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The Truth About Your Electric Bill, Six Issues to Consider


MW-CB755_pfther_20140502170505_MDFor many, picking the right utility company and tariff plan, and then setting up a standard order to pay the bill, is all they should do when it comes to household electricity, According to governmental statistics, in the past decade the average energy bill has increased by nearly 10%.

Nevertheless, not many have looked into where electricity comes from, what brings the consumption up and what constitutes a bill. We all often forget that there are many factors, besides the standard rates we pay, that could influence not only the pretty high number that comes out of our bank account every month, but also our overall vision of what electricity is and how to use it most wisely.

Here is a small compilation of what you might want to keep in mind next time you forget to check if you have left the bathroom light on.

1. Electricity is not always clean energy.

Just because we don’t see the emissions coming out of our sockets, it does not mean that the electricity that runs through them is not generated by burning fossil fuels. In fact, almost 40% of the energy that is provided to US households comes from coal, while just 13% comes from solar, wind, biofuels and other renewable sources. Thankfully in the past few years, the great advances in technological developments and rapid drop of prices of solar panels can change the statistics soon. In the mean time, however, do think about the environment when leaving the TV on stand-by for the night.

2. Switching from a local utility company to a big energy service does not necessarily save money.

In many places across the US, the electric markets were deregulated, which means that everyone is now free to choose the energy service provider, who would be billing them for energy usage. Unfortunately, for many this did not turn out as great as they originally thought. According to the statistics, deregulation, or switching providers, has added quite a significant amount to household bills in Texas and New York, which would not have happened if the customers stuck to the local utility. It will not be too bad for long, though. State officials are now developing schemes and programs that can help customers understand better the different plans and tariffs, hence make the best choice.

3. Green energy plans and your house electricity

Now this is a particularly tricky one. Most people think that when they sign up for a green energy plan, they start using clean energy. But actually, the source of the electricity that we get at home remains the same- that coal power plant in the outskirts of town. In addition, even if the utility company that provides your electricity has a contract with a renewable energy farm, this does not mean that you are the person using the clean energy, because the farms might not be anywhere even close to you. But it is a good thing. When you pick the green energy plan, you create demand, and the higher the demand for clean energy is, the higher the number of suppliers will become.

4. Utility companies benefit from your excess usage

Of course the utility companies are happy if you use excess amounts of electricity. Regardless of what they say on the commercials, they do not want to make customers use and pay less. For this reason, regulators have provided the so called “revenue decoupling”, which maintains the revenue of the utility even if the customer buys less. Generally, it is supposed to introduce balance in rates- raise in price during low consumption, and drop in price during high consumption. Now, this is something that is almost never mentioned on your bill.

5. You pay a lot of taxes as part of your bill

There are a lot of hidden taxes on your electricity bill, especially if you live in New York. The facilities of the city’s utility company are taxed at a much higher rate than homeowners, and in return they pass on around $1.1 billion a year from the tax directly to their customers. This could well get to around 30% of the customer’s bill. According to local governments, however, and not only in New York, paying hidden taxes is extremely common, and often not labeled or mentioned at all.

6. You have the power to control your bill

Not all is lost, of course. You can control the amount you pay, and there are many more ways to do it, than you might think. Unplug all cellphone and laptop chargers when you don’t need them, use energy saving light-bulb (these really do work), be smart about your heating and cooling systems, isolate your house, and go through this check list of tips for more ideas. There is also this very nice online document named “dissecting your electricity bill“, you can have a look at it too. But do it sooner.

Image (c) Shutterstock

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