Last week, we posted a list of the Top 16 Energy Cost Management questions that we hear on a regular basis.

Today we answer two basic questions about utility invoicing and give you 3 suggestions for what to look for when you review your utility bill. 

1. How and when do utilities invoice customers?
   Utilities invoice customers on a regular schedule set by the utility at the beginning of each calendar year. The first step in the process is for the utility to read the customer’s meter. Larger customers frequently have digital meters that are read continuously over the wire.

• When will the utility bill you?The utility publishes a set meter reading and billing schedule at the beginning of each calendar year. If you’re interested, you can find your account’s “trip schedule” on your utility website. From time-to-time utilities have to estimate meter reads when they can’t get direct access to a meter. In that case, you will receive a bill based on anestimated usage and then an updated invoice the following month that reconciles the actual read to the estimated read (and cancels the charges associated with the estimated meter read).
• How do utilities calculate what a customer pays? Utility tariffs are published on your utility website and will determine what you pay for electricity delivery each month.

If you are a customer who has chosen to remain with your local utility for electricity and/or gas supply service (in deregulated markets) or your facility is not located in a service territory that permits competitive supply, your supply costs will also be determined by the regulated tariff. If you have chosen a competitive supplier, you may have chosen to have your supplier invoice you separately for electricity/gas supply or you may receive a single invoice from your utility that includes your supply costs.

2. How frequently and in what manner do utility tariffs get updated?
   Utilities are regulated by your local (usually State) Public Service Commission (sometimes known as the State Public Utilities Commission). All utilities participate in an open, public regulatory process in order to update tariffs. The process is known as a “rate case” and occurs every few years. Many components of tariffs in competitive markets are now indexed to “market” rates and will change automatically without any formal ‘rate case’.
3. What are the 4 key things to look for on your utility invoice? What questions should you ask? 

Proper rate class. The way that your utility invoice is calculated is determined by your rate class and voltage level of service. Typically your facilities’ rate class will be determined by the size and type of building that you operate. Some sample rate classes are: residential, small commercial, large commercial, multifamily, etc. Your load profile is intended to represent the way similar facilities use power or gas. Do your facilities have a pattern of usage that matches the assigned load profile? Making sure that your facility rate class is reflective of the size and usage profile of your facilities’ actual usage is obviously important.

Some components of your charges are flat rates that you will pay every month no matter what your usage profile. And some charges are determined by the Public Service Commission and fund new investment in renewable energy or energy efficiency.

Proper tax classification. Sales taxes are charged on utility service. Make sure that all your suppliers are treating your accounts as tax exempt if you are eligible. Also, residential users often have a different sales tax rate than commercial operations. It is your responsibility as a buyer to make sure that your tax classification is accurate.

Peak demand (power). Most utilities calculate charges for a specific account or facility based on when you use power during the week and during the year. Managing your peak demand can have a significant impact on your monthly electricity costs.

Reasonable kWh volume. Compare your usage volume to the same period in a prior year to confirm that your meter reading is reasonable.You may be wondering how often you should review all this information? Do it once a season, if possible– once in the Winter, once in the Summer and perhaps once in October or April. Tariff rates often vary by season, so checking once in each season should help you to identify any major errors or inconsistencies.

Bottom line for businesses and institutions: Utility invoices can be inscrutable. If you have some high level guidelines for how to make sense of your invoice, you can manage and control energy costs. Let us know what you look for when you review your utility invoices.