Let’s be honest, when our energy bill arrives, we tend to look for the biggest, boldest number on the bill and pay it. But sometimes, especially when a large bill hits our mailbox, it helps to understand just where that number comes from.
Unlike our cable bills, car insurance, or mortgage payments, our electricity and natural gas bills fluctuate every month. This is because both the amount of energy you use and the rate you pay for that energy varies.
We know, that can be a lot to take in. Here’s how that equation breaks down in plain English:
Energy Used: There are a number of factors that determine your monthly bill, but the biggest one may be how much energy your household consumes. For electricity this number is shown in kilowatt-hours or kWh. For natural gas this number is shown in therms, hundreds of cubic feet (Ccf), or thousands of cubic feet (Mcf). These units of measurement are for the volume of energy you use.
Supply or Generation Charges: The amount of energy you use is then multiplied by a rate, shown on your bill in cents per kWh. This rate fluctuates based on your supplier, your plan, and market conditions. On your bill you will see that this rate is multiplied by the amount of energy you use each month. The resulting line item is the total cost of your energy supply, or generation charges.
Citigroup, the global investment bank, has claimed the “Age of Renewables is Beginning”. In the report, they claim that pricing for renewable energy is becoming increasingly competitive with non-renewable and fossil fuel forms energy. In addition, they forecast that traditional energy prices will continue to rise, meaning that renewable energy will become an increasingly better option.
Additional Charges: Additional fees may include services like meter readings and maintenance. You may also see other fees related to green energy efforts or taxes in your state.
While you can’t exactly “boycott” your energy bills, you can take a long hard look at the parts of your energy bill you can control. While the energy you use must be transmitted by your local utility, many people have the option to save by purchasing their energy from an independent supplier. Simply enter your zip code above to compare rates and find a plan that is right for you.
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