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

Utility Service vs. Electric Charge

Trying to make sense of an electric utility bill? What is the difference between an electric service and an 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 and the same. Further, understanding the differences is the first step in taking control of your utility bill.

Electric service charge is the monthly cost the utility company charges for the equipment provided for metered connections to the grid. The Electrical Service figure below shows a typical residential electric service and defines who owns each piece.

Electric Meter
Electrical Service

Electric charge is the cost 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 (Charge)

Generally, the government sets service charges. In California, the Public Utilities Commission defines them. What does this mean? These charges subsequently 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. As a result, 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). Moreover, costs may vary based on previously consumed energy or the time of day energy is 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.

For example, think of the electric service as a pipe or hose. The demand/rate at which electricity draws through the hose means the utility must provide you with a big enough hose for the worst case.

What We Do

APT works closely with customers to understand their specific electric charges on their bills. Above all, we leverage your energy monitoring infrastructure (i.e. meters/relays/trip units/communication connections) to independently measure electric consumption and demand.

APT’s RECIPE Analytics platform uses the same tariff and electric rate to calculate the bill.  Moreover, we give customers control of their bills with tools to forecast, accrue, and reconcile their utility bills and reduce costs.

Electric bill analysis
RECIPE Analytics | Utility Bill Analysis Tools

Understanding electric charges are the first step in taking control of your utility bill.  APT works closely with our customers to take that first step to control costs. Don’t wait. Let us help you take control of your energy bill and stop letting it control you.

Andy Taylor, CEO APT