The average gas or electricity bill is made up of a number of different components. This blog post will look at charges you will see on the average energy bill as well as a few terms you will want to familiarize yourself with.
Units of Measure
When most people look at their energy bill, they focus on the units of measure. Gas and electricity are measured using different units.
With an electric bill, you will see either kilowatt hours (Kwh) or megawatt hours (MWh). Every 1,000-kilowatt hours is equal to one-megawatt hour.
Meanwhile, gas is measured in either therm (Ccf) or decatherm (Mcf). Every ten therms will equal one decatherm.
Supply Charges and Delivery Charges
However, by taking a closer look at an energy bill, you will see there is much more to it than just units of measure. For instance, many of the charges are broken down into either supply charges or delivery charges.
Let’s look at each one more closely below:
- Supply charges: The supply charges cover the costs of the energy itself. This is the portion of gas or electricity that has been deregulated for that area. It means the consumer has a choice about who to purchase their electricity from.
- Delivery charges: The delivery fees are based on how much it costs to deliver the energy to the consumer. This includes:
- Transmission fees: This covers the cost of delivering the energy supply from its source to the receiving station. This is still regulated to ensure reliable delivery.
- Distribution fees: The distribution charges cover the transportation of energy from the receiving station to the consumer’s business or home. Like the transmission, this is still regulated to ensure reliability.
Other charges and fees may appear on the bill as well. For instance:
- Taxes: Taxes will include traditional sales tax but will sometimes include additional taxes depending on the state or the company delivering the services.
- Charge calculation: This is the calculation of what the charges are on the energy bill. The total will include the supply and delivery charges plus taxes.
- Meter read: This is the predetermined cycle that the electricity and gas are calculated on. Most meter reads operate on either a 30 or 31-day cycle.
As an energy broker, it’s important to understand how to read the average energy bill. This will help you empower the consumer and help them get the best plan for their money.
You may be interested in more Energy 101 blog posts: