Understanding Your Electricity Bill

Jun 05, 2018

Understanding Your Electricity Bill

That can go a long way to helping you manage your home energy spending, and even how you may be able to stop wasting electricity and save money. Plus, if you ever have to dispute a bill, it’s helpful to know what you’re actually talking about when you call your utility.

Only 17% of utility customers feel that they have a very good understanding of their bill.

And 30% of utility customers think they have a poor understanding. So in case you fall in this group, we want to help you read your utility bill better, and make the most of your energy usage and budget.


Terms and definitions

Let’s start by breaking down some of the key terms you’ll see on your bill — both what they mean, and why they matter.


Watt: The measure of power.

Simply put, this is how power is measured. But (keep on reading), it’s not exactly what you’re paying for.


Energy: The use of power over time.

Your wattage use over time is what you’re actually charged for. A 100-watt light bulb pulls 100 watts immediately when you turn it on — and keeps using 100 watts for as long as you use it. If you use it for two hours, you’ll use 200 watt-hours. (Want to know more about the difference between a watt and a watt-hour? We've got you covered.)


Kwh: Kilowatt hours.

To make the math just a bit more challenging, the utility company converts all energy into kilowatt hours (kwh). So, 200 watt hours gets converted to 0.2kwh. On your bill, the total energy you’re being charged for is shown in kwh.


TOU (Time-of-Use): Time of day the power is used.

The time of day that you use energy is often as important as how much energy you use. That’s because many utilities charge “peak” rates — usually afternoon to early evening in most places, when energy consumption is at its highest and power plants have to work harder — and “off-peak” rates, when usage is generally lower.

In some states, like California, there are three time periods: off-peak, partial-peak, and peak. Depending on both time of day and time of year, your time of use will be charged based on your time of use. To save money, try to move some of your energy-using activities to the morning or early afternoon, like running the dishwasher before you leave for work, using the washing machine during your lunch hour, etc.


Rate Schedule or Tariff: The list or outline of rates your utility company charges for each type of energy usage.

Your bill will list the exact name or category of your rate schedule, so you can see how much you've been billed for each type of energy usage. If your rate schedule is not included with your bill, you can look up the rate schedule on your utility company’s website.


Baseline Territory: The service area that your home is part of.

Utility companies divide up the territories it covers into what are called “baseline territories” — and they name them with a simple code to keep them straight… as they all have slightly different rates and regulations.


Distribution & Meter Charges: Fees charged by the utility to support delivery of your energy.

Did you know you’re charged a set of monthly fees to cover all the delivery and infrastructure costs? These costs include everything from a portion of the fees required to keep the utility company and equipment up and running, all the way to charging “rent” on your home’s energy meter.


Net Metering or NEM (Net Energy Metering): The utility’s way of giving you credit for over-generation of energy you produce yourself (like solar energy).

If you produce your own energy (for example, with the Enphase Home Energy Solution), your utility may offer you credits for any energy you transfer back to the grid. This policy is called Net Metering, or NEM, and it will factor into the final total charges for your utility bill. NEM policies vary by state, but there are plenty of resources to help you find out what the policy is in your area.


So what are you paying?

Now that we know the terms, let’s look deeper and see what the utility company actually charges you for. In the simplest of terms, your utility company charges you for the cost of delivering energy to you. That means every part of the cost, including:

1.  Your energy usage in kilowatt hours
2.  Distribution fees

And they charge you for that usage by asking:

1.  When you used the energy (peak vs. off-peak)
2.  What your rate is based on territory and rate schedule

Then, they factor in any credits you should get from net energy metering charges, if you generate any of your own electricity with solar or other renewable energy sources.

Then, finally, they tally it all up and give you a big “total due”. Of course, that’s the big number with a $ in front at the top of the bill. But, if you’ve gotten this far, you know it’s just one little part of a bigger picture.


What if you have solar?

If you don't generate any of your own energy using renewable resources (like solar), you pay the full retail value for all the energy you use. But if you do generate your own energy, you only pay retail value for the energy you don't produce yourself. So, if you use more than your system can produce, or if you use power when the sun isn't out, you will be charged by the utility for that power. (Unless, of course, your system has storage!)

For Enphase customers that have energy usage monitoring, you can log on to MyEnlighten to see how your energy production compares to what the utility company is giving you credit for. If it doesn’t line up, check here for some tips that might explain the difference.

Still have questions about your electrical bill? Join one of our upcoming live learning sessions.

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