Electric Utility Billing Key Terms

Juice up with these electric utility billing key terms

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 difficult and time consuming, 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.

 

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

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