How to Understand Your Electricity Bill

3 min read

Have you ever wondered what goes into your business’s electricity costs? Understanding what goes into your energy bill can help you make smarter decisions and better manage your energy expenses.

Let’s take a closer look at the main parts of electricity pricing and how they affect your bottom line.

Energy Supply: This is usually the largest part of your electricity bill, accounting for 35% to 70% depending on your location and business type. It reflects the cost of generating electricity, which can vary based on usage, season, and regulatory factors. Keeping an eye on your energy usage patterns can help you manage this cost more effectively.

Capacity: Capacity costs ensure there is enough electricity available when demand is at its highest. These charges are set by regional transmission organizations (RTOs), and they help maintain grid reliability, especially during extreme weather or high-usage periods.

Transmission: Transmission costs cover the delivery of electricity from power plants to your business. This includes infrastructure and maintenance expenses like Network Integration Transmission Service (NITS) and Transmission Enhancement Charges (TEAC), regulated by the Federal Energy Regulatory Commission (FERC).

Ancillary Services: These are smaller RTO charges that support the safe and reliable operation of the electric grid. Ancillary services support the balance of supply and demand and maintaining stable voltage levels.

Energy Losses: Energy losses refer to the small amount of electricity that is lost as heat during generation, transmission, and distribution. This is an expected part of the delivery process that is factored into your pricing.

Renewable Portfolio Standards (RPS): Utilities require that a portion of electricity must come from renewable sources like wind or solar. These programs are called renewable portfolio standards. Meeting these requirements can affect electricity prices, but they also support long-term sustainability goals.

Choosing the Right Energy Supplier for Your Business

By understanding what makes up your energy bill, it can help you:

• Identify opportunities to reduce energy usage
• Choose the right plan for your needs
• Budget more accurately

At AEP Energy, we’re committed to helping you feel confident in your business’s energy choices and fully informed about your energy costs. Whether you’re exploring renewable options, considering a fixed-rate plan, or simply looking to reduce usage during peak times, we’re here to help you navigate the complexities of the energy market.

If you’re a current customer and have questions about your bill, contact your Account Management Team at 1-888-924-7111. If you’re interested in becoming a part of the AEP Energy family, learn more by clicking here.

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