Understanding Your Electric Bill

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understanding your electric bill

With currently over 3,800 electric utility providers in the United States, there are about just as many ways for them to bill their customers. Based on where you live, your electricity bill can be bundled in with other bills. If you’re living in a deregulated state and you’re purchasing natural gas from the same utility or retail energy company, you will be billed for both, electricity and gas on just one bill. If you’re living in a regulated state, your electric bill may also be bundled with municipal bills such as water, sewage and other municipal or state charges.

Taking a closer look at your electric bill will help you better understand how much electricity you’re using and see where exactly your money is going. Taking the time to study your bill may help you recognize opportunities to save electricity. Knowing what’s on your bill also helps when shopping for alternative electricity suppliers.

What's on an Electric Bill?

The first thing on your electricity bill is your supplier information. You’ll find the name of the company and their contact information on top of the bill. Using Maryland based Baltimore Gas & Electric (BGE), an Exelon Company, as an example, here’s a breakdown of what’s on your bill and what you’re paying for.

Page 1 of Your Electric Bill

On the first page of the BGE bill, you’ll find the bill summary. You can see your name and address on the top right as well as your BGE account number and the issue date of the bill. Make sure the bill you’re trying to pay is yours and current.

In the next block, you can see your balances: last month’s balance and the payments made, any outstanding balance and the individual charges for electricity and natural gas (in case you also purchase gas from the same provider). An extra line for other charges and credits will list those charges to make it easier to track the cost for electricity and gas separately. Finally, this block lists the total amount due and the due date.

On the left side of page 1 are two or three charts showing the amounts you’re paying for electricity, natural gas (if applicable) and other charges or credits respectively. The electricity doughnut chart displays the proportions of the amount paid towards electricity supply, delivery and the supplier and delivery company information, as well as taxes and fees.

The bottom portion of page 1 is the payment stub for those who pay by check. Cut this portion off and return it to BGE with your check.

Page 2 of Your Electric Bill

Page 2 of your electric bill provides details on usage and charges. Electricity is measured in kilowatt-hours (kWh). The graphics on the top of the page show the number of kilowatt-hours used in this billing period and compares them to the previous month and the previous year. If you’ve been with BGE for less than 12 months, it’ll only go back to the first month you started purchasing electricity from them. On the bottom of the graph you’ll find the average monthly temperature of each month to compare it against your usage.

The second block on page 2 has information about your rate schedule, billing period with the amount of days billed and the date for the next scheduled reading.

In block 3 of that page, you can see the number of kilowatt-hours used in that billing period. It gives you the readings of your last and your current meter reading. The number of kilowatt-hours used is the current reading minus the previous reading in kilowatt-hours. This block also lists the date of the meter reading and your meter number for verification purposes. Your utility company uses the readings from your electric meter to calculate your bill.

Block 4 gives you a complete breakdown of the electricity cost. The BGE electricity cost is composed of three different categories, electric supply, electric delivery and taxes and fees.

Electric Supply

The electric supply category lists the supplier’s name, in this case also BGE, and the number of kilowatt-hours used. The kilowatt-hours are multiplied by the electricity supply charge per kilowatt-hour. This is the actual electricity rate including both, generation and transmission charges. If you live in a deregulated electricity market you can compare this rate to other suppliers and switch to a one with more competitive rates. On the far right is the total for this charge in dollars.

Electric Delivery

There are several different charges falling under the electricity delivery category. The main item is the distribution charge for the utility to deliver the electricity from the high voltage transmission lines to your home. It’s the charges for using the utility’s equipment such as wires, transformers or substations. The distribution charge is calculated on a per kilowatt-hour basis.

The second largest item in this category is the customer charge. It is a monthly basic distribution charge covering the costs for billing, meter reading and maintenance. The customer charge is a fixed amount paid each month, regardless of how much electricity you’ve used. It is currently $7.90 a month.

In Maryland, all residential electricity customers pay an EmPower MD charge. It is a consumer education charge to fund programs that help consumers save money and reduce their energy consumption. Many utilities offer free quick home energy audits, free LED light bulbs and even free Wi-Fi thermostats. The EmPower MD charge is per kilowatt-hour of electricity and it is currently set to $0.00736/kWh for residential customers in Maryland. Every residential customer in Maryland can use that program.

The last item in the delivery category is the Electric Reliability Initiative (ERI) charge. The ERI charge was installed to enhance the safety and reliability of BGE’s electric distribution system. The charge adds $0.00024/kWh to your bill.

Taxes & Fees

The first item in this category is a Maryland Electric Universal Service Program (MD EUSP) charge of $0.36 a month for residential customers. The EUSP provides financial assistance to eligible customers by paying a portion of their electric bills.

The Electric Environmental Surcharge (EES) of $0.000146/kWh provides funding for the Power Plant Research Program. It’s assessed on all electricity delivered in the State.

Your utility is required to collect a Franchise Tax, which is passed on to the appropriate State and local government agency. This tax is currently $0.00062/kWh. However, in Maryland, energy for residential use is subsidized and exempt from the 6% State sales tax on the sale of utility services.

The subtotals for each line item are calculated at the far right of each line; all line items then make up your total electricity bill.

Supply Price Comparison Information

The last block on your bill provides information on the Standard Offer Service (SOS) electricity price and the applicable dates for the current rate and for upcoming seasonal rates. This information will make it easier for you to compare the rates to alternate suppliers’ rates.

Check Your Meter

To balance your electric bill, read your meter regularly and compare your readings to the utility’s readings provided on the bill.