Electricity Bills

Reading a Utility Bill

Electricity bills can be complicated and confusing to read, but there are a few important numbers that everyone should know. They are: average daily electricity use, delivery charges, and generation charges. These numbers will help you understand how your electricity use is changing over time and will give some insight into how to minimize the electrical bill.

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Average Daily Electricity Use

This figure may also be presented as a monthly amount; to convert from monthly to daily, just divide by the number of days in the month.  Energy usage will be reported in kilowatt hours, abbreviated “kWh.”  A kilowatt is 1,000 watts, so one kilowatt hour is the amount of electricity it takes to run ten 100-watt light bulbs for an hour. 

Monthly changes in energy use generally come from different ways of using large home appliances, such as heating or air conditioning, refrigerators, washer/dryers, pool heaters, and so forth.  (Note that the electricity bill won’t cover appliances powered by natural gas, such as a gas stove or water heater.)  In warm areas like Southern California, we usually see higher electricity bills in the summer when people run their air conditioning units.

Generation Charges

Generation charges represent the cost of the electricity that you were delivered.  The kilowatt hours of power will be assigned various prices depending on whether you’re in a TOU or tiered pricing plan.  These charges represent the cost of running a generator to produce the electricity that you used.  The less total energy you use, the lower your generation charge will be.

Distribution Charges

Distribution charges represent the cost of the infrastructure that delivered the energy to your home – from the high voltage transmission lines carrying power away from the generator to the poles and wires that deliver electricity to your property.  Distribution charges are usually allotted based on the highest electricity load to your property during the month.  So, if one home runs the pool heater at night and the air conditioning during the day, and the next home runs both at the same time, the second will probably get a higher distribution charge.