Understanding Your Energy Bill: How to Read it In Deregulated States
If you live in a energy deregulated state, your bill might be confusing to read. The layout is different, and there could be certain taxes and fees that you don’t quite understand. Don’t freak out and start declaring that you’ve been overcharged. Here’s a basic breakdown of your deregulated energy bill.
The supply charge is the amount you’re charged for the energy that is consumed in your home. It’s going to be the bulk of the bill. The supply charge takes into account the energy used and the costs needed to generate that electricity. This energy is measured in kilowatt hours (kWh) for electricity, and therms (TH) for natural gas. The bill shows you the rate you’re charged per kWh or TH.
The distribution charge is to compensate your local utility for the costs associated with the transportation and delivery of power to your home. The distribution charge could also include charges for administering your account services, such as any maintenance or repair work done, meter readings, and emergency services.
Your bill may include a few miscellaneous charges for a variety of things. These could include upgrades to the infrastructure, the installation of smart meters, the use of renewable energy, and more. You need to pay close attention to this section and call your energy provider if you have any questions related to the charges on your bill.
In some deregulated states, you’re likely to have two taxes on your electricity use. The first tax is a state sales tax that’s assessed at a certain rate. The second tax, which only applies in New Jersey, is the TEFA tax. This tax is supposed to remain in place through 2014, though it has the option to be extended.
The original goal when the state chose to implement energy deregulation was to reduce the 13.5 percent energy tax in half. The TEFA tax was put in place, and it was supposed to be phased out by 2001. If it ends in 2014, the rates will be cut.
Regional Greenhouse Gas Initiative (RGGI)
Ten states in the Northeast joined together in an effort to reduce greenhouse gases. This program, which is mandatory, affects any electric generating unit that burns more than 50 percent fossil fuel. All non-nuclear power plants are affected and must comply with very expensive regulations.
Retail Margin Surcharge
This only applies to businesses, and it’s when a business purchases their power from a third party. The fee is half of one cent per kilowatt-hour used. The original idea behind the surcharge was to encourage companies to compare energy providers. Recent data shows that up to 35 percent of businesses haven’t chosen to take advantage of this, so they’re charged a fee every month.
Societal Benefits Charge
Utility companies offered programs to low-income families before energy was deregulated. They also recovered building structure improvements by building a charge into their rate structure. After energy was deregulated, this wasn’t allowed. Those charges were replaced by Societal Benefit Charges, which now funds six separate initiatives. Those initiatives include social programs, low-income assistance programs, and consumer education.
Approximately 3 percent of the average energy bill is dedicated toward these initiatives. The majority of this surcharge is paid around businesses. Businesses also now have a cap on how much they can receive for renewable and energy efficiency projects, but the cap doesn’t affect residential customers.
Other Things You Need to Know
There are several other pieces of information that you need to know when you read your electric bill. You need to make sure that your name, address and account number are all accurate, and that the billing period doesn’t have any erroneous charges. You should note the meter number. Some homes have multiple meters — check that the correct ones are listed. Under rate class, your home energy bill should be classified as residential, not industrial or commercial.
Make sure there are no inaccuracies in the meter and usage section. Review all of the messages left on the bill — these messages are there to help you decipher any charges on your bill. They may also provide energy saving tips, announce rate increases, or other updates.
If you live in a state that has deregulated energy, you may be a bit confused reading your monthly bill. Hopefully, these tips have cleared up a few things. Remember, if you think there may be any inaccuracies whatsoever, or there’s anything you have a question about, call your electricity provider. If you need additional help, you can contact your state’s utility commission at the National Association of Regulatory Utility Commissioners.
Do you live in a deregulated state? Have you ever experienced something confusing with your energy bill? Tell your story in the comments below.