Source: Photo by Marco Verch via Flickr
Are you one of the 60% of Americans who don’t quite understand their utility bill? Do you just receive your bills, pay for them & forget about them? Or are you one of the thousands that question themselves why is it that high every month but does nothing to fix it? If you relate to any of these statements, this blog is for you.
Finding a high utility bill can be daunting, you can feel helpless and dread each month for that. We know it can be hard to maintain a budget while you don’t know the actual costs of it each month. Well, let us tell you that you’re not alone and that we’re here to help you! We will break down your utility bill, so you can understand how it works, and start saving energy and money now.
Understand your utility bill costs
Knowing the measuring unit, and understanding the different charges can make it easier for you to budget around your utility bill.
1. What is the measuring unit?
Maybe you have heard of it before, the regular measuring unit in a utility bill in Kilowatt-hours. Despite weather or season, your electricity rate will be charged as kWh, this rate can give you some insights into how much your utility bill will be.
You need to know the difference between kW and kWh. The first one is used to measure the electrical potency; it is a statement of the amount of energy delivered or used by a product to be able to run. As an example, when you see a 60W lightbulb it means it needs 0,06 kW to work properly.
On the other hand, kWh expresses the relation between energy consumption on a time frame of one hour. The current measuring unit for the energy industry is kWh. To know the amount of kWh that you have used monthly, your utility company will have its workers checking out your meters. They’re located outside of your home, connecting the grid to your internal wiring network. Meters register the amount of energy that has passed and has been used in your place on a time frame.
2. Ever heard of billing cycles?
From month to month, the meter reading timetable varies by 2–3 days. You could be paying for 27 to 33 days per bill with this variation, resulting in a slight increase or decrease in the amount you pay. As a result, depending on how many days they read, you may pay less or more in some months. When reviewing your next electric bill, keep an eye out for the billing cycle, as this might serve as an indicator of how long it has been since you last paid your payment.
3. Fixed and variable rates
In our explanation of how to compare electricity rates, you found out that there is different rate pricing for your energy – If you haven’t checked it out go and do it, it’s really helpful. We will explain briefly how they work:
Fixed-rate Plans
On these, you will have guaranteed that the price per kWh you’re paying is going to be the same throughout the term of the contract. What does this mean? You will not get any price fluctuation regardless of the season or usage times. So, what’s the catch? None, you will just have a contract for a period that will guarantee that price. You can rest assured through the term of it.
Variable-rate Plans
On the other hand, in variable-rate plans, the kWh you see on your utility bill is an average of the price per kWh used throughout the month. How does it work? Well, do you remember high school classes about offer-demand market rules? That’s exactly how it works. The energy market is volatile, it has peak hours and seasons. What you will find is that your monthly payment will be affected by how much the price was on the market at the moment when you used the energy.
4. Delivery & Supply charges
If you live in a deregulated state you will most likely face 2 different charges on your utility bill.
Delivery Charges
These fees cover the upkeep and maintenance of the wires, poles, cables, and other systems that ensure that power is delivered to your home constantly. If you switch suppliers this will be the cost charged to you by your utility company to deliver electricity.
Variable-rate Plans
They are based on how much energy you utilize (kWh) multiplied by the rate and are measured in kWh. If you reside in a state where electricity is deregulated, you have control over this portion of your payment. You have the right to select from a variety of energy providers, the one that best meets your needs, and the plan that is most convenient for you. If you switch suppliers, this will be the cost charged by them based on your energy consumption.
5. Terms of service
Keep track of contract terms, expiration dates, exit fees, and other crucial details. Another important aspect of having your electricity bill explained is this. If you haven’t switched before you’re most likely facing a 1-month billing, meaning you don’t have either exit fees or terms. If you switched already once, look out for the contract terms. They will be your guideline on how to act from then on.
We know utility bills can be annoying, especially when they’re more expensive than what we planned. That’s why we give you all the information you need to understand them and lower the costs. If you have any questions regarding your monthly utility bill feel free to ask us in the comment section below. We want you to know exactly how much you’re spending and why you’re paying it. We hope we were able to clarify your electricity bill to you so that you may better manage your expenditure and switch to save money – we have a full blog with summer energy savings in case you want to check it out.
Another great way to lower your expenses is to check out our website, enter your zip code, and some basic information about your consumption. You will find out if there’s a rate that may benefit you more than your current one.
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