Reading Utility Bills

An understanding of the components of utility bills is essential to a consumer’s ability to manage expenditures for electricity, heating oil, natural gas, propane, and water. Utility bills must be included in a household budget because companies or municipalities often provide them for a fee. Payment is due either at the time of delivery of the resource or after receipt of an invoice that lists the total units consumed and the rate charged for each unit.

Some utilities, such as water, charge on a quarterly basis. Other utilities, such as electricity, propane, home heating oil, and natural gas, expect payment each month, although they will often allow customers to pay a fixed amount each month that is one-twelfth the estimated average for the year rather than the actual charges for each specific month. Some utilities, such as heating oil and propane, are delivered and paid on an as-needed basis. Once again, knowledge of the units used to calculate the utility bill and the rates charged is vital to consumers and their success in budgeting monthly income.

Brief History

Drinking water once came directly from rivers and lakes. As people began developing agricultural communities and living on farms, water came from wells, heat was generated from wood fires, and candles and lanterns provided lighting. As people migrated from living on farms to living in towns, fundamental changes in the way they lived took place.

Water came at first from pumps in the town center or square. Area residents would pump water into buckets and then carry them carefully home. As towns grew into cities, centralized pumps became obsolete, and companies and municipalities began to deliver the water to buildings and individual homes over a network of pipes. Consumers would pay for the water coming into their home.

Food was once prepared over wood fires in fireplaces. As things grew more modern, wood fires were made in stoves that not only served as cooking surfaces but also as heating units as well. In cities, stoves were fueled by coal that was delivered by a coal vendor. Coal could also be delivered and used in furnaces that would soon be introduced in city homes. Payment was made for the amount of coal delivered. Those living in towns or cities could also have blocks of ice delivered for the iceboxes that would keep food cool, in lieu of the root cellars that were still in use in the country. Customers paid for each delivery of ice.

While changes were taking place in public access to water and the methods used to heat and cool homes and food, changes were also being made in lighting technology. The first lamps used kerosene as fuel. In the cities, streetlights were fueled by natural gas, and before long, lights in homes as well as stoves and ovens were also powered by gas. Gas furnaces ultimately replaced coal or oil furnaces, and consumers were charged for the gas used. Usage was determined by a gas meter attached to the home.

Once electricity became widely available, more appliances and fixtures were invented or improved upon. Customers continued to be charged for the amount of electricity used.

Overview

Although not everyone pays for the water they use, nearly everyone who uses electricity, natural gas, propane, or heating oil receives a bill for those products. Fortunately, most utility bills are straightforward and have several key components in common. The top of the bill generally includes the billing period, which encompasses the dates that designate the beginning and end of the billing period. Account details are also provided. These include the customer’s name, the location of the service, and an account number. Contact information is provided so that the customer can write to or call a customer service representative for billing questions or in case of an emergency. Oftentimes, an emergency or after-hours phone number will also be provided on the bill.

The body of the bill includes a summary of charges, which shows whether there is a previous balance and what that amount is; any payments that have been received since the bill was generated; the charges for the current billing period; and the total amount that is now due. Details of the charges are also included. In the case of an electric or water bill, a specific meter reading will be given. The customer can verify these numbers by checking the meters at the billing location. The total number of days in the billing period will be shown, as well as whether the rates are different due to the season in which the utility is being used. Electric companies, for instance, often have different rates for different seasons.

In the case of an electric bill, the total charges will be the number of kilowatt hours (kWh) that the consumer has used, which is then multiplied by the rate the electric company is charging for that particular billing period. Kilowatt hour is the standard unit for measuring electricity used. Although the rate may be a flat rate per kilowatt hour, many electric companies charge by tier, with one amount being charged for the first tier of kilowatt hours and another amount for the next, and so on.

Oil and propane companies charge by the gallon. Natural gas is charged by the cubic foot. Oil, propane, and natural gas companies only charge for the amount of the resource that was delivered to the consumer during that billing period. Water is measured and charged by the gallon, cubic foot, or cubic meter and is charged by the amount of water used during that billing period. It will show the amount of water carried to the location as well as the amount carried away. Sewage and gray water that leaves the home must be carried through pipes, just as the water coming into the house is covered through pipes.

There may also be additional charges included on the bill. Many of these depend on where the consumer lives, but, in general, these include surcharges for state and/or county programs, service charges, and taxes. Other common additional charges one may see in a utility bill include a delivery charge, a regulatory compliance charge, or any interest owed on past-due amounts. An explanation of these fees and how they are calculated should be included in the bill.

Some utility companies include a graph or a list that shows the consumer’s energy use for the previous twelve months. Others provide a comparison, month by month, of the current year and the previous year. Still others provide a way for the consumer to compare his or her own usage with those of average consumers that the utility company services.

There will likely be a return coupon to mail with your payment. Many utility companies offer the option of paying bills online, over the phone, or in person. This payment coupon will include the due date and often a discount date if the bill is paid in full prior to the due date. If there is no coupon, the due date will be included at the top of the bill.

Bibliography

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