Most people look at one number on the utility bill: the total. That is understandable, because the rest of the page seems designed to be skipped. But the bill is really two businesses in one envelope, plus a handful of fees, and once you know which line is which, you know which ones you can actually change.
The two halves
Delivery is the local wires and pipes: the company that owns the poles on your street and sends someone out when a storm takes them down. You pay them per unit delivered plus a fixed charge. You cannot change this company. It is a regulated monopoly and it is the same for every house on the block.
Supply is the energy itself, the actual electricity or gas. In many states this half is open to competition, and you can choose a different supplier while the delivery company stays the same. The bill shows both, usually in separate sections, and the supply section is the only one where shopping around makes any difference.
The fixed charges
Below or between the two halves are the fees. A customer charge or basic service charge is fixed every month whether you use one kilowatt-hour or a thousand. Then there are taxes, and in some places riders with names like storm recovery, energy efficiency program or renewable portfolio surcharge. These are set by regulators and they are the reason a tiny apartment with the lights off still gets a $40 bill.
There is nothing to do about the fixed charges except know that they exist. If a third of your bill is fixed, cutting your usage in half will not cut the bill in half, and that is worth understanding before you get discouraged.
The one number worth calculating
Find the supply charge in dollars and the usage in kilowatt-hours (or therms, for gas). Divide the first by the second. That is your real rate per unit, and it is the only number worth comparing with a supplier's offer. Offers are quoted per kilowatt-hour, so this is the apples-to-apples figure.
If a supplier offers a rate below yours, check three things: whether the rate is fixed or variable, how long the term is, and what the early termination fee is. Variable rates that start low and climb are the standard trap. A fixed rate for twelve months with no exit fee is what you are looking for.
Reading the usage history
Most bills include a small bar chart of the last twelve or thirteen months. This is the most useful thing on the page and the most ignored. It shows your seasonal shape, and it lets you compare this month with the same month last year, which is the only fair comparison. A July bill that is higher than June is normal. A July bill that is higher than last July, on similar weather, is a question to answer.
Things that look like errors and are not
- Estimated readings. If the meter was not read, the bill is estimated and will be corrected next month. It is marked with an E or the word estimated somewhere near the meter reading.
- Budget billing adjustments. If you are on a level payment plan, there is a true-up once a year. It can be a large credit or a large charge.
- Rate changes mid-cycle. When a rate changes during a billing period, the bill shows two lines for the same category. It is not a double charge.
What we did after reading ours
Our supply rate turned out to be about 15 percent above the best fixed offer available, because we had never chosen a supplier and were on the default rate. Switching took ten minutes online and nothing changed except the number. The delivery half and the fees stayed exactly the same, which is what the bill had been telling us all along.
