How to Understand Your Utility Bill

How to Understand Your Utility Bill

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Complexity

Utility billing. Never welcome, always received one month after using the resource. And unavoidably full of complex fees for items with obscure terms.  For example, we face charges related to commodity, peak demand, standard metering, and distribution facilities. Next come franchise costs, cost recovery adjustments, and state and local taxes — just to name a few.  In response, most of us simply look at the bottom line and submit payment. Too often we just don’t feel it worth our time to understand the utility bill.

Simplification

However, with average US energy spending somewhere between $1,900 and $2,900, we ignore better understanding at our peril. Those numbers represent costs on the order of a whopping 4% of median household income. And as incentive for our effort, it may be possible to avoid as much as 50% of that spending!

But rather than focusing on details, why not instead seek to understand the underlying framework of the utility bill? This simplification allows us to avoid slogging through confusing terms that impede understanding. Towards this end, we build upon imagery offered by Nate Adams and think of energy use in terms of something familiar: a car. In particular, we can think about three components of a car. The first component is a gauge that accumulates data: the odometer. The second component is a gauge that shows instantaneous data: the speedometer. And finally, the third component is not an instrument, but rather structure: the chassis.

The Odometer: Commodity Charges

These charges account for total measured use of a resource, say natural gas or electricity. For electricity, we most often speak in terms of energy: kiloWatt-hours (kWh), power multiplied by the amount of time that power is applied.  The utility tallies monthly usage simply by subtracting the amount read at the beginning of a billing month from the value at month’s end.  As with a car, “mileage” counts in only one direction: up.

It may be tempting to consider another common instrument, the fuel gauge, when thinking of commodity charges. However, fuel gauges also respond to filling a reservoir and therefore do not operate only in one direction. As a result, fuel tanks and gauges correspond better to energy storage rather than accumulated usage.

The Speedometer: Demand Charges

These charges relate to the rate at which we consume a resource at any moment.  Most commonly seen in the context of electricity, “demand” speaks to how quickly we consume power (or Watts) over any period. As an example, “peak” demand charges typically account for the highest average power used over any 15-minute period in a billing month.  Conceptually, the utility must make up costs (especially variable costs) for providing power at the highest rate of use. In particular, they must pay for the fuel needed for power delivery. Of interest, depending upon rate plan, charges for peak demand can often equal charges for commodity use.

The Chassis: Delivery Charges

Just as utilities must make up for variable costs, so too must they recover fixed costs. Therefore, they bill for a set of charges related to power delivery. In practice, this grouping becomes the catch-all for many of the fees outlined at the beginning of this post.  It captures charges for fixed-cost heavy infrastructure such as towers, lines, pipelines, and meters. Further, it adjusts for operational expenses related to the utility’s cost of doing business. As a result, it includes expenses such as maintenance, administration, billing, and compliance.

Given that many of these charges pertain to structure, it makes most sense within our car analogy to about the chassis. However, it may prove as helpful to conceive of delivery charges in terms of the wheels, engine, or body. Regardless, with respect to delivery, we are not speaking of power or energy, but rather physical matter.

Understand Your Utility Bill for Your Benefit!

Now that you better understand your utility bill, you are better prepared to put this knowledge to work! Clearly, strategies exist for decreasing costs. Referring back to our categories above, we could work to decrease total commodity usage through conservation. Smart thermostats, smart plugs, or LEDs? Alternatively, we could try decreasing peak demand — if our tariff plan charges us on this basis. Or, we might benefit from switching to different plan — or changing the time at which we use energy. With new
“smart” meter roll-out, greater tariff variety will reward us for responding to utility price signals.

Increasingly, achieving cost-savings will prove that much more dynamic in a changing energy world. For this reason, Emporia has developed the Emporia Vue. In the interest of saving consumers up to 50% on energy spending, Emporia’s platform measures and analyzes energy usage. Using IoT technology, the Vue delivers insight and recommendations to users that help them save energy, gain security, and reduce carbon.

Here’s How:

Step 1: Try Emporia’s Software

Download Emporia’s app on either the App Store or Google Play. Any user can sample a demo version of this app and provide feedback. But the app becomes so much more powerful when installed with Vue hardware! So be sure to complete the second step below, either before or after downloading the Emporia app.

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Step 2: Purchase Emporia Vue Hardware

Installed behind your home’s main breaker box, the Vue works in any market. Though homeowners can often complete this installation in 15-20 minutes, Emporia nonetheless recommends hiring a qualified electrician. However, as a reward for installation, the Vue provides highly granular data and the ability to monitor individual circuits.

Click here to choose your Vue!

Step 3: Reap the Rewards of Success

Simply put, Emporia seeks to put consumers in control of their energy data. By viewing this data in real time, consumers can expect to save between 3% and 13% through awareness and simple conservation. However, Emporia has established the bold goal of saving consumers up to 50% on energy spending over time. Consumers will achieve this level of savings through a combination of app-recommended strategies that will compound over time. Better yet, these opportunities for savings will only increase as utilities proceed further into the renewable-energy transition.

Think about it:

Emporia sees this confluence of interests as the ultimate win-win — and hopes you will as well. Please join us!

Stop Putting Off Your Savings — and Reap the Rewards of Success

Emporia is committed to saving consumers up to 50% on their energy spending. The Emporia Vue provides the tools and the support to help you succeed at realizing these bold savings. For minimal investment, you will receive the data necessary to meet this goal. We encourage you to take the two simple steps above and put yourself on the path to improving value from the dollars you spend on energy.


Seth Terry

Seth is Head of Customer Experience at Emporia Energy. A Colorado native, Seth has devoted his career to working in the water-food-energy nexus and remains deeply committed to meeting the challenge of climate change.

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