Wednesday, March 21, 2012

10 Reasons Electric Bills are So Confusing

Of all the utility statements that the average person receives, few are as frustrating or difficult to decode as the electric bill. The mass of numbers, abbreviations and technical jargon are complicated enough on their own; adding in the local fees and mysterious service charges can make things even more of a pain. Here are ten of the reasons why reading your electricity bill seems to require several doctorates.

  1. Separate Charges for Supply and Distribution – The deregulation of the energy industry in the Nineties led utility companies being allowed to make separate charges for your energy distribution and your electricity supply, effectively charging consumers for both. Because this is split into two separate billing items, it can create confusion for those trying to figure out the source of their rising energy costs.
  2. Billing Riders – Depending on the company that provides your electricity, there may be mysterious charges labeled as “riders” on your bill. These are the charges that regulatory authorities allow the energy corporations to pass on to their customers in order to recover “special expenses.” These fees are used for the repair and maintenance on service lines, among other things.
  3. Too Much Information – One of the simplest explanations for the mess that is an electricity bill is the sheer amount of information. The itemization is intended to keep consumers informed about what they’re paying and why, but in most cases, it only serves to confuse people more.
  4. Billing Formats Can Differ – If you do manage to decode your bill, it’s not a good idea to move out of the utility district; billing formats can differ widely from one district to the next. You could find yourself back at square one with a new electric company.
  5. Contract Options – Another bewildering aspect of utility billing is that there are so many different plans and contract options available. Choosing one can be difficult, but figuring out the nuts and bolts of your selection by examining your monthly bill is usually even more complicated.
  6. Non-Standard Meters – Just in case your billing and wasn’t difficult enough to understand, there are also no standardized meters in most places. Depending on the contractor who built your home, you may have an interval or time of use meter, two rate or controlled load.
  7. Peak and Off-Peak Hours – During the early days of cellphones, most providers billed more heavily during “peak” hours. While they’ve almost universally abandoned this idea in favor of more simplified billing options, many electric companies do still cling to this business model.
  8. Unfamiliar Abbreviations – The abbreviations that your electric company uses aren’t likely to be familiar if you’ve never worked within the industry; trying to figure out what each shortened term means can be a headache in and of itself. Often, there’s a dedicated section for familiarizing yourself with these abbreviations; the best possible way to eliminate this source of confusion is to find it.
  9. Seasonally Differentiated Billing – Much like “on-peak” and “off-peak” hours, seasonally differentiated billing can cause energy rates to hike during certain months. Even if your basic usage is the same, it could still cost more; most of this is dependent upon the type of plan you have.
  10. What is a KWH? – One of the abbreviations that you’ll see on every bill is kWh; a kilowatt-hour is a unit of energy that virtually all utility companies use for billing. Depending on your plan and your provider’s policies, you may be charged baseline allowance per kilowatt-hour. Exceeding this usage allowance can cause higher billing rates per kilowatt-hour for the rest of the billing cycle.

No one said that bills had to be easy, but learning more about what you are reading can help. You’ve just read an entire page worth of explanations regarding the confusing nature of electric bills. That, in itself, serves to prove the point, doesn’t it?

Taken From Compare Electricity Rates

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