Understanding your Commercial Electricity Bill
Despite the fact that energy consumption is often one of a business’s biggest overhead costs, electricity bills are generally paid without a second glance. Understanding your commercial electricity bill will allow you to pick out the relevant information that impacts your energy strategy. This can be particularly helpful for companies that are considering sustainability initiatives, renewable energy, or energy efficiency improvements.
Let’s look at this sample Xcel bill from a commercial client and dig deeper to see what lies beneath that total monthly charge.
What You Need To Know:
The electricity charges section breaks down each component of your total monthly bill. Some charges include usage units and a per kwh rate, which show how they are impacted by your monthly energy usage.
It’s also worth taking a closer look at the charges that aren’t explained on the bill. The Resource Adjustment includes costs related to several different conservation and renewable energy programs. Each program has a per kilowatt hour rate that is multiplied by your billed usage to formulate the total charge. The Affordability Charge is a flat monthly surcharge that offsets costs of offering bill payment assistance and discount programs to low-income customers. The charge varies based on customer type, and this commercial client pays $3.60 per month.
So what is the difference between a Charge and a True Up? Each year Xcel predicts the costs of energy and sets rates based on those predictions. When actual energy production costs rise or fall, Xcel adjusts prices accordingly and adds the difference to your bill as a ‘true up’. If energy prices fluctuate multiple times during the month, there will be multiple true ups. The total kWh of those true ups will equal your total billed usage.
Resource Adjustment Note:
Energy subsidies have long been a controversial topic. Virtually all sources of energy are subsidized, and unlike some subsidies, this one is directly mentioned on the bill. Powering your facility with solar can directly reduce the amount you pay into this fund.
Electricity Charges Glossary:
- Rate: Xcel charges customers different rates for their energy, depending on their maximum demand. This customer’s demand is 708 kW, which falls under the General Service Rate.
- Basic Service Charge: This charge stays the same regardless of your usage. It covers the cost of providing you with energy service, such as electric and gas line maintenance.
- Energy Charge: This is the amount you pay per kwh for electricity usage. It includes the cost to generate the electricity you use, and costs to own, operate and maintain the power plants that produce it.
- Fuel Cost Charge: This is the cost of the fuel used to generate electricity. It is a straight pass-through to you. Electric utilities calculate the total cost for fuel sources to generate electricity each month and pass those costs on to you as charges.
- Sales True Up: Each year Xcel predicts the costs of energy and sets rates based on those predictions. When actual energy production costs rise or fall, xcel adjusts prices accordingly. These adjustments show up on your bill as ‘true ups’. If energy prices fluctuate multiple times during the month, there will be multiple true ups. The total kWh of those true ups will equal your total billed usage.
- Demand Charge (winter): Xcel applies demand charges based on the maximum amount of power that a customer uses in any 15 minute interval during the billing cycle. Demand charges usually apply to commercial and industrial customers, who tend to have higher peak loads. The rate for these charges changes seasonally.
- Affordability Charge: This is a surcharge to recover the costs of offering bill payment assistance and discount programs to low-income customers.
- Resource Adjustment: This includes costs related to several conservation and renewable energy programs. You can see the full list here.
- City Fees: In some cities Xcel Energy is required to collect a fee on behalf of the city.
Meter Reading Information
What You Need To Know:
The meter reading information section breaks down your energy usage during the last billing cycle. In this section we are looking for two things: your total billed energy usage and your instantaneous demand.
Your total billed usage can be found in the Total Energy row. Since your meter counts up cumulative energy used, the Current Reading isn’t actually the amount of energy used this month, its the total amount you’ve used since the meter was installed. You can take the Current Reading and Subtract the Previous Reading to find the amount of energy used this month. Use the multiplier in the top left-hand corner of the table (in this case 300) to get your Billed Usage in the far right column.
The Demand row of the Billed Usage column shows the maximum amount of power you used within a single 15-minute interval.
These two numbers show up as the Energy Charge and Demand Charge in the ‘Electricity Charges’ section of your bill.
Meter Reading Information Glossary:
- Current & Previous Reading: These columns show the cumulative energy reading from your meter during the current and previous billing cycles. THIS DOES NOT SHOW HOW MUCH ENERGY YOU USED THIS PERIOD. You can subtract the previous reading from the current reading to get your measured usage.
- Measured Usage: This is how much actual electricity in kilowatts that you used during this billing period, measured by your electric meter.
- Billed Usage: Your measured usage is put into an equation that determines the total units of energy consumed. That number is your billed usage, and is what Xcel bases your monthly charges on.
- Total Energy: Energy can be broken down into multiple components. This includes all of them.
- Reactive Energy: Reactive energy is one of those components that contributes to total energy.
- Demand: Demand is a measure of how much instantaneous power a customer uses at a given time. Xcel calculates demand based on the maximum amount of power that a customer uses in any 15 minute interval during the billing cycle.
- Billable Demand: If this number is higher than Demand in the row above, you’re getting penalized for your power factor.
- Power Factor Demand: Power factor attempts to show how efficiently you are using the energy supplied to you. If your power factor is 100%, you’re using 100% of the supplied energy. A lower power factor means that you aren’t using all of the power supplied to you.
What You Need To Know:
Your total account balance is the first thing you see on your bill, and the last piece of the puzzle. Its helpful to look at your usage information and the specific charges on your bill to get the full picture of your energy expenses.
If you are looking to spend less on energy bills, our experts are happy to help you evaluate your businesses’ solar potential.
Account Balance Glossary:
- Balance Forward: If this is zero, you’re up to date on your payments.
- Amount Due: This is the total amount you owe for energy this month. You can compare this amount to your Previous Balance to see if you’re paying more or less than last month.
Want help understanding your commercial electricity bill? We can help.
If your company is considering sustainability initiatives, renewable energy, or energy efficiency improvements, we’re happy to hear from you. Impact Power Solutions has been helping organizations implement solar projects for over 30 years. If you’re interested in learning more about your commercial electricity bill or want to see how solar can work for your organization, reach out to us today!