What charges are reflected on your bill?
How much energy you use (consumption) is not the only determination of how much you pay for electricity. In addition to Energy Charges, based on a cost per kilowatt-hour (kWh), a portion of your TOU bill may also be determined by Demand Charges, based on cost per kilowatts (kW).
Demand Charges
Demand and consumption measure two different aspects of your energy use. The explanation below breaks down how each one works and why both appear on your bill.
In comparing both light bulb examples, if both of these customers were billed for their consumption only, both would receive the same bill for 1 kWh of energy. That is the way most residential customers are billed. In the second case, the utility has to have 10 times more generating “capacity” to provide that customer's brief high demand for power compared to the first case.
Customers who create high demand require more infrastructure, such as additional generation capacity, larger transformers, and more robust lines and substation equipment.
Demand Charges help cover these fixed costs of making power available at the level you need, while Energy Charges reflect the variable costs associated with the actual amount of electricity you use.
Components of Business Customer Bills
Your bill will include charges based on your rate plan, as outlined below. Please note that not all of the charges listed may apply to your bill.
Key Takeaways
- Fixed charges: Customer Charge, Fixed Recovery Charge
- Variable charges: Energy, Demand, TRD, Wildfire Fund, PPP, Nuclear Decommissioning, CTC, Renewable Energy, Franchise Fee Differential
- Mixed charges: Delivery, Regulatory Fees
- Credits/Adjustments: Reduce costs if you participate in programs like Net Energy Metering, Solar Billing Plan, or Demand Response
See sample bill (pdf) Understanding Your Time-Of-Use (TOU) Bill >