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How to Read Your Utility Bill
(in Regulated States)

Learn what you're paying for and why

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.

See also: Save up to $1,000 a year on your energy bills.

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.

  Next: How to Read Your Bill >>

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