PCN - Electricity Bill Explained

Utility bills are difficult to understand -we feel you. When you first see them, they seem like a whole tangle of numbers, statistics, and information. You’re not alone. According to a survey made by YouGov, 60% of the people don’t understand their electricity bills. With Power Choice Now, we will have your electricity bill explained, allowing you to embrace your power, and choose to buy the same thing as you have right now for less money.

This quick guide will give you all the tools to understand your energy bill for you to understand it and gain control over it!

How do I read my electric bill?

There are three key things you should know to get your electricity bill explained: the costs of electricity or kWh, the delivery or fixed charges, and the supply portion of it. These costs are most of the time the same, regardless of your utility company (ComEd, AEP, Ameren, First Energy, or others). Let’s get started.

Calculating your energy costs

The first step to get your electricity bill explained is to debrief and help you understand the measuring unit.

Kilowatt-hours (kWh)

To truly understand your bill, you must first know what a kWh is. The unit of measurement for power use is the kilowatt hour. It combines two measurements: speed and time. Wattage is the rate at which electricity is consumed, and time is how long does this energy gets consumed. 

To calculate your kWh, your utility company multiplies the wattage of the appliances used by the number of hours and dividing the total by 1000. Now that you know what a kWh is, you can better control its usage. So an important thing to bear in mind when you get your electricity bill explained is the kWh usage!

Fun fact: according to data from the Energy Information Administration, the average amounts of coal, natural gas, and petroleum liquid fuels used to generate a kilowatt-hour (kWh) of electricity by the US electric power sector in 2020 were: coal–1.13 pounds/kWh, Petroleum liquids–0.08 gallons/kWh and Natural gas–7.43 cubic feet/kWh.

What are the delivery charges and the supply costs on my electric bill?

If you live in a deregulated state, they may split your energy bill into two parts. Energy delivery and energy supply. So what does this mean? In a nutshell, delivering is the process carried out by your utility company, where it focuses on delivering energy itself through wires, poles, and cables

Energy supply refers to the Retail Energy Provider that supplies the energy that is generated in a power plant, and it can be produced by the usage of renewable resources through wind farms, solar plants, biofuels, or by using non-renewable ones like petroleum, natural gas, or coal.

Now that you get the basics, let’s dive into the charges to get your electricity bill explained:

Delivery charges

This includes the following fees:

  • Renewable energy charge: associated with the development of renewable sources.
  • Energy conservation charge: aiming to develop efficiency initiatives:
  • Distribution demand charge-in case you’re a commercial or industrial entity
  • Distribution charges, transmission charges, and transition charges.
  • Customer charge: fixed cost of serving a customer.

All these costs entitle the maintenance and upkeep of the wires, poles, cables, and other systems that guarantee that consistent power is delivered to your home.

Supply charges

Linked to the kWh, they rely merely on how much energy you consume (kWh), multiplied by the rate. If you live in an energy-deregulated state, you have the power over this part of your bill. You’re entitled to choose between different energy providers, the one that best suits your needs and the plan that works best for you.

Getting to choose your energy supplier is one of the biggest pros of the Energy Choice program. Why? because you have the power to choose the supplier that meets your needs and the electricity rate that 

What are the energy plans in the market?

Having your electricity bill explained is key to start saving. And as we previously mentioned, if you live in an energy-deregulated state, it means you have the power to choose how and who you want to buy your energy from. This generally opens the market competition and encourages you to take advantage of the wide variety of products and services customized to your home or business.

There are two main types of electricity plans when you talk about your electricity bill explained:

Fixed-rate plans

You agree to pay the rate per kWh throughout the length of your contract. At Power Choice Now, we help you to find the best energy supplier in your state while having a fixed rate and no hidden fees.

Variable-rate plans

As the name states on these plans, the kWh price fluctuates because of peak seasons, seasonalities, or supply-demand forces. You don’t have a long-term commitment, but you will be surprised with a new rate now and then.

Check out our entire blog about fixed vs. variable rates, to find out more about them

Tips to Compare Electricity Rates

What are the additional costs on my energy bill?​

Another important issue to note when you get your energy bill is to check out any potential add-ons, such as:

Tiered Electricity Pricing

One common pricing structure used by many utilities is a tiered one. In this one, consumers are charged a higher fee after exceeding a particular threshold of usage. This method divides the customer’s use into levels and then charges different fees for each usage tier. You can lower down your bills and energy consumption by taking small, conscious actions daily.

Peak hours/seasons

One key part of your energy bill, and an important factor to get your electricity bill explained is to know if you’re affected or not by seasonality. Depending on where you live, your utility may have set some “time-of-use pricing” for peak use periods in which the kWh is much higher. You may reduce costs by running large appliances and machines during off-peak hours and lowering your energy use during peak hours. 

Peak hours vary depending on region and season, so contact your power supplier to learn how to avoid peak use periods in your area. You can just avoid it all at once by switching to a fixed-rate plan and you can get your electricity bill explained by checking the electricity rates you get on it.

Now that we covered the basics, we want you to keep an eye out for this important information:

Meter Point Administration Number (MPAN)

If you’re thinking about switching energy suppliers, this is an important number to know. Another of the key points when we want to get your electricity bill explained is to teach you those “random” numbers that it has. It is unique to your property and generally consists of 21 digits. This number is like your home’s energy supply fingerprint-it is exclusive to each residence. 


Be aware of your contract terms, expiration dates, exit fees, and other important information. This is another key part of having your electricity bill explained. You can reach out to your current supplier to find out more about this.

We get it… having your electricity bill explained is not that simple, it seems  hard to understand – it might be be even difficult to measure precisely how much you’re paying, and why you’re paying it. We hope we got your electricity bill explained so that we can help you have more control over what you’re spending and make it easier for you to switch and save money.

So now that you know how to read your electricity bill properly, and you have your electricity bill explained, we encourage you to take control of your energy budget. At Power Choice Now, we want you to embrace your power, and to choose to have the best service for less money. Choose the lowest fixed rate, no service disruption, easy enrollment, and great customer service. There are no frills—just the service you need!

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