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Understanding your utility bill

Here is some helpful information on how to read and understand your electric or gas bill. You can also find information on your billing options and calculating your costs.

Table of Contents

1. Determining your electric costs

Electricity is measured in units known as kilowatt-hours (kWh). How much you pay depends on the price of the electricity and the amount that you consume. Your monthly electric bill is calculated by multiplying the cost of a kWh by the number of kWh used. While the average residential customer uses approximately 500 kWh per month, your use may be higher or lower depending on the number and type of appliances that you use in your home. You can determine your average monthly usage by looking over your past electric bills.

2. Breaking down your electric bill

Supply charges

The first component of your bill is supply charges.  Your power supply charge is between one-quarter to half of your bill.  There are two types of entities that can provide your electric supply service:

  1. the investor owned electric company that provides delivery services in your area (Eversource, National Grid, or Unitil), and
  2. competitive suppliers. 

More information on historic and current supply charges that the investor owned electric companies charge are available on the basic service page.  Some current competitive supplier rates that competitive suppliers charge are available on Energy Switch MA.

Delivery charges

The second component of your bill are delivery charges.  Delivery charges include:

  1. transmission charges

  2. distribution, operations and service charges, and

  3. public policy charges

The transmission charges help pay to build, maintain, and operate the transmission system. The transmission system brings electricity from power generators to the local distribution system. The Federal Energy Regulatory Commission (FERC) regulates the transmission system.

The distribution, operations, and service charges include the costs to:

  • deliver power to your home,

  • pay employees that maintain poles and wires,

  • provide customer service, and

  • make the electric grid more reliable.

The public policy charges are mandated by state and federal governments. Some of the line items on your bill that fall into this category are:

  • energy efficiency,

  • renewal energy, and

  • distributed solar charge.

Delivery service rates will vary depending on which town you live in. The only way to reduce the delivery part of your bill is to use less electricity. Using less electricity will lower both your delivery charges and your supply charges.

Example of how you are charged

Harry pays a total of 10 cents per kWh for electricity:

  • delivery charges - 7 cents per kWh

  • supply charges - 3 cents per kWh

The company tracks Harry's usage, which is about 500 kWh per month. Harry's monthly bill ends up being $50 (10 cents per kWh x 500 kWh = $50). Since the supply charge is 3 cents, the supply part of the monthly bill is $15 (3 cents per kWh x 500 kWh = $15). This $15 is the only part of the bill that is subject to competition. Harry will pay an average of $35 ($50 - $15 = $35) per month to his distribution company for delivery no matter which entity provides his supply.

3. Determining your gas costs

Natural gas is measured in units known as therms.  How much you pay depends on both the price of the natural gas and the amount that you consume. Your monthly gas bill is calculated by multiplying the cost of a therm by the number of therms used. While the average residential non-heating customer uses approximately 20-30 therms per month and the average residential heating customer uses approximately 100-125 therms during the heating season, your use may be higher or lower depending on the number and types of appliances that you use in your home. You can determine your average monthly usage by looking over your past natural gas bills.

4. Breaking down your gas bill

Supply charges

The first component of your bill are supply charges.  Your supply charge recovers the costs associated with purchasing and transporting natural gas to Massachusetts. There are two types of entities that can provide your gas supply service:

  1. the investor owned gas company that provides delivery services, and
  2. gas suppliers. 

Current rates for the investor owned gas companies are available here

Delivery charges

The second component of your bill are delivery charges.  Your delivery charge recovers the cost of delivering natural gas through the gas company’s distribution system to your home or business. The rates for delivery service will vary depending on which town you live in.  The entity that provides your supply service does not affect your delivery charges. The only way to reduce the delivery part of your bill is to use less natural gas.  Using less natural gas will lower both your delivery charges and your gas supply charges. 

5. Billing and Rates

The rates charged for electricity and natural gas vary among the different distribution companies.  See the links below for specific rate information.

If you select a competitive supplier, you will be paying both your distribution company (for the delivery charge) and the competitive supplier (for the supply charge).  Depending on the competitive supplier, you may receive one bill (combined billing) or two separate bills. In general, smaller consumers (residential and small commercial) will receive one bill from the distribution company.  The distribution company will then transmit generation charges to the chosen competitive supplier.

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