How to Read Your Electricity Bill: 2026 Expert Guide

Whether you’re a first-time payer of electricity, just bought a home and need to budget, or simply just want to know what you’re paying for, reading an electricity bill is a fundamental tool that is important to have.

Understanding your monthly electric bill helps you take control of your energy use, avoid surprises, and find opportunities to save. This is increasingly important with the rise of complex rate plans and the addition of solar credits, which can make a bill look vastly different than in years past.

Once you know what each charge means, it’s easier to spot high usage patterns and make smarter energy choices.

For starters, here is common terminology you may find on an electricity bill:

Term	Definition
Kilowatt-hours (kWh)	A unit of energy, specifically electrical energy, used to measure how much energy your home consumes over a period of time.
Delivery	Refers to the cost of getting electricity from the power plant to your home or business
Supply	Refers to the cost of electricity your home consumes, measured in kilowatt-hours (kWh)
Meter reading	The measurement of how much electricity you’ve used during a billing period, based on your electric meter, which tracks the total amount your home uses in kWh.
Account number	A unique identifier assigned to your utility company to help keep track of your billing information, usage history, and service address
Amount due	The total amount of money you owe your utility company for electric service used during the billing cycle, typically followed by a due date

What are utility bills?

Utility bills are regular statements you receive from service providers that charge you for essential household services, such as electricity, water, natural gas, internet, and sometimes trash or sewage. 

These bills reflect how much of each service you’ve used during a specific period (usually monthly) and include both usage-based charges and fixed fees for maintenance for service maintenance and infrastructure. 

What are the different types of electric rate plans?

First and foremost, it's important to understand what the difference is between electric rate plans, so you can understand how you’re being billed. The three main types of electric plans offered by electric utilities are:

• Fixed-rate plans

• Variable rate plans

• Time-of-use (TOU) plans

Fixed-rate plans

Also known as flat-rate plans, a fixed-rate electricity plan entails that you will be charged the same price per kWh no matter the day, time, or season, for the term of your contract (e.g., 12 or 24 months). Rates can be subject to change year-over-year if market conditions force utilities to raise prices.

Variable rate plans

These plans charge customers rates that are subject to change based on how much it costs your electric utility company to provide power that month. Variable plans come in a few forms:

• Market-based: The price per kWh fluctuates monthly or daily based on the wholesale cost of electricity. This is common in deregulated markets

• Tiered or block rates: The price per kWh increases (or decreases) once your energy consumption exceeds a certain predefined threshold. This is common in regulated markets.

Time-of-use (TOU) plans

On a time-of-use (TOU) plan, your electricity company charges you a different rate based on the time of day, which is split into off-peak and on-peak hours. Additionally, these are split into summer rates and winter rates. Electric rates are higher when demand is highest during peak hours and lowest during off-peak hours. This system is designed to incentivize customers to shift energy use away from high-demand hours to help reduce strain on the power grid.

For example, your electricity provider might charge $0.10 per kWh during summer off-peak hours, but $0.19 per kWh during summer on-peak hours. 

What am I being charged for on my electricity bill?

When you are billed for electricity, you are paying for more than just the electricity supply your home consumes. The common charges you might see on your monthly bill are:

• Supply and generation charges

• Delivery charges

• Customer charges

• Net metering credits (for solar customers)

What are supply and generation charges?

These energy charges are for the cost of generating the amount of electricity supplied to you, calculated based on your monthly kWh usage – so the more electricity you consume, the higher this portion of the bill will be. Supply charges typically cover electricity usage, fuel costs, and power plant operation.

What are delivery charges?

These charges are the added cost of getting the electricity to your home by traveling via the grid, power lines, substations, transformers, and the power plant itself. Delivery costs are sometimes also referred to as Transmission and Distribution (TDU/TDSP) charges.

What is a customer charge?

Also known as a service charge, customer charges are a fixed monthly charge that covers the cost of necessary administrative services, like billing and meter readings, and general account management, regardless of how much electricity you use.

Net metering credits (for solar customers)

Net metering is a billing mechanism that allows customers who generate their own electricity from solar panels to receive bill credits for any surplus power they send back to the utility grid. These credits can then be used to offset the electricity you draw from the grid at night or when solar production is low, which reduces your total energy bill.

What other fees might I see on my electric bill?

Depending on where you live and the regulations put in place by your local public utility commission (PUC), these are other charges you might notice on your bill:

What is the average electricity bill?

As of late 2025, the average monthly residential electric bill in the U.S. is around $169.80, with a national average residential rate of about $0.18 per kWh (as of September 2025 data).

That said, your actual bill can vary significantly depending on where you live, and how much electricity your household uses. For example, residents in Hawaii pay some of the highest rates in the country – around $0.40 per kWh – while those in North Dakota enjoy much lower rates, averaging about $0.10 per kWh.

Other factors that affect your electricity bill include:

• Fuel costs

• Your electric rate plan

• Weather conditions

• Policy changes

• Power plant and infrastructure costs

How can I lower my electricity bill?

There are many simple lifestyle changes and upgrades you can make to lower your energy bills. One of the most effective options is installing solar panels – which can greatly reduce or even eliminate your monthly energy costs, aside from unavoidable utility fees. 

Invest in energy efficient appliances

Swap out energy-hogging appliances in your home for energy efficient upgrades that help cut down on the amount of energy your home uses. Simple changes – like installing a smart thermostat, switching to LED lightbulbs, and choosing ENERGY STAR-rated dishwashers, washers, and dryers, can make a big difference in both your energy consumption and monthly bills.

Best of all, lots of utilities offer rebates for installing energy efficient appliances, so you can save money on installing these home energy upgrades.

Use time-of-use rate plans to your advantage

If you are on a time-of-use plan, or have the option to switch to one – you can use this to your advantage by creating an energy-use schedule for yourself.

For example, shift all of your most energy-consuming home tasks to times where electricity is the cheapest, which is typically at night. Once you have a solid routine, you can save tons on your monthly bill. 

Unplug electronics whenever possible

Many devices continue to draw small amounts of electricity even when they’re turned off– which is known as “phantom” power. To avoid paying for energy you’re not actually using, try to unplug devices when they’re not in use or use a smart power strip to cut off power automatically.

Perform a home energy audit

You can hire a professional and complete an energy audit to identify problem areas of your home that are leading to high electric bills. They can point out air leaks, identify places where you could replace your insulation, and make recommendations. This way, you can make a more informed decision about how to lower your energy usage and bills.