPL, Duke Energy Florida, Hawaiian Electric and Anaheim Public Utilities. On those plans a home that uses very little, or a vacation home left empty, pays the minimum rather than the fixed charge plus a few kWh.

Fixed charges and solar

Net metering, where it applies, credits each kWh your panels send to the grid against a kWh you buy. It works on the energy charges only: the fixed charge is billed whatever the meter shows, so even a home whose panels cover all its use over the year keeps paying it every month. A minimum bill above the fixed charge sets a higher floor, so a solar home on such a plan pays at least that minimum every month however much it exports.

That makes the fixed charge part of the solar payback arithmetic. A system cannot save more than the energy part of the bill, and the higher the share of the bill that is fixed, the smaller that part is. At the median utility here the fixed charge is 9% of a typical home’s bill. The solar payback calculator keeps the fixed charge and any minimum bill on the bill after solar, month by month, so its savings already account for both.

What this guide leaves out

Taxes, franchise fees and some riders are billed as a percentage of the bill or as their own monthly line, and are not included here. Some utilities also charge a separate fixed amount for a second meter, or a monthly fee to join a specific program. Some low-income programs waive or reduce the fixed charge. The methodology describes how each tariff is modeled.