How to Read Your Electric Bill and Find Your Real Price per kWh
Electric bills are not designed to be read. They mix usage, supply, delivery, riders and taxes across a page of small print. The good news is that only three numbers matter for understanding what you pay.
The three numbers that matter
Total kWh used. This is the energy you consumed in the billing period, taken from your meter.
Total amount due for the period. Use current charges only, not any past-due balance.
Billing days. Periods range from about 28 to 33 days, which is why two months with similar habits can produce different totals.
Supply versus delivery
Most bills split charges into supply (also called generation or energy), which pays for producing the electricity, and delivery (also called distribution or transmission), which pays for the poles, wires and meter. In states with retail choice you can pick the supplier, but delivery always comes from the local utility.
Advertised prices often quote only the supply portion. Delivery can add as much again, so always compare the total.
Fixed charges
Nearly every utility charges a fixed monthly customer charge, commonly between $5 and $25, regardless of use. Because you pay it either way, it does not affect what running one more appliance costs. That is why some people calculate two prices: the all-in average, and the marginal price that leaves the fixed charge out.
Working out your real price
Divide current charges by kWh used. A bill of $162.40 for 870 kWh is $162.40 ÷ 870 = 18.7 cents per kWh. Enter that figure in any calculator on this site in place of the state average for a result that matches your own bill.
Tiered and time-of-use rates
On a tiered plan the price rises once you pass a set amount of use in the month, so added appliances are billed at the higher tier. On a time-of-use plan the price depends on the hour, typically highest in the late afternoon and early evening. If you are on either kind of plan, an average price will understate the cost of heavy use during expensive periods.
Why the bill jumped
Check in this order: more billing days than last month; a hotter or colder month; a rate change, often announced in a small notice on the bill; an estimated meter reading being corrected; and finally a new or failing appliance. A water heater element or a well pump stuck on are frequent culprits when nothing else has changed.