Utility Bill Paying 101

Nationwide there is a certain frustration about paying utility bills. So much so that people jokingly refer to the experience as paying “futility bills”. These jokers probably view their electric and gas bill as something someone does to them rather than something that they do to themselves, but in all cases it is true that if you do not have a meter you will not have a bill. It’s easy right? Just call those bastards up today and say, come and get this thing out of my yard- or off my house or whatever; then, no bill. Some frustrated bill payers have actually done this and gone “off the grid” with generators or alternate energy systems that include wind and solar. Being your own power company sounds cool, but if it was that easy, more people would do it.

The first thing that you need to know about utility bill paying, is that you are going to be paying one for the rest of your life – one way or another. You may be off the grid and get all your energy from wind and photovoltaic power, but unless you paid cash for that system, you are making loan payments that amount to a “utility bill”. Once you pay off the loan there may be minimal maintenance expenses, but it won’t be zero. And, if you have batteries, in seven to ten years they’ll need to be replaced – so there will always be some type of “utility bill” in time, effort or cash to keep your lights on and beer cold. Even if you get a rental deal where the landlord pays the utilities, a portion of your rent payment covers the utilities. The only way out of paying for utilities is to not have a meter and to not use any electricity or gas of any kind, period.

Why do I make a point of saying “not have a meter and not use any electricity or gas”? Aren’t they the same thing? No. Electric and gas meter costs are coming down, but they are not free. No utility is going to give you a free meter. You will be paying for your meter through a minimum monthly fee on your bill or the meter expense will be built into your energy use fee.

Your Load - In utility language, your house or business is a “load”. This means that your building needs electricity or gas and depending on a long list of variables you either need a little electricity or gas or a lot of electricity or gas. So you are either a little load or a big load or something in between – but in all cases, if you need electricity or gas, you are a load. You will sometimes hear the term “demand”. This is a synonym for “load” because you – or at least your building is “demanding” electricity or gas. This is the source of the term “demand side management” or DSM. If your utility has DSM programs, they are trying to manage the demand, usually downward, to reduce the supply that they have to come up with.

Residential electricity is billed by the kilowatt hour (kWh). The “W” in the abbreviation is capitalized in reference to James Watt. One kilowatt hour is the energy used by a 1,000 watt load in one hour. For example, if you turn on ten 100 watt bulbs for an hour, you use 1 kWh of electricity.

Propane gas is generally billed by the gallon. Natural gas is generally billed by the Therm, or 100 cubic feet (CCF).

It seems elementary, but utilities are businesses. They have to make money to cover their expenses just like any other business. If they are an investor owned utility, they must be concerned about share holder profits. If they are a municipal utility they must be concerned about the needs of the citizens in their city and if they are cooperative utilities, they must meet the expectations of their members. All utilities cover most of the expense of getting the power to you by charging a rate per unit (kWh or CCF). The more you use the more you pay.

All utilities buy wholesale energy, electricity or gas and “distribute” it to customers like you; hence the term “distribution utility”. All utilities have wholesale power expenses and distribution expenses. In most cases the wholesale expense is fifty to eighty percent of the retail rate. All utilities have fixed expenses and variable expenses. Fixed expenses are those expenses that occur whether or not there is a load or demand; like the cost of insurance, depreciation, equipment, billing and administration. There are literally billions of dollars of power poles, wires, pipelines, transformers and meters sitting there across the nation ready to spring into action when you flip the switch or turn the knob. Those expenses don’t go way just because you don’t need electricity or gas this month. Variable expenses are those expenses that change with the load or demand placed on the utility’s supply. The more you use the more your utility has to buy.

Your Bill - In addition to the unit of energy billed, there is usually a minimum monthly charge. Some utilities call this charge an availability of service fee. This fee generally tries to recover the fixed operating expenses mentioned above. If you don’t have a minimum monthly charge on your bill, those fixed charges are rolled into your unit rate. There are pros and cons beyond the scope of this week’s blog for both ways of billing. The more your bill is based on a per unit rate the more control you have over the size of your bill.

