Understand Your Energy Bill

Understand Your Energy Bill

Electricity meter displaying kilowatt hoursUnderstanding the charges on your electric bill may help you lower your energy costs. Here is an explanation of how your utility calculates electricity costs.

Your monthly bill is divided into three parts:

  • A billing and payment summary
  • Your monthly energy consumption for the current month and the previous 12 months
  • A detailed description of all applicable charges.

Kilowatt Hours and Electricity Usage

Understanding your electric charges starts with understanding kilowatt hours (kWh). Kilowatt hours are units used to measure your electricity use over time. Using 1,000 watts of electricity for one hour means that you used one kWh. A typical Virginia home may use approximately 1,000 kWh in a month.

Your electricity consumption varies with the seasons, family size, appliance use, and other factors. In most Virginia homes, more electricity is used during the summer and winter than in fall and spring. During the summer, there is an increased need for electricity for air conditioners and fans, and refrigerators and freezers have to work harder. In winter, heating your home requires more electricity even when gas, oil and other fuels are burned in your furnace. Electricity is needed to run the fans and other components of your heating system.

A bill includes your kWh usage for the month based on a reading of your electric meter. To help you track your electricity consumption, a 12-month usage history is provided on the bill.

Itemized Power Charges

The major costs on your electric bill are separated and itemized to show all of the charges that add up to your total amount. Most of the rates for these charges are based on your monthly kWh usage. For investor owned utilities and electric cooperatives, these rates are approved by the State Corporation Commission (SCC). The current schedule of these charges is contained in a utility tariff that is filed with the SCC. Many utilities also publish tariffs on their websites. The major charges on your electric bill include:

  • Distribution Service: The charge for the delivery of electricity to your home or business through the wires and other equipment of your local utility.
  • Electricity Supply Service: The charges for the generation and transmission of electricity, including the cost of fuel used to produce electricity.
  • State and Local Consumption Taxes: Taxes based on the amount of energy used by customers
  • Local Utility Tax: A tax imposed on energy services by local ordinance.

Investor owned utilities and electric cooperatives impose a flat monthly basic customer charge — also approved by the State Corporation Commission — designed to recover certain fixed expenses associated with making utility service available to your location. The utility incurs these expenses regardless of how much electricity you consume. These expenses may include customer account expenses such as metering, billing and payment processing, as well as fixed costs associated with your individual service line such as depreciation, maintenance, and financing costs. The utility may or may not show this charge as a separate line item on your bill.

How to Read Your Electric Meter

Explanation of how to read an electricity meterYour electric meter measures your use of electricity in kilowatt hours. To read your meter:

  • Stand directly in front of the meter to give you the best view of where the dials are pointing.
  • The dials rotate in different directions. Read and record the number from each dial starting from the right and moving left.
  • When the hand is between two numbers or has just passed a number, record the smaller number (e.g. hand is between the 7 and 8 or has just passed the 7, record the number 7).
  • When the hand appears to be directly on a number, before recording that number, be sure to check the dial to the right. If the hand has not passed zero, record the smaller number instead (e.g. the third dial is on the number 5; however the dial to the right has not reached 0, so the dial would be read as 4).

Subtract the reading taken on an earlier date–or the reading on your latest bill–from the current reading to get the number of kWh you’ve used since that earlier reading.

Understand Your Energy Bill