How to Read Your Energy Bill (And Find Hidden Savings)

Your energy bill has more information than you think, and most of it is designed to be confusing. This guide breaks down every section of a typical residential electricity and gas bill so you can spot savings you are currently missing.

Section 1: Account Summary

The top of your bill shows the billing period (usually 28-32 days), account number, service address, and total amount due. The number that matters most here is the billing period length. A 35-day billing cycle will show higher usage than a 28-day cycle, even if your daily consumption is identical.

If your bill seems unusually high, check the billing period first. Some months have irregular cycle lengths that distort the apparent cost.

Section 2: Usage (kWh and Therms)

This is the most important section. Your electricity usage is measured in kilowatt-hours (kWh). One kWh powers a 100-watt light bulb for 10 hours, or runs a window air conditioner for about one hour. The average US household uses roughly 900 kWh per month.

Gas usage is measured in therms or CCF (hundred cubic feet). One therm equals about 100,000 BTUs of energy. A gas furnace running for one hour uses approximately 1 therm. Gas-heated homes typically use 50-100 therms per month in winter and 10-20 in summer.

Most bills include a usage comparison showing the same month last year. If your usage increased more than 10% year over year without an obvious reason (new appliance, more people in the home, extreme weather), investigate. Common culprits: degrading HVAC equipment, new air leaks, or a malfunctioning appliance.

Section 3: Supply Charges

Supply charges cover the cost of generating or purchasing the electricity or gas you consumed. This is the per-unit rate multiplied by your usage. For electricity, the national average is about $0.168 per kWh in 2026, but rates vary dramatically by state: from $0.11 in states like Louisiana to over $0.30 in Hawaii.

If you are in a deregulated state (Texas, Pennsylvania, Ohio, parts of New York), you may be able to choose your supply provider. Comparing supply rates can save 5-15% on this portion of your bill.

Section 4: Delivery Charges

Delivery charges cover the cost of maintaining the power grid: transmission lines, substations, transformers, and the local distribution network that brings electricity to your home. These charges are set by your utility and approved by your state public utility commission.

Delivery charges typically make up 30-50% of your total electric bill. You cannot avoid them by switching supply providers. They include both a fixed monthly charge and a per-kWh component. The only way to reduce delivery charges is to use less electricity or generate your own (solar).

Section 5: Rate Tiers and Time-of-Use

Many utilities use tiered pricing: the first block of usage (say, 500 kWh) is charged at a lower rate, and usage above that threshold costs more. This is designed to encourage conservation.

Time-of-use (TOU) plans charge different rates depending on when you use electricity. Peak hours (typically 2pm-7pm on weekdays) cost more. Off-peak hours cost less. If you can shift heavy usage to off-peak times (running the dishwasher at 9pm instead of 5pm), a TOU plan can save $50-$200 per year.

Your bill will show which rate plan you are on. If it says "standard" or "flat rate" and your utility offers TOU, it is worth comparing. WattGap's rate plan optimizer does this automatically.

Section 6: Taxes, Fees, and Riders

The bottom of your bill includes state and local taxes, franchise fees (paid by the utility for using public rights-of-way), renewable energy surcharges, and various regulatory riders. These are typically 5-10% of the total bill and are not directly controllable.

One fee to watch: the "demand charge" if you see it. Demand charges are based on your highest 15-minute usage peak during the billing period, not your total usage. They are more common in commercial accounts but appear on some residential bills. Running multiple high-draw appliances simultaneously (oven, dryer, AC, EV charger) can spike your demand charge.

Five Things to Check Right Now

1. Compare year-over-year usage. If usage is up more than 10% without explanation, something changed.
2. Check your rate plan. If you are on a flat rate and your utility offers TOU, compare them.
3. Look for phantom loads. Devices in standby mode (TVs, game consoles, chargers) can add $100-$200/year to your bill.
4. Check the billing period length. An unusually long cycle inflates the apparent cost.
5. Look for available credits. Some utilities list rebate programs or efficiency credits directly on the bill. Many customers miss these.

Frequently Asked Questions