Many times we pay electric bills without knowing exactly what goes into our bills. Understanding your electric bills is vital in lowering bills especially if you can tell the charges on the billing sheet. In most cases, many people cannot tell when there are errors which is why you need to understand your electric bill to help you monitor energy usage.
What charges make up your bill?
Your electric bill shows the basic information of your account, a breakdown of energy consumption and the different electric charges. These include;
The meter readings show your previous and current meter readings, not forgetting the date when the last reading was taken. Your bill is the difference between the current meter reading and the previous meter reading in kilowatt-hours (kWh). A kWh is the unit of electricity measurement based on consumption speed (watt) and time (hours).
It shows a breakdown of the rating of the different services used in delivering energy to your household. It shows electricity generation charges, transmission charges, distribution charges, and customs charges. Each charge is the product of your current kWh usage multiplied by the service charge.
Are you on your preferred billing tariff?
Your billing depends on the billing tariff you are subscribed to; either monthly or budget plan. If you are operating on a monthly tariff, electricity billing is delivered to you at the end of every month, while a budget plan allows the spreading of total costs across the year based on energy usage in the previous year.
Is your billing correct?
Once you have identified your service charges rating and the prevailing kWh rate, you can check on the correctness of the bill; whether the overall costs correspond to the billing rates, which requires you to countercheck all the services charges by multiplying every charge with your kWh usage. Knowing the number of hours that you use electricity in a day is very crucial, especially if the billing is based on a tiered billing structure. For instance, a tiered billing structure can place a different charge for units above the first 400kWh. This allows you to calculate the total hours of usage by adding the hours from the different tiers.
Example of a typical monthly bill
Your monthly electricity bill depends on several factors for example, the number of people in your household, weather, and the type of residence. The more the number of people in your household, the higher the electricity bill since usage is also high. Living in a one-bedroom house without air conditioning or heating would translate to a monthly bill of around $30-50. These costs vary from one location to another, whereby people living in suburbs may pay slightly lower charges compared to those living in big towns or cities.
Understanding your electric bill enables you to make rational decisions that can help reduce energy bill and consequently your energy spending.