As a business owner, you are always watching your bottom line. Finding ways to cut costs may cause you to take a second look at your electric utility bill. Deciphering how your company came up with the total amount due can be intimidating, especially if each charge is listed separately. To help you with this task you may want to first define what each charge listed on your bill stands for. That way you can more easily analyze those areas of usage you may be able to reduce.

Action Steps
The best contacts and resources to help you get it done

Kilowatt hour (KWh)

A kilowatt hour is the unit of measure used to calculate electric consumption. One kilowatt hour equals 1,000 watts of power used in one hour.

I recommend: Check out this ESB information about how much energy is used by common household appliances.

Unit price

The unit price is set by your electric company, and is variable depending on how much energy is consumed in a given time period. The unit price is then multiplied to every kilowatt hour for billing purposes.

I recommend: Review an AARP article's discussion of unit price and the accompanying chart.

Standing charge

A standing charge is the fixed daily rate for your energy supply. Most of the time the standing charge correlates to the level of consumption. Not every supplier bills a standing charge, or they may refer to it in other ways such as a service charge, customer charge or minimum charge.

I recommend: Learn more about standing charge through the Tesco Energy Price Comparison website. The Ask the Expert section explains how some suppliers compensate by not billing a standing charge.

Capacity charge

The capacity charge is also refereed to as a demand or system use charge. The capacity charge is linked to demand, and is based on the maximum amount of energy used in the previous year.

I recommend: Westar Energy explains how they calculate capacity charge with demand meters.

Distribution charge

If you have unbundled electric service, you will be charged separately for each service such as generation, transmission and distribution. The distribution charge is the amount charged to the customer for the actual delivery of energy. This amount can include a customer charge, demand charge and energy charge as well. Some suppliers' distribution fees are regulated by state agencies.

I recommend: Check out a sample bill and explanation of all the individual charges - including the distribution charge - from the Official Website of the Attorney General of Massachusetts.

Electric meter

An electric meter is the instrument that gauges the amount of electricity used. There are several different kinds of meters, depending on the type of electricity account you have set up. The most common and basic type of meter is an energy meter which simply measures electricity usage in kilowatt hours.

I recommend: The SCANA Corporation provides information on how to read your meter. Your individual electric company may supply you with similar information.

Electric billing system in need of an upgrade? Data communication technology plays a significant role in the operation of a utility system, and the benefits of new technology can extend to a billing system as well.

Utilities looking for innovative business solutions need look no further than new digital technologies, including software capabilities. With advances in technology, your business can become more effective and more profitable by streamlining billing processes. Finding the right electric utility billing software can help you reduce costs and improve customer service at the same time.

Before choosing electricity billing software, consider the following:

1. Are you looking for utility billing services to be utilized in-house or to be outsourced to a third party?

2. What are the must-have features in the ideal electric utility billing software?

3. What kind of technical support or training will be required for an electric utility billing system upgrade?

Action Steps
The best contacts and resources to help you get it done

Compare and research electric utility billing software

Many states are deregulating their electric industries, and changes are happening in the way utilities handle information about their customers, metering and billing systems. As a result, many utility companies play down traditional billing processes and instead make way for new concepts.

I recommend: Capterra offers a utility billing software directory. You can also search billing software that is not just limited to the utility business.

Try before you buy an electric billing system

Download a demo version, request more information or find the training you need to see if the software you are considering will best fit your needs. Use it in true examples to see how the software would update and change your current system.

I recommend: WhiteMountainTech.com offers sample outputs for your review. Visual Utility Billing is available from Diversified Technology and bills itself as an easy to use program for utility companies small and large. Continental Utility Systems offers a customer-friendly billing solution for utility companies.

Calculate the cost of the electricity billing system

Pricing among electricity billing systems can vary widely. Evaluate the cost over a five-year period for a realistic idea of the investment. Some of those extra fees-including license fees, a modification fee to adapt software for your operation, installation costs, training and an annual technical support fee, as well as product updates-can really add up.

I recommend: Beware of expensive training fees and high installation costs. A good system should not require high-priced services. Loading software can be as easy as inserting a CD and clicking a few keystrokes. Check out a comprehensive buyer's checklist from Donald R. Frey and Company, Inc.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Make sure that the electricity billing information stored in your old electricity billing software can be backed up or converted to be compatible with the new technology.