How to Analyze and Calculate Your Electric Bill

This article provides an in-depth understanding of calculating your electricity bill using the information provided by your Electric service provider. Many of us are unable to completely comprehend our Electricity bills. By following this article you would be able to understand the basics of Electric bill while learning some Electricity basics along the way.

Instructions

1. Your electric bill shows your electric usage (electric units) during the billing period. It is measured in kilowatt-hours (kWh). The average American household uses about 1,000 kWh per month. This may vary monthly depending upon the usage of weather-dependent appliances like heater (during winter) and air-conditioners (during summer months).

2. Obtain a copy of the rate tariffs for your electric service provider. Most electric utilities post their tariffs on their website. If the provider is a municipal electric utility, you would have to obtain a copy of the tariff from the utility office (mostly Town hall, city hall etc.)

3. Most Electric utilities have a Customer charge or service charge. This charge is associated with the utility's administrative costs of providing service to the end user. This ranges from anywhere between $4 to $20 depending on your utility. (We will assume $10 for our calculation).

4. The next is your unit charge (base rates from the utility tariff). Many utilities have a stepped rate. For e.g.
   1st 200 kWh - $0.15/kWh
   next 300 kWh - $0.12/kWh
   over 500 kWh - $0.1/kWh

   So if your usage during the month was 900 kWh then your usage charge would be calculated as:

   Base Charges = 200 * $0.15 + 300 * $0.12 + 400 * $0.10 = $106.00

5. Some utilities also offer seasonal rates or time-of-day rates. Usually off-season electric rates (off-season is usually non-summer and non-winter months) are lower than summer or winter rates. Also electric usage during the night or on weekends is charged at a low rate than during daytime on weekdays.

6. Some utilities also add a tracking factor (or adjustment factor) in addition to the base rates. These factors are actually the utilities' additional costs for increase in their fuel or environmental costs over their budgeted costs. These tracking factors are also expressed in $/kWh. These should be multiplied by the total kWh amount (900 kWh in our example). Lets assume a tracking factor of $0.015/kWh

   Additional Charges = 900 kWh * $0.015/kWh = $13.5

7. The final step in calculation of your electric bill is "Taxes and surcharges" part. You can estimate your taxes by adding all the components calculated so far and multiplying it by your state's tax rate. For e.g. Indiana State tax is 7%.

   Thus, for our example

   Taxes = (Customer Charge + Base Charges + Additional Charges) * State Tax Rate
   = ($10 + $106 + $13.50) * 0.07
   = $9.07

8. Adding all the charges we can calculate the final electric bill as:
   $10 + $106 + $13.50 + $9.07 = $138.57