How a bill is put together
We build billing software for electricity retailers, so we see bills from the side that produces them. The process is the same everywhere: take the kWh the meter recorded over the billing period, assign them to the prices of your rate plan (by tier, by time of day, or both), add the fixed charges, add the riders and adjustments the regulator has approved, then the taxes and local fees. Each step leaves one or more lines on the bill. The names change from utility to utility; the structure does not.
1. Billing period and meter reads
The top of the bill shows the service period (its start and end date and the number of days) and the meter readings at each end. Your usage is the difference between the current and the previous reading, multiplied by a meter constant that is 1 on almost every home meter. Most bills mark each reading as actual or estimated: when the utility cannot read the meter it bills an estimate from your history, and the next actual read settles the difference.
Two details explain many “why is this bill different?” questions. Billing periods are not calendar months, and their length varies from bill to bill, so a longer period carries more kWh and more days of any charge billed per day. And with a smart meter, the utility records your use every hour or every 15 minutes; the bill shows only the total, but the interval data is what prices a time-of-use plan, and most utilities let you download it.
2. Customer charge (fixed charge)
Usually the first line: a fixed amount per month, called the customer charge, basic service charge or basic facilities charge. It pays for the costs that do not depend on how much you use, such as the meter, meter reading and billing, and part of the line to your home, and you pay it even in a month you use nothing. Across the 230 residential plans modeled on HomeWattCost it ranges from $4.20 to $41.01 a month; the median is $15.00. Some utilities state it per day, which is one reason the amount moves with the length of the billing period. Fixed charges and minimum bills compares them utility by utility.
3. Energy charge
The core of the bill: kWh × price per kWh. How the price is set depends on the kind of plan, and the plans modeled here split into 55 flat, 62 tiered and 113 time-of-use:
- Flat: one price for every kWh. The bill has a single energy line.
- Tiered (inclining block): the first block of kWh in the month costs one price, the next block more. The bill shows one line per tier, and the tier limits often change with the season. See tiered rates and baselines.
- Time-of-use: the price depends on when you used the power. The bill shows one line per period (peak, off-peak, sometimes mid-peak or super off-peak), each with its kWh from the interval meter. See is a time-of-use plan worth it?
Some plans combine the two: California’s large utilities, for example, give each home a daily baseline allowance of kWh at a lower price on top of their time-of-use periods, and the second worked bill below shows how that adds up.
Reading the Georgia Power bill
R-31 is tiered in summer: the first kWh of the month are the cheapest and each block above costs more, up to 21.03¢ against 13.83¢ for the first block. The typical Georgia home uses about 18% more in July than in January, so its summer bill climbs twice: more kWh, and a larger share of them in the upper tiers. The same home’s January bill on the same plan is $181.18, against $278.02 in July. The practical consequence: on a tiered plan, the kWh you add or save in a heavy month are priced at the top tier, not at the bill’s average.
Reading the PG&E bill
E-TOU-C has two layers. The clock sets the period (peak or off-peak), and each period has a lower price for the kWh within the home’s baseline allowance, 9.8 kWh a day in the climate region used here (304 kWh in a 31-day July), and a higher price above it. A real PG&E bill shows the same idea as the period charges followed by a baseline credit; the total comes out the same. We split the baseline across the periods in proportion to the home’s use, the convention of the Utility Rate Database and NREL’s System Advisor Model. Moving use from the peak to the off-peak hours changes the period lines; using less in total changes how much of the month falls above the baseline.
4. Delivery and supply
Many bills split the energy charge in two. Delivery (also distribution, or transmission and distribution) pays for the poles, wires and substations that bring power to your home. Supply (also generation) pays for the electricity itself. Where the utility both generates or buys the power and delivers it, the two may be combined or shown side by side. In states that have opened retail electricity to competition, including much of the Northeast and Mid-Atlantic, Illinois, Ohio, and the competitive areas of Texas’s ERCOT grid, the supply may come from a company other than your utility, which then appears as its own section or even a separate bill; in competitive Texas, the retail provider’s bill passes the wires company’s delivery charges through. Comparing a supply offer means comparing its price with the supply line only, not with the whole bill.
5. Riders and adjustments
Below the base charges come the riders: per-kWh or monthly amounts that the regulator lets the utility adjust between rate cases. The most common is the fuel or purchased-power adjustment, which passes through the changing cost of the fuel and power the utility buys and is reset as often as monthly or once a year. Others recover specific costs such as storm repairs, energy-efficiency programs, transmission or the retirement of power plants. Riders can add up to a large share of the price per kWh and move independently of the base rate, which is why a bill can rise with no rate case in the news. For the plans checked against the utility’s tariff sheets, HomeWattCost folds every per-kWh rider into the price shown; the methodology explains how.
6. Taxes and local fees
Last come state and local sales or utility taxes, franchise fees paid to the city, and in some places a gross-receipts tax. They are usually a percentage of the bill, and they vary by city and county even within one utility’s territory, so HomeWattCost does not model them; expect your bill to come out somewhat above the totals shown here.
7. Minimum bill
Some tariffs set a minimum monthly bill: if the customer charge plus energy comes to less, you pay the minimum. It matters mostly for vacation homes and for homes with rooftop solar, whose net use can fall close to zero. 8 of the 230 plans modeled here (3%) have a minimum above their customer charge.
8. Solar and net metering lines
With rooftop solar, the meter records both what you import and what you export. Under net metering, exports offset imports and the bill shows the net kWh, with any surplus carried forward as a credit, often settled once a year (the “true-up”). Under net billing, imports are billed at the plan’s prices and exports are credited at a separate, usually lower, export rate, so the bill shows both lines. The solar payback calculator works with whichever rule your utility applies.
If your bill went up
Work down the bill in this order before assuming the price changed:
- Days in the period. A longer billing period carries more kWh and more days of any per-day charge.
- Season. Compare with the same month a year earlier, not with last month. Heating and cooling move use more than anything else, and many plans also change price by season.
- Usage, then tier. If the kWh rose, check whether more of them fell in an upper tier or in the peak period; those kWh cost the most.
- Estimated reads. A bill that follows one or more estimated reads may be catching up.
- Rider and rate changes. Compare the price per kWh of each line with the previous bill. Rate changes lists the tariff versions that changed in the plans modeled here.
- A new load. An EV, a space heater, a pool pump or a failing appliance shows up as a step in use. The electricity cost calculator prices any appliance on your plan.
If the bill is right but too high, the next question is whether another plan from the same utility would cost less for the way you use power: the rate plan comparator prices every plan of your utility for your monthly use.