When you receive your electric bill, do you look for the total cost and skip the rest? You may be missing out on other valuable information, including helpful details about your energy usage that can give you insights into how to reduce your energy costs.

In this guide, we’ll show you how to understand each line of your electric bill so you can read next month’s bill with confidence and make informed decisions about your energy usage.

3. Locate and Assess Your Monthly Billing Plan

Do you remember which billing plan you chose when you signed up for your electric service? Your billing statement should indicate which billing plan you’re on.
Knowing this information can help you understand how your charges are calculated and what to expect on your bill each month.

Here are some of the common types of billing plans offered by utilities across the United States.

• Monthly Usage Plan — Your bill is based on how much energy your household uses during the billing period (usually a month). This is the most common billing plan for energy utilities.
  
  It may be called “Standard” or “Default” depending on your provider, or it may not have a distinct name at all. This type of bill can fluctuate greatly each month and is usually impacted by the season.
  
  If you live in an area that gets very cold in the winter and very hot in the summer, your bill may go up as your home’s HVAC system works harder to keep you comfortable.
• “Levelized” or “Flat” Billing — If you’re paying about the same amount for electricity every month, you may be enrolled in a levelized billing plan that uses a rolling average of your energy usage to calculate your bill. In other words, each month, you pay the average of your last 12 months of energy usage.
  
  This type of billing method is a great way to eliminate billing spikes in winter and summer months and to keep your energy costs more predictable so they’re easier to budget for.

Energy Tip: If you’re an EPB customer and you’ve lived at the same address for at least a year, you can enroll in EPB Levelized Billing to keep your monthly payments predictable, even in winter and summer months when you’re HVAC system is working extra hard to keep you comfortable. Learn more about Levelized Billing here.

• “Prepay” or “Pay Ahead” — These billing plans work like prepaid cell phone plans where you pay for your energy before you use it. Another way to think of it is like filling up a car with gasoline—you can pay any amount toward your energy costs when you can. If your account gets low, you can add funds of any amount at any time to turn your power back on.
  
  The perk of choosing a prepay plan is that you typically won’t have to pay late fees, reconnect fees or security deposits since you’re paying ahead of time. EPB customers can enroll in EPB PrePay Power here.

Here are some of the charges you may see on your bill:

• Energy Usage: This is the main part of your bill. It shows you how much electricity you used during the billing period, typically measured in kilowatt-hours (kWh). Your daily habits greatly affect this number, so if you’re trying to improve your energy efficiency, you can refer to this number each month to track your progress.

Energy Tip: Looking for ways to use less energy and reduce your monthly energy costs? Here are some free resources that may help: EPB’s YouTube Channel, EPB’s blog and comprehensive guides from the U.S. Department of Energy (DOE). If you’re an EPB customer, you can sign up for a free consultation by phone or chat with the EPB Energy ProsSM, or schedule a free EPB Home Energy CheckupSM.

• Energy Rate: Your energy rate tells you how much you’re billed for each kilowatt-hour of energy you use. This amount varies greatly depending on where you live.
  
  For example, some areas pay as much as 25–40 cents per kWh. Some utilities combine an energy charge (cost of energy per kWh) with another fee, such as a fuel cost adjustment. The sum of the energy charge plus your fuel cost adjustment is your energy rate (the total that you pay per kWh of energy usage).
  

It’s also important to note that some energy providers offer an array of energy rate plan options to meet the needs of their customers. These energy rate plan options may offer a rate that changes based on the season or time of day.

EPB customers can compare Residential Energy Rate Plan options here.

• Service Charge: Fixed costs or fees may be charged to help cover the maintenance of the power grid, including power lines and transformers that deliver electricity to your home.
• Other Fees: If you see other fees on your bill, they may cover additional operations or specific services provided by your utility company. If you’re not sure why these charges are there, give your electric company a call—they should help you understand what you’re paying for and remove any errors on your bill.
  

Why Knowing How to Read Your Electric Bill Matters

Taking the time to read and understand your electric bill is crucial for several reasons:

• Confidence: It empowers you to understand why you pay what you do each month and how much energy you consume. That way, you know whether or not your bill is accurate when it’s time to make a payment.
  
• Budgeting: Knowing what to expect on your bill helps you budget more effectively and avoid surprises.
  
• Avoiding Surprises (Levelized Billing): If you’re on a levelized or flat billing plan, you can avoid sudden or seasonal spikes on your energy bill, which makes it easier to manage your monthly expenses.
  
• Identifying Errors: By reviewing and calculating your charges, you can catch any mistakes and ensure you’re not overpaying.
  
• Spotting Issues With Appliances: If you notice a spike in your energy bill, it’s possible that a major appliance, such as your HVAC system, may need repairs. Understanding your monthly energy usage can help you detect these warning signs early.
  
• Energy Awareness: Understanding your energy usage can help you develop more efficient habits, potentially saving you money in the long run.