Understanding Your Electricity Bill: An In-Depth Guide

Energy Ogre explains how homeowners can properly read and understand their electricity bill.

Homeowner Education
By Garrett Faden
Share:

In this post, Energy Ogre will explain:

  • how to understand your monthly electricity bill

  • what is an Effective Rate and how to calculate it

It's Not THAT Complicated

There are two unfortunate realities surrounding electricity bills—they are often expensive and very confusing to understand. So we’ve assembled this guide to help you discern the contents of your bill and how they relate to determine your monthly charges. 

In the first section, we get down to the brass tacks. There are two short concepts that every Texan should understand because they are fundamental to being a smart, empowered shopper.

Next, we're going to take you step-by-step and show you the essential elements of your bill. Doing so, we hope you'll become more comfortable understanding why your bill is that particular amount.

Knowing how to navigate your bill will help ensure you are being accurately charged each month.

Let’s Start with the Basics

  1. What’s a kWh?

Many Texans are unsure of how much they are paying for electricity and if their rate is competitive to other plans on the  market. So let’s start off with this.

Consumers are charged according to how many kilowatt hours (kWh) of electricity they use. Think of kWh as a gallon of gasoline. Your car may use 100 gallons of gasoline per month, whereas your home may use 2,100 kWh of electricity per month.

Therefore, the kWh is the unit of measurement that quantifies how much electricity you used.

  1. Effective Rates

After dividing the total bill amount (including all charges and taxes) by the kWh used, you get the effective rate. This is the best value to consider when shopping for plans or comparing your current plan to a new one.

With that said, the average consumer typically doesn't understand how to decipher their electricity bill charges. Now let’s show you a real-life example of calculating an effective rate.

If you revisit #5 in the graphic below, you'll see the following charges:

  • Energy charge

  • TDU meter charge

  • TDU delivery charge

  • City sales tax

  • TX PUC assessment

  • Gross receipts reimbursement

Most notably, the energy charge is the actual dollar amount you're paying for the electricity portion of your bill. But clearly there are other fees, such as delivery charges, that also influence your bill amount.

Yay, math time! The bill balance in the sample bill below is $81.88, and the billed kWh usage is 782. Divide the balance by the usage, and you'll get the effective rate.

$81.88 / 782 = 10.4 | Therefore, the energy charge is $0.0537 (listed above in the sample bill), and the effective rate is 10.4 ¢

How to Read and Understand Your Bill

Use this guide to better analyze and understand your bill and its many components. This will help you make better electricity-buying decisions in the future.

1. Account Number: Your account number is typically found on the top left corner of your bill among a few other spots throughout. This number is your customer ID for your provider regarding all billing and customer support.

2. Total Amount Due: Aside from the kWh amount, this is one of the most important numbers or values you’ll see on your monthly bill. This figure is the total sum of all fees, and we'll expand on these fees in #5.

3. kWh Usage: The amount represents the amount of "kilowatt hours" you used over the past month. That's as much as you need to know about kWh, but if you want to dive deeper into kWh, be our guest.

4. Service Start/End Dates: This timeframe specifies the exact billing period for which you are about to pay. In the graphic above, you'll notice the provider began that month's bill on 8/6/2020 and ended it on 9/4/2020.

5. & 6. Bill Charge Breakdown: Both items 5 and 6 compile all fees, including electricity price, delivery charges, taxes, PUC-assessed charges, etc. For a definition of each of these charges, click here. As you can see, the info surrounding column 5 is the charge description, and the info surrounding column 6 is the corresponding fee.

7. Meter Number: This number is the identification number attached to your home's meter—think of it as the serial number for the hardware. The meter number has very little relevance to you. Over time, if your meter breaks or has issues, the meter number will change if a new meter is installed.

8. ESID Number: This acronym stands for "electric service identifier" because it uniquely identifies your home address by a particular number. Think of the ESID as your address on the Texas electricity grid. Unlike your meter number, your ESID will most likely remain the same.

9. Contract End Date: This one is pretty self-explanatory. The date listed is the final day of your current contract. This date is critical because it identifies when you need to shop for your next plan -- unless you're with Energy Ogre. Our members can ignore this date because we begin shopping for their next contract 30-45 days before their contract ends.

10. Plan Type: Yet another self-explanatory item, but hey, we're here to help you make sense of things. This tells you which plan you enrolled in. Sometimes the electricity provider will attach your contract length to the back of the plan. For example, the plan will sometimes be listed as "Texas Power Saver 12" or "Green Texas 9." In the example, 12 and 9 signify respective 12 and 9-month plans.

That Wasn't That Hard, Right?

By now, you're either thinking, "That was easy!" or "Geez, my brain hurts." If all this still seems complicated, then that's what Energy Ogre is for. And if not, then I hope this guide better prepares you to understand your next electricity bill.

How do I get started with Energy Ogre?

Easy! Click here to learn more. Grab a copy of your most recent bill to find out if you're overpaying for electricity. And if so, we'll tell you exactly how much you could save.
If you're ready to start saving immediately, our sign-up process takes less than 5 minutes!    

This has article has been a sponsored message by Energy Ogre, contact them for more information or assistance with your energy needs.

Stay Informed about the Real Estate Trends and Housing Information

Subscribe to the Real Insight Newsletter to stay ahead of the market with our valuable articles, local market statistics and analysis, and insightful information.

By subscribing, you accept our privacy policy.