Utility Service and Electric Charge – What’s the Difference?

Electric Meter
Electrical Service

Trying to make sense of an electric utility bill? What is the difference between a electric service and the electric charge, anyway?

Good luck – utility companies hire experts to design tariffs and rates that meet the legal requirements but end up being confusing and almost impossible to verify the bill.

While electric service and electric charges often end up in the same discussion, they are not one in the same.  Understanding the differences is the first step in taking control of your utility bill.

Electric service charges are simply the monthly cost the utility company charges you for the equipment they provide for your metered connection to their grid. The Electrical Service figure above shows a typical residential electric service and defines who owns each piece.

Electric charges are the costs the utility charges per unit of electricity consumed (usually defined in terms of kilowatt hours) or per unit of demand (usually defined in Kilowatts).

Electric Bill
Sample Electric Bill

Generally, the service charges are set by the government, in CA this is defined by the Public Utilities Commission. These charges are defined to allow the public utility providing the service to recoup their investment over a set period of time.

Electric charges, however, are more complicated – the same government entity can define the utility tariffs and rates, and then the utility uses their meter to define how much energy the consumer used over a set period of time.

Energy charges are based on the amount of consumption, measured in kilowatt hours (kWhrs), and the cost may vary based on how much already consumed or even time of day the energy was drawn through the meter.

Demand charges are based not on how much you use, but how fast (the rate) at which the energy was used. A good analogy would be to think of the electric service as a pipe or hose, and the demand or rate at which you draw electricity through the hose means the utility has to provide a big enough hose for you for the worst case.

APT works closely with customers to understand their specific electric charges on their bills, and leverages your energy monitoring infrastructure (this can include meters, relays, trip units, anything with a communications connection) to independently measure the electric consumption and demand.  APT’s RECIPE Analytics platform uses the same tariff and electric rate to calculate the bill.  This puts customers in control of their bills with tools to forecast, accrue, and reconcile their utility bills and reduce costs.

Understanding electric charges is the first step in taking control of your utility bill.  APT will work closely with you to take that first step to control costs.

Electric bill analysis
RECIPE Analytics – Utility Bill Analysis tools