How to read a utility bill: kWh, rates and fixed charges explained

Every electricity bill has the same building blocks

Layouts differ by country and company, but nearly every electricity bill is built from the same parts:

• How much you used, in kilowatt-hours (kWh).

• What you pay per kWh, sometimes at several rates depending on the time of day.

• Fixed charges you pay regardless of how much you use.

• Delivery and other charges for getting power to your home and running the system.

• Taxes, credits and rebates.

Once you can find those five parts, any bill becomes easier to check.

Start with the kWh

A kilowatt-hour is the unit for electricity use: running something that draws 1,000 watts for one hour. Your bill shows how many kWh you used in the billing period, often with the meter readings at the start and end.

For a sense of scale, the US Energy Information Administration says the average US residential customer bought about 899 kWh a month in 2022. Your own use will differ with climate, home size, heating and cooling, and whether you have solar.

Actual or estimated reading?

Look for a note saying whether the bill is based on an actual meter reading or an estimate. The sample bill published by the Energy and Water Ombudsman NSW in Australia shows exactly this note. An estimated bill can be too high or too low, so check it against the next actual reading. If several bills in a row are estimated, ask the company why.

Compare daily averages

Billing periods vary in length. The NSW ombudsman's guide suggests comparing average daily use rather than total use, because a 34-day bill will naturally be bigger than a 28-day one.

Then the rate

The usage charge is the price per kWh times the kWh you used. In Australia, Energy Made Easy, the government's energy comparison site, says the usage charge is also called the consumption or variable charge, and is shown in cents per kWh (or cents per megajoule for gas).

There are three common rate structures:

• Flat: one price per kWh at all times.

• Tiered or block: a lower price up to a set amount, then a higher one. Energy Made Easy says blocks can apply to daily, monthly or quarterly use.

• Time-of-use: different prices at different times of day, usually called peak, off-peak and sometimes shoulder.

Fixed charges: what you pay even at zero use

Energy Made Easy describes the daily supply charge, also called the service charge or fixed charge, as the cost of getting electricity or gas to your home even if you use none. It may appear as cents per day or as a total for the billing period. Cutting your use lowers the usage charge but not this one.

US and Canadian bills often have a similar line, called something like a customer charge, basic charge or service charge.

A sample bill, decoded

Sample electricity bill · Northgate Power (synthetic)

Billing period 30 days · Actual read · Use 720 kWh

Energy charge 720 kWh × $0.142 = $102.24 · Customer charge $12.00

Delivery charge 720 kWh × $0.051 = $36.72 · Taxes $7.55 · Total $158.51

Read it as: you used 720 kWh, or 24 kWh a day. The energy itself cost $102.24. The $12 customer charge is fixed. Delivery depends on use, at 5.1 cents per kWh. Your effective price, total divided by kWh, is about 22 cents per kWh, higher than the 14.2-cent energy rate because of delivery, the fixed charge and tax.

Country notes

United States

Utility rates are generally overseen at the state level, by a body usually called the public utility commission or public service commission. Bills commonly separate supply or generation (the energy) from delivery or distribution (the wires). In some states you can buy the supply part from a different company, and the bill then shows both companies' charges. If you think a bill is wrong, contact the utility first, then your state commission's consumer complaint office.

Canada

Each province has its own system. In Ontario, for example, Hydro One explains that bills have an electricity line, a delivery line and a regulatory line, with the Ontario Electricity Rebate applied as a credit before HST. The Ontario Energy Board sets delivery rates, regulatory fees and the time-of-use prices most customers pay. Ontario customers can be on time-of-use, tiered or ultra-low overnight pricing. Other provinces have different line items and regulators, so look for your provincial energy regulator.

Australia

A typical bill shows peak, off-peak and sometimes shoulder usage, the daily supply charge, and any solar feed-in credit. The sample bill from the Energy and Water Ombudsman NSW also shows your National Metering Identifier (NMI), which identifies your meter, and a box where the retailer must say whether you could be on a cheaper plan with them. The Australian Energy Regulator requires this information. You can compare plans on Energy Made Easy. If you can't sort out a problem with your retailer, contact the energy ombudsman or complaints body for your state or territory; in NSW that is EWON.

Seven things to check on every bill

1. Name, address and account number are yours.

2. Billing period dates, with no gaps or overlaps with the last bill.

3. Meter reading: actual or estimated, and whether the numbers follow on from last time.

4. kWh used, compared with the same period last year if the bill shows it.

5. Rates, compared with your plan or contract.

6. Fixed charges, and whether any new ones appeared.

7. Credits and rebates you expect, such as solar or government concessions.

Questions to ask your energy company

• "Is this bill based on an actual reading or an estimate?"

• "Which rate plan am I on, and is there one that better fits when I use power?"

• "What is this charge, and when did it start?"

• "Can you show me how this amount was calculated?"

Have a confusing bill explained

EasyToDecode, launching soon, will read your utility bill and explain each charge in plain English, quoted from the page, with the rate and kWh math pulled out, unusual charges flagged and a complaint letter template you can edit. See how it works or join the waitlist.