The electricity bill arrives every month with a long list of items that are not always easy to understand. Knowing what each part means lets you see how much you pay for the energy you actually use and which decisions are yours to make.
Why is it worth reviewing your electricity bill?
An electricity bill contains several different items. Understanding them helps you see how much you pay for the energy you consume, which costs depend on the capacity you have contracted and which extra services are included.
The exact structure can vary depending on the tariff, the contract and the supplier.
1. Check the billing period
Find the start and end dates of the period. Before comparing two bills, check that they cover the same number of days.
A higher bill does not necessarily mean the tariff has got worse: you may have used more electricity, or the period may have been longer.
2. Review the energy you used
Consumption is measured in kilowatt-hours (kWh). It represents the energy used by your appliances, your lighting and other equipment over the period.
Compare it with previous months, keeping in mind the time of year, electric heating and any changes in how many people live at home.
3. Understand the contracted capacity
The capacity you contract, expressed in kilowatts (kW), has an influence on part of the fixed costs and determines how much power you can use at the same time without certain interruptions caused by exceeding demand.
Reducing it is not the right move for every home. Before you change it, check your needs, the available capacities and the possible financial conditions of the change.
4. Tell the fixed and the variable charges apart
A bill can include items linked to the contracted capacity and others that depend on the kWh consumed.
There may also be equipment rental, additional services, taxes and other regulated or contractual items.
Look at the breakdown on your bill to identify every amount.
5. Check the price of the energy
If you are on a tariff where the price changes depending on the hour, the cost of using electricity can change throughout the day. On a fixed price tariff, the conditions are the ones set out in your contract.
Do not compare tariffs on a promotional price alone: check how long the offer lasts, which extra services it includes, the renewal conditions and any associated costs.
6. Review the additional services
Check whether you have maintenance, insurance or other services contracted together with your electricity supply.
If you do not know what an item refers to, ask your supplier to explain it before you cancel anything. Check the conditions of the contract.
7. Compare offers with your real data
To compare tariffs, use your annual consumption or the usage data you have available, your contracted capacity and the specific conditions of each offer.
You can use the official comparison tools and information, such as the answers published by the U.S. Energy Information Administration on how utility bills are made up.
8. Check whether your habits can change
Once you understand the bill, work out which part of the cost depends on your usage and which part is made up of fixed items.
If the energy cost is high, review the appliances, the heating, the insulation and the hours you use them before investing in new solutions.
Conclusion
Understanding the bill lets you tell consumption, capacity, taxes and additional services apart. Before you change tariff, compare the full conditions with your real data and avoid decisions based only on an advertising offer.
Once you know which part of the bill depends on you, act on it: our guide to 10 tips to save money on electricity at home gives you ten measures, the lighting is solved with LED bulbs: power, lumens and how to choose the right one and the heating with what temperature to set the heating to save money.
