Charges on Your Electricity Bill Explained
Whether we like it or not, prices for items such as milk, gasoline, and grain will continue to increase in the course of our lifetime. But the rate at which these prices will inflate is tough for the average American to guess. What we can do, however, is stay vigilant with what we can control. For many of us, that means shopping around for electricity.
There are roughly 17 states with the deregulated electricity market. The size and impact of deregulation within a state vary wildly. For example, around 85% of Texas homes and businesses are within a deregulated market, meaning they can shop, compare, and switch to an electric rate and plan offered by a retail electricity provider (REP). On the other hand, states like West Virginia have a very limited electric choice program — very few homes and businesses benefit from it.
The way deregulation works are simple — homes and businesses are given the option to shop around and compare electric rates and plans offered by REPs. Within states or cities with deregulated markets, REPs are able to compete for your business, sometimes offering incentives, lower rates, and services that your local utility can’t or won’t offer you.
After you’ve shopped your electricity coverage and decided on a provider, it’s up to you to keep your household energy consumption down if need be. You can also keep an eye on your bill by familiarizing yourself with all of the bits and pieces that come up:
Distribution Charge: Charges for the use of local wires, transformers, substations, and other equipment used to deliver electricity to end-use consumers from the high voltage transmission lines.
Customer Charge: A monthly basic distribution charge to cover costs for billing, meter reading, equipment, maintenance, and advanced metering when in use.
State Tax Adjustment Surcharge: A charge, or credit, or electric rates to reflect changes in various state taxes included in your bill. The surcharge may vary by bill component.
Consumer Education Charge: A monthly charge for ongoing consumer education concerning your bill, shopping for electricity, energy efficiency, and conservation.
Transmission Charge: Charges for moving high voltage electricity from a generation facility to the distribution lines of an electric distribution company. Based on federally regulated charges.
Generation Charge: Charges for the production electricity.
kWh (Kilowatt-hour): The basic unit of electric energy for which most customers are charged. The amount of electricity used by ten 100-watt lights left on for 1 hour. Customers are usually charged for electricity in cents per kilowatt-hour.
RSD: The rate for service to a private home.
Just like you would shop for any household item, you can shop for your electricity to find the best deal and the best service for your needs. Remember, saving just one cent per kWh could translate into more than $100 a year in savings, depending on usage. For more information about what Spark Energy can do you for your home electricity needs, click here.