Interactive · Your bill
How your electric bill is built
An electric bill isn't one number — it's a few different charges stacked together, each recovering a different kind of cost. Move the sliders below to see how they add up.
- Customer charge
- Fixed monthly cost to connect, meter, and bill your account.
- Demand charge
- This plan has no demand charge (typical for residential).
- Energy charge
- $0.12/kWh × 900 kWh used.
- Estimated monthly bill $133.00
Illustrative sample rates for teaching only — not any real utility's tariff and not Rate360 engine output. Your actual rates are set by your utility and appear on your bill's tariff sheet.
The customer charge
The customer charge is a fixed monthly amount you pay just for being connected — it recovers the cost of your service drop, meter, and the billing and account administration that happen whether or not you use any electricity. It is the same every month at any level of usage.
The demand charge
A demand charge is based on your peak power draw during the month, measured in kilowatts (kW) — the single highest rate at which you pulled electricity, not the total amount. It recovers the cost of building the poles, wires, transformers, and generating capacity sized to meet that peak. Larger customers usually have demand charges because their peaks drive a big share of system cost; most residential customers do not.
The energy charge
The energy charge is billed per kilowatt-hour (kWh) — the total electricity you used. It recovers costs that rise with consumption, chiefly fuel and purchased power. This is the part of the bill you can most directly change by using less.
Frequently asked questions
What are the three parts of an electric bill?
Most electric bills are built from three kinds of charges: a fixed customer charge (for connecting, metering, and billing your account), an energy charge billed per kilowatt-hour of usage, and — for larger customers — a demand charge based on your peak power draw. Together they recover the different kinds of costs a utility incurs to serve you.
Why don't residential customers usually have a demand charge?
Demand charges recover the cost of building capacity for a customer's peak power draw, measured in kilowatts. Metering that peak requires demand meters, which historically were installed only for larger commercial and industrial customers. Most residential customers are billed on just a customer charge plus energy, though some utilities are introducing residential demand or time-of-use rates.
Are these the rates my utility charges?
No. The numbers in this explainer are illustrative sample values chosen to show how the pieces fit together — they are not any real utility's tariff, and they are not output from the Rate360 engine. Your actual rates are set by your utility and appear on your bill and its tariff sheet.
Keep reading
How are electric rates set?
Where these charges come from — the three-step process behind your rate.
Ratemaking glossary
Every term on this page, defined in plain English.
Helping members understand a bill like this is exactly what Rate360's transparency tools are built for. See the methodology