Every utility bill payer should know the price per unit (kWh or CCF) and the minimum monthly charge that they are paying. You don’t buy gas for your car without looking at the price per gallon so don’t buy electricity or heating fuel without knowing the price. The number of kWh or CCF used during your billing period will be on your bill. Really, it is there so keep looking. The price per unit is not always on your bill. We are back to that pesky sixth grade math.
You can calculate your rates by simply dividing your total bill by the total units that you used during that billing period. See Table 5.6.A. Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, by State, August 2008 and 2007(Cents per kilowatthour) on the Energy Information Administration website to find local average kWh rates.

Natural gas bills may have a confusing list of other charges that make it hard to find a per unit cost. And, while most residential bills come in units of hundred cubic feet increments (CCF or Therms), statistics a generally listed in thousand cubic feet (MCF). The Energy Information Administration statistics on the average price for natural gas make it harder to compare with your bill.

Every utility payer should also know the billing period for your bill. If you are billed one month for thirty days of use and the next month for 20 days of use, the size of your bill will be different even if you use the same kWh of electricity or the same CCF of gas every day.

The main thing to realize about your utility bill is that it is all under your control. You can elect to never use any electricity or gas or you can pick and choose the appliances and equipment that you buy which directly affects the size of your utility bill.

Deposits – Unlike the gas station, when you buy natural gas or electricity, you don’t pay until after you use it. This means that by the time you pay your first utility bill after moving, the utility has given you at least a month and a half worth of their expensive product without getting paid. And, if you drop dead after seeing your first bill they are out a lot of money. So, most utilities will either check your credit history or require a deposit.

How to complain about your bill - Before you call, look at the meter reading dates. Maybe your son or daughter invited the whole high school football or volley team to spend the weekend during this time and you just forgot about it. Maybe you had the flu and cranked the thermostat to fight the chills.

Stay calm; screaming, or profanity will not serve you well when dealing with utility employees. They have heard it all. They have already heard whatever question, complaint, excuse or threat you are about to tell them, so just chill. Make sure you have your bill in front of you so you can give them your account number. This also helps you stay focused on your complaint and way from inappropriate comments about their relatives or anatomy.

If you think your bill is too high, ask them to help you determine if this is an actual or estimated bill. There should be a code on your bill that will tell you this, but sometimes it’s hard to find.

Next, ask for help verifying the number of billing days. I once thought I had a big bill only to find that last month’s bill was for 22 days and this month’s bill was for 33 days. Sometimes holidays or personnel scheduling screws up the meter reading schedule.

Other things you can ask about include the weather. Some utilities keep track of the weather during billing periods as a service to their customers. Colder or hotter weather usually mean higher utility bills.

If you still can’t come up with a reason that your bill is higher than expected you can ask to have your meter tested, but be careful what you ask for. Meter testing is performed on a meter test board in the meter shop. This means that you are getting a new or refurbished meter if you ask for a test. Most meters are simple mechanical devices. And, like your car, they don’t speed up when they are having trouble. Most utilities have a testing and replacement schedule set by state law. Once in a while you can catch them with a meter that has been in the field too long, but if you do, chances are your bill is going to be higher, not lower after the change. All meter exchanges have to be carefully documented so don’t assume that there is any monkey business going on. Deliberate discrepancies are easy to catch and most utility employees like their jobs.

If none of your questions or requests result in a lower bill, it’s time to tour your house. Obvious problems like leaky hot water faucets, well pumps that never turn off due to line leaks, broken thermostats, stuck valves and things that were left “on” when you thought they were “off”, often trigger more energy use. My favorite discovery during an energy audit for an angry customer was the space heater, plugged into a tool shed with the door left open in January. It’s less embarrassing to take that tour by yourself.

Phantom loads have gotten a lot of press lately and can increase your electric bill by several dollars a month. Phantom loads get their name from the fact that the energy used doesn’t give you anything immediately tangible, like light or toast. These loads result from those remote control devices that are always on. You should have a handle on this problem after you get that appliance meter mentioned in last week’s blog.

Thank you for completing Utility Bill Paying 101. If there is ever anything about your utility bill that you don’t understand, let me know. I’d be glad to help, for free. No I won’t pay your bill for you. Nice try. I will do my best to take the confusion out of what it is you are paying as well as help you wade through a bill interpretation. Just email me. ( mrdaily@markricharddaily.com)

If it’s something you have to do every month for the rest of your life, you might as well get good at it. Understanding what you get from your gas and electric utility gives you one less thing to worry about and makes it less like paying for gas and electric futilities.
© Mark Daily, 2008