Your electricity bill could be full of hidden fees. For small businesses and homes, these fees can increase how much you spend on electricity every year. Learn how to spot the fees and avoid them.
The electricity rate is typically made up of of two parts, the TDU pass through fees (also known as the delivery charge from your local utility) and the “supply” or “energy” charge (the price of the commodity).
As you shop for electricity rates, be sure to check the EFL or "Electricity Facts Label" where you'll find the pricing brackets, corresponding rates, and any fees associated with the plan. You should be particularly aware of monthly fees, or a “base charge” that will increase your monthly price per kWh.
In the “charges” section from a sample EFL below, the three brackets are 500 kWh, 1,000 kWh, and 2,000 kWh. Each bracket has a different electricity rate. The less electricity you use per meter read, the higher the average price per kWh.
Should your monthly usage fall below a certain level, you may have to pay a fee, depending on the supplier you choose. The minimum usage fee isn't always listed in your bill, but it should always be listed in the EFL associated with your electricity plan.
In the example above, the minimum usage fee is $15.95 when usage falls below 1,000 kWh per billing cycle. Electricity plans that have a flat fee may have a lower price per kWh than plans that don't have a minimum usage fee.
What to do
When choosing a rate, you'll want to be aware of these types of fees and compare the difference in price to decide whether the electricity plan with or without the fee is better for you. Some suppliers offer credits or waivers for using certain amounts of electricity so always check the EFL, contract, and with the supplier directly to see if they have any such offers.
Once you sign up for a plan and start receiving your electricity bill, you should see all the charges that you are paying, as many suppliers itemize the bill. However, always keep a copy of the EFL associated with your plan and your contract so that you can double check them just in case.