How your energy is calculated by your energy company

How your energy is calculated by your energy companyYour energy company provides you with electric, but how do they charge you for the electricity that you use. Have you ever had an electric bill that seems far too high? Most customers are upset about the high bill that they have to pay but then often just accept the charges.You can start checking your energy company’s math and make sure that you are only paying what you have to. Let’s break down your bill and find out how your energy company came to such a high total.

Your energy company charges you a small fee every month for using their services, generally known as a base charge. This is just for having a contract with your electric company and not for the actual energy usage itself. Your energy expenditure is the largest portion of the bill with a rate per kilowatt hour and your kilowatt hour usage being calculated to give you the energy charge. For an example, let’s say that you are charged .06 cents per kilowatt hour and you only used 500 kilowatt hours because you went on vacation for two weeks. You would multiply the rate per kilowatt hour by the amount of kilowatt hours that you used for the month and come up with your energy charge, which in this case would be $30.

One aspect of your electric bill that may leave you scratching your head is the TDU charges. This can often be over $50, which can leave many people wondering what is this large charge for? The TDU stands for Transmission and Distribution Utility and is a charge from the company that repair and maintain the power lines and poles in your area. They also are the ones that read your meter every month. The charge is for distributing the energy to you, similar to a shipping and handling charge when you order things from a catalog or on the internet. This company is a different one than your regular energy company.

Other miscellaneous charges that can show up on your bill are local or state taxes on electricity. You may be charged fees if you pay your bill late or you were not required to put down a deposit when you opened your energy company account. If you have signed up for any special programs through your electric company charges for these programs will be included in this section as well.

The combination of the base charge, the energy charge, and the TDU charge is how the energy companies figure out how much they should charge you and then they are required by law to include the taxes on your bill. If you would like to compare energy rates and figure out how much your energy company is charging you on average per kilowatt hour in total you would take your base charge, your energy charge, and the TDU charge and add them all together. After that you would divide that number by the kilowatt hours that you used for the month. Now you can use this figure to keep track of how much your energy company is charging you each month and make sure that the math is correct.