If you’re new to reading electric bills, it can be unclear. Thankfully, Constellation can help you decipher your energy bills and understand how to control your power costs.

Your electricity bill shows how much energy you use, measured in kilowatt-hours (kWh). Knowing this number can help you identify ways to save money on your utility bill.


When you receive an electricity bill, it’s essential to understand the rates that apply to your electricity usage. Choosing the best electricity rates in Texas can vary significantly depending on your choice of electric company and how you use energy in your home or business.

In addition to the rate per kWh, your bill also includes other charges. These include a delivery rate, which covers transporting your power from power-generating facilities to your home or business. Additionally, you may see a transmission rate line item, which helps your utility cover the cost of moving the energy over high-voltage lines.

Another substantial charge on your electricity bill is capacity cost, which helps keep your local power grid functioning correctly. This charge is most often incurred by commercial customers and is determined by the demand for power during certain times of the day.

The most common way to calculate your electricity bill is to multiply the rate you pay per kilowatt hour (kWh) by the number of kilowatt-hours that you use. This formula will help you understand how much your energy usage costs you and what kind of savings you can achieve by fine-tuning your kWh use.

Connection Charges

Electricity bills can confuse customers, especially if they don’t know what is on them or how to read them. However, learning to understand your bill can help you keep your energy costs under control.

The first thing to look at on your electricity bill is the power you use during a billing period. This is calculated in kilowatt-hours (kWh); you are billed per kWh.

You can control this portion of your electricity bill in two ways: First, you can work to cut home energy charges by reducing your usage. Second, you can select a supplier that offers a fixed-rate plan to avoid fluctuations in rates caused by changes in supply or other outside factors.

Connection Charges

The connection charge on your bill pays for connecting your electrical installation to the distribution network. This can include any equipment required to secure your property to the network and any additional fees involved with the building itself.

Aside from the connection charge, your electricity bill may also contain other fees for getting your energy delivered to you. One of these is capacity cost, which helps ensure the electric utility has enough resources to meet your energy demand when it’s at its highest.

Another is a power factor surcharge, applied when your facility has a low power factor. Commercial or industrial customers usually pay this fee, which may apply to residential customers.

Supply Charges

A crucial part of your electricity bill is the supply charge, which relates to purchasing power from a utility or retail supplier. This rate reflects the cost of poles, wires, transformers, and other infrastructure; employees and contractors who install, operate and maintain that equipment; and necessary business expenses.

In addition, this charge covers the costs associated with your utility’s grid maintenance. This includes the upkeep of power lines, natural gas pipelines, and transformers.

Another charge on your energy bill is a delivery charge, which is a fixed cost for the utility to deliver energy from the power-generating facilities to your home or business. These charges are regulated by the Public Service Commission and will vary according to how much electricity you use.

If you have a commercial or industrial account, your utility company may add a distribution demand charge to your bill. This charge is based on your utility meter’s highest 15-minute average usage during billing.

Delivery Charges

Electricity delivery charges are the fees you pay your utility company to cover the cost of delivering electricity to your home. They are known as pole and wires charges, distribution charges, or transmission charges, and they can make up about one-third of your monthly bill.

These delivery rates are regulated by the Public Service Commission, including the costs of transporting power from a power plant to your home. They also cover the costs of maintaining transmission equipment and fixing any issues in the energy grid.

Most of the time, these delivery charges are itemized on your electric bill so that you can see what you’re paying for. However, some electricity providers bundle these rates together, which can be confusing.

The first thing to understand is that these delivery charges are based on your peak demand. The highest level of demand you experience on your meter will be a part of the rate you are charged every month, no matter what day it is or when it occurs.

Other Charges

Electricity bills are complicated and can be challenging to understand. But there are some things you can do to help improve your understanding and reduce your energy costs.

First, read your bill carefully. This will help you understand how your energy usage has changed, as well as your rate structure.

Next, look for any line items specific to your product or services. These include service fees and taxes.

Then, read through the “Other Charges” section to find out what other charges you may be charged. These can include shop supplies and environmental costs.

You should also see a chart that shows how your electric usage compares to the previous year. All of this information is in kilowatt-hours (kWh).

In some areas, you may be charged demand charges for using more electricity than usual during certain times. These are usually measured over a 15-minute interval and based on your highest rate of energy use over that time frame.