Understanding Electricity Rates: What Consumers Need to Know

With rising energy costs, consumers must understand what the bill includes and how they can save as much money as possible. Though every provider may have different names for the items included in the bill, there are charges and rates that each homeowner should be aware of so they can easily compare providers or make sure they aren’t overpaying for the electricity in their home. 

Amount of Energy Used

It’s a good idea to look at the amount of energy used each month and compare that with electricity rates in your city to determine if the bill is higher than average. If rates are high with the current provider, it might be time to start shopping around for a new provider, as this can help significantly lower the bill each month. Consumers will want to make sure they understand the total energy used, typically measured in kilowatt hours, and how the rate impacts how much they pay each month to see if switching is a good idea. 

Service Charge or Capacity Cost

Most energy companies will have a service charge or capacity cost on the bill. This is a charge based on the estimated energy use for the month, calculated using information from prior bills or the average use in the area. This is a fee to ensure the energy is there and able to be used when it’s needed, and it’s included on most energy bills. Though it is an inevitable cost, it is a good idea to look to see if it might be lower with a new provider. 

Utility Delivery Charge

Most providers will also include a delivery charge for the energy, which covers the cost of getting energy to the home. Also known as a distribution charge, this can help cover the cost of distribution, the new wires and poles needed to help with improvements, and more. Consumers will want to check the utility delivery charge for their current bill and compare it to other providers to see if it’s possible to lower it. 

Time of the Year Matters

Don’t forget that the time of year matters when comparing energy costs for the home. If the example bill for a new provider was created in March, but the current bill for the consumer is for June, the current bill may seem much higher comparatively because it’s during the summer months. Compare similar bills to make sure to get an accurate idea of whether costs can be lowered by switching providers. 

Peak Use Times Matter

Don’t forget that the use times matter when it comes to energy use. Using energy-heavy appliances during peak use times can mean the consumer will spend more on their energy costs, which can make a difference when comparing current costs to example bills for new providers. 

Is it time to look into ways to save money on energy costs? Start by taking a close look at the bill to see what’s included on it and how it impacts what is paid each month.

It might be time to look into switching energy providers to save more money, but the best way to tell if another provider is going to offer a better deal is by closely comparing the existing bill to an example bill for the new provider.