Understanding Your Electric Bill

A kWh or kilowatt-hour is a measure of electric energy consumed by electric loads such as appliances in your home.  A 100-watt light bulb in use for 10 hours consumes one kWh.  Because energy is a continuous accumulation of usage, it is analogous to the odometer on your car.

A kW or kilowatt is the rate at which a customer consumes energy and measures the demand placed on your electric utility’s power plants. One kW of demand for one hour consumes one kWh. Because demand varies over time, it is analogous to the speedometer on your car.

The Energy Charge recovers costs for the electricity (kWh) you consume in one billing period (approximately 30 days). It is represented in $/kWh or ₵/kWh. The Energy Charge is multiplied by number of kWhs consumed during the billing period, which is determined by subtracting the previous billing cycle’s meter reading from the current billing cycle’s meter reading. The Energy Charge is established by the Utilities Commission in a general rate case proceeding and can only be changed during a general rate case. For greater transparency on your kWh usage, please log in to your account with your electric provider.

Generally, the energy charge recovers costs that change with the amount of electricity you consume such as fuel used in power plants; however, for some customers, particularly residential customers, the energy charge recovers certain fixed (non-variable) costs such as the power plants, wires, and poles that send electricity to your home.

Rather than recovering costs solely based on the amount of electricity you used, a demand charge recovers costs based the maximum amount of electricity you used at a specific point in time.  The charge is typically calculated based upon your share of the overall power system’s kW load during peak demand.

Importantly, not all customers have a demand charge.  While some residential customers elect to have time-of-use (TOU) rates with a separate demand charge, most residential customers do not use TOU rates. Demand charges are more commonly assessed to commercial and industrial customers. This charge is set in a general rate case and can only be changed in a general rate case.

Generally, the demand charge recovers a portion of the fixed (non-variable) costs that occur based on your maximum electrical demand. For example, a certain number and size of power plants are necessary to supply the total electrical demand of all customers at a given point in time. The transformer that serves your home or business is another example of equipment that must be sized to meet a maximum demand.

The Basic Customer Charge is a fixed charge that recovers a portion of the specific costs to provide service to an individual customer. This charge is applied to the costs that include the meter that measures your electrical usage, the costs to read the meter and process the bill, and basic facilities to connect your home or business to the electrical grid, including the wires that run from your meter to the distribution or transmission lines that serve the entire grid. Even when a customer uses no kWh in a given month, the facilities must be in place so that electricity is available when the customer needs it. This charge is set in a general rate case and can only be changed in a general rate case.

For Duke Energy customers, the Storm Recovery Charge recovers the costs incurred by Duke Energy to restore power after damage to its system following a major hurricane or ice storm. N. C. Gen. Stat. § 62-172 allows Duke Energy to issue storm recovery bonds to finance these costs, which are repaid by this charge on your bill. The actual costs are tracked, trued-up, and rates are updated every six months (on January 1 and July 1).  Issuing bonds saves customers money because the bond interest rate is lower than Duke Energy’s rate of return.

For Duke Energy customers, the Summary of Rider Adjustments is a summation of various charges, authorized by North Carolina law, that change at different points throughout the year. These charges cover costs such as: the variable cost of fuel which changes year to year from what is included in the base Energy Charge described above; the cost of demand-side management and energy efficiency (DSM/EE) programs; certain renewable energy costs; costs to assist low-income households to pay their electricity bill; and refunds of over-collections due to a reduction in income tax rates. These charges are in $/kWh or ₵/kWh and are applied to your monthly energy usage. These charges are separate from the Energy Charges and are added to your bill as a separate line item.

For Dominion Energy customers, similar rider charges can be found itemized on Dominion Energy's website, but these charges are rolled into the charges listed under "Electric Charges."

No, you are not charged twice for the same costs. Most riders change on the first day of a particular month, but these changes may not necessarily align with your billing period of a given month. For example, DEP’s fuel rider changes on December 1 of each year. If your billing period is from November 15 – December 15, half of your energy usage for that period would be billed under the “old” fuel rate and half under the “new” fuel rate resulting in two distinct Summary of Rider Adjustment charges.

No, not all riders change on December 1. Please see the table below that lists the timing of all rider changes for DEC, DEP, and Dominion Energy Customers. And as mentioned above, for Duke Energy customers, the Storm Securitization Recovery Cost rider changes twice per year, January 1 and July 1.

This rider recovers the incremental costs (costs above the cost of non-renewable energy) of certain clean energy purchases Duke Energy makes to comply with a North Carolina State law – N.C.G.S § 62-133.8 which became law in 2007. It mandates that electric utilities must procure a certain amount of their electricity sales from clean energy sources such as solar, wind, biomass, etc. Unlike other riders, this rider is assessed on a per account basis, meaning each residential, commercial, or industrial customer pays the same fixed amount by classification, regardless of monthly usage. This charge changes each September 1 for DEC, December 1 for DEP, and February 1 for Dominion Energy.

This charge is the State sales tax of 7% applied to the “Total Current Charges” line item for Duke Energy customers and "Current Electric Charges" for Dominion Energy customers. Your electric utility does not keep this money but instead remits it to the North Carolina Department of Revenue.

Electric utility bills generally increase for two reasons: increase in usage or changes in rates. As discussed above, and illustrated in the Table above, numerous riders change all throughout the year.  These rider changes are independent of base rate changes. Most of the recent rider changes have resulted in increases, particularly for fuel costs, renewable energy costs, and DSM/EE costs. These increases are on top of the increases from the general rate cases.

No. As discussed above, and illustrated in the Annual Billing Adjustments Table, numerous riders change at other times of the year.  These changes are independent of base rate changes.

The Commission is required to consider any rate changes requested by all regulated utilities.  State and Federal laws require the Commission to approve rates that allow each electric utility the ability to recover its expenses plus a reasonable return on its funds prudently invested to provide reliable electric service to its customers.
 

The Public Staff investigates every request made by regulated utilities for rate changes and makes its recommendations to the Commission to ensure that each utility is operating prudently and spending money wisely so that its customers are not required to pay rates any greater than is required by State law.