If you’re unsure about how much you’re paying for your electricity, learn how to read an electricity bill. It’s an important part of everyday life and can help you understand your energy usage. And if you’ve been twiddling your thumbs over the decision to go solar, understanding your bill can help you understand your home energy usage and how solar can help you achieve your home’s energy goals.

Let’s learn how to read electricity bills.

How to read electricity bills, demystified

Electrical bills can add up quickly. When a family has a fridge, an air conditioner, a TV, a dishwasher, as well as multiple devices and appliances that require a constant stream of electrical power, it’s understandable why they’d have energy on the brain. Often, people don’t even think about how much energy they use. Did you know that more than half of the energy consumption in the average American household goes straight to heating and cooling?

The fact of the matter is, when you understand what your bill says, you can start to make smarter decisions when it comes to your energy usage and your budget. Let’s go over electricity bill basics to gain an understanding.

Account information

electric bill example

One particular staple on your electricity bill is your account information. This little blurb is the section of the bill that includes features like:

  • The service address
  • Your billing period
  • Your very important account number.

When there is an issue with your account, the account number is your identifier. It also allows the utility company to make sure you’re being charged for your energy consumption. By first validating the correct service address and account number, you can ensure that your bill is the right one for you.

Amount due

electric bill example

Traditionally, the first number your eyes wander to is the “Amount Due.” This is the cost of your energy consumption plus fees. While the total amount due is pretty important for your household, your bill is so much more than that. The cost to power your home is broken up into two sections: “Billing Summary” and “Billing Details.” Let’s explore each part.

Billing summary

The billing summary is a kind of overview of your charges. What you owe is divided into several categories.

Here are a few charges below:

  • Distribution charges: These are monthly fees charged by your electric company to cover the cost of transmitting energy to your home. This includes local equipment (like power lines) used to make this transfer happen.
  • Generation charges: Also charged monthly, these fees account for the cost of electricity and production.
  • Transmission charges: These fees amount to the cost of moving electricity. Electricity is generated at high-voltage generation facilities, then filtered to your local utility company’s distribution lines. From there, it’s headed to power you home.

electric bill example

Billing details

This is where you’ll find the nitty gritty details around your bill. This section includes any local or federal taxes and offers you a snapshot into what it costs to power your home. In addition to the charges mentioned above, the details section of your bill might have other charges as well.

For instance, there’s the consumer charge. This fee is a fixed rate charged by your electric company. It includes the costs of providing you with services, such as meter reading and actual administration costs, among other things. Charges will depend on where you live and the specific fees from your utility company.

Kilowatt-hours: a simple explanation

The best thing you can do for your budget is get familiar with kilowatt-hours (kWh). It’s time to learn how to read kilowatt-hours on electric bills!

Often abbreviated as “kWh” are units of measurement that determine energy usage. Kilowatt-hours measures the consumption and production of your home. It’s a way to let you know how much energy is being used and how quickly you’re using it.

How to calculate your electricity bill from meter reading

If you were trying to figure out how to calculate your electricity bill from your meter reading, look no further.

Take note of these details on your bill:

  • Meter reading from last month’s utility bill
  • Meter reading from current month’s utility bill
  • The current cost per kilowatt that your utility company is charging

Although you could take a peek at your electric meter to monitor usage and make sure the bill is accurate, the best way to calculate your energy costs is to read your bill. Once you learn how to read electricity bills, you can apply your knowledge to lower the amount of energy you use. Also, this is a great tool for budgeting your expenses. Simply follow these equations to really understand your home’s energy use:

  • LM – CM = E

LM [last month’s meter reading] is subtracted by CM [current month’s meter reading] to find E [the energy your home used this month]

  • E x C = AD

E [the energy your home used this month] is multiplied by C [current cost per kilowatt hour], which is determined by your electricity company and varies based on location, to find AD [the amount due].

Energy at a glance: the usage chart

electric bill energy usage chart

The usage chart is a snapshot of your energy usage. It’s a graphic that compiles the energy you’ve used during previous billing cycles. Higher bars depict peak periods, when you probably ran your HVAC system for longer periods of time, or at higher than normal temperatures. This is usually during the summer or winter months.

The usage chart is the easiest way to see when you use the most energy. Some bills can even show your household usage from previous years. If it doesn’t, oftentimes you can log into your online account and find the information there. The usage chart is a great tool for comparing your current usage and adjusting your energy use accordingly. However, you could combat energy pitfalls by changing the way your energy is generated.

How solar can save your electricity bill

When you switch to solar, your energy bill may look a little different than described above, depending on your electric company. If your electric company has the program available, you might see a “Net Metering” portion on your bill. If you have net metering, you most likely will see savings subtracted beneath the charges.

Net metering breakdownelectric bill net metering example

Net metering is a great incentive where it’s available.* Coupled with the many state and federal rebates, it could help make the cost of solar a great investment. If it’s available to you, net metering allows you to receive credits back on unused electricity you send back to the electric company.

What is net metering?

Net metering basically sells your unused electricity back to the electric company for credits on your bill. In some cases, homeowners have found that their solar system helped them achieve a negative electric bill.

Here’s all of the moving parts:

  • kWh use by meter/ kWh delivered: this section refers to how many kilowatt-hours of energy your home used during the billing cycle.
  • kWh received: this section refers to the amount of kilowatt-hours rolled back to the electrical grid.

net metering diagramLearning how to read electric bills is just the first step in tracking your electricity usage and energy charges. Now, you can calculate your anticipated electric bill every month, but if you really want to save where it matters, go solar. You can receive specialized solar solutions for your home, so chat with a Solar Specialist today!


* Net metering and similar excess or buyback programs vary by location and utility provider and are subject to change. Rates may go up or down and the money you may save, if any, may vary. For more information about rates, contact your power company.