Electricity Billing Considerations

Complex systems

Consumers have been billed for decades using a clear and easy to understand system based upon consumption. In most countries there was an energy unit used for electricity billing, the kilowatt/hour and the cubic meter for gas billing. The cost would linearly increase based on the units of energy being recorded as used by the utility meter. The meter would be monthly read and a consumer bill was released.

Current energy billing got more complex as utility companies tried to find ways of being more creative and cater to the apparent needs of clients. Government intervention also introduced various surcharges and additional costs based on consumption. This lead to convoluted systems that use variable rates, tiered pricing, service fees, various surcharges. Some bills are even seasonally adjusted.

Complex billing is one key reason that energy consumption and its true impact is harder to determine. In order to have effective cost reductions it is necessary to understand your current billing and contract terms.

Current contract and billing

It is important to know your current billing system and this is presented both in the utility provider contract as well as it is reflected on your bills. Although they may be better offers to the one that is currently enforced, it is important to understand the current terms and how well your current consumption pattern fits them so you need to make some initial assessments before taking any action.

Being informed of other offers from your utility company is helpful in finding out the best long term approach but you should not have extreme expectations. Consumption alone is still the biggest factor in the total cost. There may be some difficulty in moving from one billing choice to another from the same utility company such as a specific contract duration being passed or other limitations.

Note that even though a flat rate based on consumption is the most obvious option and should be the cheapest, utility companies actively discourage such a choice by making the energy unit price much higher than on other ways of billing. This is clearly so for electrical energy billing as here the energy unit price has always been higher than on gas and the cost impact on consumers was also the highest.

Electricity billing

In many ways, mainly due to technological advance, electricity consumption billing is the most complex. There are many ways to consider electricity consumption over a period of time other than a single flat rate.

Many individuals and businesses may not chose a flat rate billing system because it would be the most expensive.

Electricity bills have previously been flat rate only, based upon the amount of kwh consumed a month.

Recent technology and policy changes migrated billing to variable rate. It may be a separate price for day/night consumption, a different subsidy to cover consumption tiers (the first 100 kwh are billed at a lower price), seasonal adjustments or a combination of these or other approaches.

Gas billing is almost always based upon a flat rate on volume.

In Europe, for instance, the metered gas in Cubic centimeters may be adjusted based on thermal (burning) energy release but it still a flat rate. In the future, a variable rate system may be introduced.