Chances are you only look at your energy bill each month to see the amount that’s due, or you might never look at it if you’re set up for auto-pay. Even if you do pay close attention, there still may be a few things you’re not sure about.
Even though utility bills are different from utility to utility there are common parts and pieces that are similar across every bill. Three main charges that you will want to be aware of as a smart energy consumer as you ask the question, “How am I billed for electricity and natural gas?”:
- Generation service charge
- Transmission and distribution service charge
- Supply service charge
Understanding what each of these utility charges is by reading the breakdown below:
1. Generation service charge
As the name implies, this relates to the cost for electricity to be generated from a power source. Depending on your location, generation can be from a coal plant, a wind turbine, or even a solar farm.
2. Transmission and distribution services charge
Transmission charges are simply the lines and pipes that carry the electricity and natural gas from the source (Generation or wellhead, respectively), to cities and neighborhoods. The Distribution charge is for “the last mile” that carries energy from local lines specifically into your home or business.
Insider Tip: In some cases, you may not see these charges listed separately on your bill, but these costs go to the maintenance and operating costs of the lines and pipes.
3. Supply service charge
You only see this charge if you enroll with an energy supplier. In that case, the supplier name and the rate you enrolled in will be on your bill. If you don’t have a supplier, this cost is simply added to your utility’s supply charges. The supply charge refers to how much energy you used and the rate you were charged for that energy.
Depending on your utility, there may also be a few miscellaneous charges such as “Customer Charge” or “Service Fee”, but these are related more to administrative or operating costs.
By understanding how to read your monthly utility bill and the related charges, you can make informed choices when it comes to your home energy. This may include choosing specific products and service from a retail natural gas or electric supplier.