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Electricity Bills and What I Should Know About Them
If you’re a homeowner or renter in Texas, then you’ve likely had to pay your fair share of electricity bills in your life. Electricity bills are the money that you pay for the cost of having electricity in your home. Every time you turn a light on, use a kitchen appliance or do anything else with electricity, you’ll pay for it in your monthly bill.
In this article, we will take an in-depth look at electricity bills, how they’re calculated, and what exactly they’re paying for. We’ll also look at how you can start reducing the amount of your monthly bill using Energenie. Contact us to find out more about your electricity bills and how to start paying less than ever.
What All is My Electricity Bill Paying for?
Your electricity bill is what you pay each month to your Retail Electricity Company (REP) in compensation for the electricity they provide you. You may have noticed as of late that electricity prices have been steadily rising more and more. Unfortunately, that seems to be the case not only in Texas but all around the country. The reason prices are going up is that companies that sell electricity to REPs are expanding and need to pay for that expansion.
The growing need for electricity around the state of Texas has led to an ever-increasing web of REPs, power generators, and transmission distribution utilities. These three components are the entities that work hard to produce and sell you your electricity, and they all need to make a profit. Therefore, the more people and companies involved, the higher your electric bill will be.
However, to make things as simple as possible, your electric bill pays for two main things.
- The creation of the electricity you used.
Electricity is created by power generating companies burning coal and processing fuels then converting it to electricity. These companies then sell the electricity to REPs, who then sell it to you. The main part of your electricity bill is to pay for the creation of electricity, which is why you usually pay for as much as you use. Keep in mind that power generating companies and REPs are separate entities, and both want to make a nice profit.
- The cost of maintaining the electrical grid.
Secondly, your electricity bill pays for grid maintenance, ensuring that the system doesn’t get overwhelmed and that poles, lines, and electric meters are maintained under the jurisdiction of transmission and distribution utilities, or TDUs. TDUs make sure that power outages are repaired and that your home has a steady flow of power.
Essentially, your electric bill is paid out to support three companies, the company that created the electricity, the company that sold the electricity to you, and the company that makes sure you get the electricity. Those are the basics, and once you understand them, it makes more sense why your bill is increasing in cost.
How is My Electricity Bill Calculated?
Now that you know what your electric bill is paying for, it will be easier to understand how it’s calculated. The first thing your REP will do is multiply the number of kilowatts of electricity you used by the cost of your kilowatts per hour. You can find these figures on your Electricity Facts Label on your monthly bill or invoice. This determines your energy charges per month. For example, if you use 1,000 kilowatts of electricity at 10 cents/kWh, your energy charge is $100.
Next, you might have the following charges depending on your power company.
- A base charge is paid at the end of every month, usually $5 to $10.
- Past-due balances for unpaid bills.
- One-time charges for first-time customers.
- TDU charges for distributing electricity to your home.
- State, federal, and local taxes.
All in all, these costs can come anywhere between an additional $25 to $100, depending on your REP. Contact us at Energenie to find out if you’re paying too much for your electric bill and how to cut unnecessary costs.
Different Components of My Electricity Bills
Now that you know who you’re paying and how it’s calculated let’s look at the different components of your bill.
- Supply Charge
Simply put, the supply charge is what you are charged based on how much electricity you use. For every kilowatt of electricity, your power generator has to burn some form of fuel to create it. The supply charge pays for their work and what your REP paid them for the electricity.
- Transmission and Distribution Charge
Like I said before, electricity doesn’t just magically enter your home by accident. Someone has to run electrical wires, power lines, erect power poles, and install the electric meter to make it all possible. None of that is free, and neither is the labor that made it happen. Your transmission and distribution charges pay for the materials and workers that make it possible.
- Miscellaneous Charges
Miscellaneous charges include everything from late bills to startup fees to a base fee that you pay every month.
Am I Paying Too Much for My Electricity Bill?
Sure, your electric bill is paying many people for a lot of different things, but you still might be paying too much. If you’re unhappy every time you see your monthly electric bill and want to make a change, contact us at Energenie, and we’ll help make that happen. Rates are constantly changing, and it’s hard to stay on top of everything yourself.
How to Get a Lower Electricity Bill
The best way to get a lower electricity bill is to find your REP using Energenie. Energenie will see all of the deals you want and qualify for in your area. There are hundreds of REPs that are offering thousands of electric plans. We’ll help you find the plan with the lowest rate, the fewest extra fees, and the best customer service. Let us take the headache and pain out of choosing the right power company.
EnerGenie is your personal electricity shopping assistant. By signing up with EnerGenie, you’ll have peace of mind knowing you have a cheap electricity rate locked in to avoid rate hikes. You’ll also never have to worry about falling onto a high variable electricity rate because we continuously monitor your account and the market to sign you up for another great rate when your contract is coming up for renewal.
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