Anita's quilts and quilting

A professional longarm machine quilter for hire and some of the work I've done.

Understanding utility billing

I mentioned in my last post that I have a goal.  My goal is to save as much as possible on my living expenses so the money can be saved to do major repairs on my house without getting a loan.   I was looking at my water bill and the gas/electric bill.  Can you read the writing on the bottom of this bill?
Ok, it’s blurry so I’ll tell you what it says.  “On January 1, Louisville Water Company rates increase 4.5%.”  That does not mean just add 4.5% to your total bill.  What it means is that each 1,000 gallons of water we use will cost 4.5% more.  Or at least that’s the way I understand it.  I do have some time to prepare before January.  It’s still 3 bills away.
Our gas/electric bills will be increasing again too.  The public service commission just approved an increase in the cost of renting our meters.  I forget how much the increase is.  Right now I pay $5 per month to rent the electric meter and $9.50 to rent the gas meter.  Did you know you rented the meters?  Yup, you rent them.  That’s what the “customer charge” is on the utility bills.  My neighbor’s utility bill goes up $14.50 per month even though his utilities were turned off about a year ago.  That’s the rent for two meters every month even without using anything.

Those are My current bills.  Gas/electric is on an equal billing plan.  It’s $127 a month.  There was a yearly adjustment made last month.  The water bill includes sewage and drainage bills.  It’s $76.24 for two months.  Those aren’t bad compared to what they were when my daughter and Ladybug lived here.

Well anyway, I thought you might like to understand how utility bills are calculated.  I believe this would be the same method all over the USA?  Basically both our gas/electric and our water bills in this area are calculated the same way.  It’s both a tier based system and a demand based system.  What does that mean?  Hmm…. I hope I can explain it so it’s understandable.

The tier based system is sort of like when you file taxes.  If you are in a lower income bracket the amount of your income owed for taxes is a lower percent.  Move to a higher bracket the percentage is higher.  Move to an even higher bracket and the percentage is higher.  You following me so far?  That’s a tier system of billing you for taxes.

With utilities if you use “lower than average household use” in KWHs, you are in the lower tier so you pay less per KWH.  Move into the “average household use” and you are in a higher tier.  Move to “above average household use” and you are in a still higher tier.  While a household that is below the average might pay .07 cents per KWH those in the average household might pay .10 cents per KWH, and the above average household may pay .15 cents per KWH.  These are just made up costs to show the example.  Check with your own utility company to find out the exact figures.  Still following me?

Next is the demand billing part.  Demand is when “the most people” are using it.  Like in the morning when more people are waking up to take a shower, brushing teeth, fixing breakfast and coffee, using a blow dryer, or generally just getting ready to go to work.  Or there is late afternoon when “the most people” are getting home from work, turning up the air conditioner, starting dinner and the dishwasher, turning on the tv and the computer, and so forth.  The more people using utilities, the more the demand.  This translates to higher KWH prices during those times.

Demand costs (peak hours) are billed at a higher rate per KWH than off peak hours of less demand.  What this means is that even though you may fall into a certain tier for most of your usage; if you are running appliances and tvs and computers when “everybody else” is doing the same thing…. you pay more per KWH.  So during off peak times you may be paying .07 cents per KWH and during peak time you may be paying .15 cents per KWH and those in higher tiers are also paying more.  Still with me?

According to the back of my electric/gas bill, the average household uses 1,000 KWH of electricity per month.  1,000 KWHs use would be the middle tier or “average”.  I used 1,132 KWH this month so I’m about in the middle tier.  If I can get my usage to below 1,000 KWH per month, say 500 KWH, I will be billed at a lower rate per KWH.  I’m going to call LGE Tuesday to get a rate schedule for my area so I will know for sure what tier I fall into and how much it’s costing me.  It will also tell me how far down I must cut my usage to be in the lower tier.

There’s one other factor to the billing.  The area you live in is figured in there somehow.  I’m not exactly sure how because I can’t remember.  I think it was by income area or zip codes or something like that.  It too is based on a tier system.  Live in an area where more people are likely to have the utilities turned off and the rate is higher.  Live in a different area that seldom has cut offs and the rate is less.

The same tier system is used for the water company billing although I can’t remember them having a high demand time rate.  I’m not sure what the average household water use is in this area but the bills are based on 1,000 gallons per unit of cost.  I think I’m about average with a use of 2,000 gallons per month.  If I can cut the amount of gallons I use then I can move into the lower tier billing.

Did you know that businesses like laundromats and car washes pay a lessor rate per 1,000 gallons than the average household does?  It’s true.   Their bills may be higher dollar wise because they use more water but the actual costs per 1,000 gallons is less than you or I pay.  The same is true of a business that uses lots of electricity and gas like a restaurant or an office building.  Their rate per KWH is less than the average household.  Hmm… I may have to check this out since I haven’t seen a rate schedule for a long time.  The rules may have changed since then.  I highly doubt there was a change though.  Businesses have always payed a lower rate than households.

You may wonder why I decided to explain about utility billing.  Well, my opinion is that if you are educated about HOW you are billed, you can use the knowledge to change your habits and save money.  For example if you know that running the dishwasher during peak hours cost a certain amount, maybe you can set the dishwasher on a timer to run in the middle of the night which would costs less.  Also, I needed to refresh my own memory of how the billing works.  Type talking about it helps.

Can anyone think of anything I forgot about how the billing works?



This entry was posted on July 4, 2010 by in ENERGY SAVING IDEAS.

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