AARP is dedicated to helping you save money on your home energy bill by fighting against unfair utility rate hikes. But you may also be able to save money by familiarizing yourself with your monthly bill. Understanding what to look for on your bill can help you identify errors and allow you to monitor your energy usage. Utility bills differ by energy type (electricity, natural gas, etc.) and distributor (your natural gas or electric “company,” also known as a utility). However, there is some key information you should look for when reading your bill. This information will allow you to interpret what you are paying and why.
Understanding Your Charges
While there may be some difference in specific terms for charges from one utility or another, below are the major categories to look for:
- Electric Base Rate and Fuel Charges — These charges are both based on the amount of energy consumed in your home. It generally will make up the largest portion of your overall bill. The “base rate” takes into account your energy usage and the costs needed to produce it. Production costs include things like delivery, power plants and utility personnel, but not fuel. The fuel charge covers the cost of fuel to run the utility’s power plants. This charge will vary throughout the year depending on the utility’s costs for fuel, such as coal and natural gas. These charges are measured in kilowatt hours (kWh).
- Gas Delivery and Fuel Charges — These are also based on the amount of energy consumed in your home. It generally will make up the largest portion of your overall bill. A “base rate” charge takes into account your energy usage and the costs needed to produce it. Production costs include things like delivery and utility personnel, but not fuel. The fuel charge covers the cost of the natural gas used in your home. This rate will change throughout the year depending on the utility’s costs for natural gas. These charges are measured in therms (TH).
- Basic or Customer Charge — A flat fee covering routine business and administrative costs.
- Extra Fees and Surcharges — Your bill may include miscellaneous charges for a wide variety of things such as upgrades to infrastructure, installation of smart meters, fees for renewable energy, and more.
- Taxes — Any federal, state and local taxes will be included on your bill.
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Knowing How to Read Your Bill
It is also important to recognize other information contained in your bill so that you know how much you are paying for energy.
- Customer Name and Mailing Address: your name (or the name of the person responsible for the account) should appear on the bill, along with the mailing address (which may be different than the actual service address).
- Account Number: your account number should be clearly stated on your bill and you should have this number readily available when contacting your utility company to ensure faster service.
- Billing Period: the total amount of days included in the billing cycle. It should also include the date of the previous meter reading and the next meter reading.
- Total Amount Due: the combined amount of your supply and distribution charges, taxes and all other charges that must be paid by the due date.
- Due Date: the date by which your total amount due must be paid. Most utility companies assess a late payment charge if full payment is not received by the due date, so be sure to submit your payment in a timely fashion.
- Meter Number(s): the identification number of the meter used to record your home energy usage. Your home may use more than one meter, and therefore your bill may include multiple numbers.
- Rate Class: there are several different rate types including, residential, commercial and industrial. Your home energy bill should be classified as residential.
- Meter and Usage: this section of the bill provides details related to the use of energy in your home during the billing period. It may also include your usage history, comparing this billing period to past periods.
- Messages: your utility company may print messages on the back of your bill to help you decipher your charges. They may also provide you with energy saving tips, announce pending rate increases or other important announcements.
- Review each energy bill you receive to check for errors.
- Ask your utility company for an itemized bill if you can’t tell what you are paying for.
- Contact your utility if you find an error.
- Contact your state’s utility commission for additional resources for understanding your utility bill. To find contact information for your state’s utility commission visit the National Association of Regulatory Utility Commissioners’ website, www.naruc.org/commissions.
- Get information on utility savings tips and help AARP fight unfair utility rate hikes at www.aarp.org/utilities.
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