How to read your electricity bill

One of the most common complaints electric utility customers have about utilities is that utility bills are hard to understand. I looked at PSE’s website page, “How to read your bill.” Having done that, I decided to write this.

Think of electricity as being similar to water. Water delivered to your home is usually metered in cubic feet. (There are about seven and a half gallons in a cubic foot.) The rate at which water is delivered is measured in cubic feet per second. When you get your water bill, you are billed for the total cubic feet of water that you’ve used.

Electricity is metered in kilowatt-hours (kWh). The rate at which electricity is delivered is measured in joules per second. One joule per second equals a watt. A thousand watts equals a kilowatt. A typical incandescent light bulb uses 60 watts. Leave that light bulb on for an hour, and it uses 60 watt-hours. Leave it on for ten hours, and it uses 600 watt-hours, or 0.6 kilowatt-hours.

A residential electric meter records the total electricity everything in the house is using, cumulatively. At any given time, it shows a live reading of the cumulative kilowatt-hours the home has used since the meter was installed. Each month, the current number from the meter is recorded (“the meter is read”). On PSE’s model residential bill, the previous month’s reading and the current reading are both shown, along with the meter reading dates. Subtract the older reading from the newer reading and you have the raw number supplied by the meter.

However, there is a complication that PSE didn’t explain on its model bill. Each meter has a “multiplier,” which was used to help minimize manual meter reading errors. A meter may record, for instance, tens of kilowatt-hours rather than individual kilowatt-hours, thus reducing mistakes by allowing smaller numbers to be read. This is similar to water meters being read in cubic feet rather than gallons. (New electronic meters don’t really need multipliers, but the concept is still built into the legacy system.)

On PSE’s model bill, the “multiplier” is 10. The home on the model bill had an end-date reading of 131 and a start date reading of 26. Subtract 26 from 131 and you get 105. Multiply that by the “multiplier” of 10, and you get 1050 kilowatt-hours, which is what the model customer is being billed for.

The “basic charge” is a charge the public service commission has approved to enable utilities to pay for costs that aren’t directly related to energy use, like metering and billing. It’s generally a fixed price. Think of it as the cost of being connected to the grid.

The other charges are all related to energy use. “Tier 1” electricity is billed at a different rate than “tier 2” electricity. “Tier 1” just means the first 600 kWh. “Tier 2” is billed at a higher rate than Tier 1. Tiers are negotiated between the utility and the Washington Utilities and Transportation Commission. The logic behind different tiers, historically, is that the utility has costs associated with building infrastructure to meet the marginal energy requirements of larger customers, and that smaller customers shouldn’t be billed for infrastructure that’s only required because of the larger customers.

The remaining charges and taxes are well-explained on the bill.