Understanding your utility bill

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

Table of Contents

1. Your electric bill

Determining your electric costs

Electricity is measured in units known as kilowatt-hours (kWh). Your monthly electric costs are based on the price of the electricity and the amount that you consume in that month. Your monthly electric bill is calculated by multiplying the cost of a kWh by the number of kWh used plus a monthly customer charge that is a fixed charge.

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 reviewing your past electric bills.

Breaking down your electric bill

Your electric bill has 2 components: supply charges and delivery charges.

Supply charges

Supply charges are the actual electricity you used for that month.  There are 2 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), or
  2. a competitive supplier. 

More information on past and present supply charges from the investor-owned electric companies are available on the basic service page.  

Information on competitive supplier rates are available on Energy Switch MA.

Delivery charges

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

  1. transmission charges
  2. transition charges
  3. distribution charges
  4. public policy charges
Transmission charges

The Federal Energy Regulatory Commission (FERC) regulates transmission charges.  Transmission charges are used to build, maintain, and operate the transmission system, often referred to as the electric grid. The transmission system brings electricity from power generators to the local distribution system. 

Transition charges

This charge recovers the company’s stranded investments such as generating plants and power contracts for ending its wholesale arrangements as a result of it exiting the generation business, pursuant to the 1997 Restructuring Act.  Unitil does not have a transition charge.

Distribution charges

These charges include the costs to:

  1. deliver power to your home,
  2. maintain a safe and reliable distribution system,
  3. pay employees that maintain poles and wires,
  4. provide customer service, and
  5. provide metering and billing services.

Your electric company bills these charges through a fixed per month charge (or customer charge) and a per kWh energy rate (distribution charge).  The Department of Public Utilities (DPU) sets the customer charge and base distribution rate charge through rates cases for the electric company. These rates may change annually for a performance-based regulation adjustment.

Below are some common components that may be included in your per kWh distribution charge in addition to the base distribution rate charge.  Note that electric companies in Massachusetts do not list these components as individual line items on the bill, and not every component listed below may be charged by your electric company:

  1. Advanced metering infrastructure (AMI) factor: This charge recovers the costs of legacy meter and enterprise information technology, and costs associated with the implementation and deployment of AMI approved by the DPU in D.P.U. 21-80-B/21-81-B/21-82-B.
  2. Attorney general consultant expense factor: This charge recovers expenses associated with consultants or experts retained by the Attorney General.  These experts assist with cases before the DPU.  General Laws Chapter 12, § 11E(b).
  3. Basic service adjustment factor: This charge is used to credit or charge any over or under recovery of the costs incurred from competitive suppliers that provide basic service.
  4. Capital cost adjustment factor:  This charge recovers cost associated with utility plant additions recorded by the company, subject to an annual cap, since its last base distribution rate case.   
  5. Grid modernization factor: This charge recovers incremental costs associated with the electric company’s grid modernization plan approved by the DPU.
  6. Pension/post-retirement benefits other than pensions (PBOP) adjustment factor: This charge recovers costs associated with the pension and PBOP.  This charge is adjusted annually to recover pension and PBOP costs.  This charge reconciles these expense amounts with the revenues billed in the prior period.
  7. Residential assistance adjustment factor: This charge recovers:
    1. the revenue discount given to residential assistance customers enrolled in the electric company’s discounted rate (rate R-2),
    2. incremental costs directly related to the electric company’s approved arrearage management program, and
    3. includes any payments, for hardship protected accounts, made by customers towards the amortized balance.
  8. Revenue decoupling charge: This charge reconciles an electric company’s actual distribution revenue with the approved distribution target revenue, to remove a disincentive to implement energy efficiency and demand reduction programs that encourage customers to lower energy usage and demand.
  9. Storm fund replenishment factor and exogenous storm fund factor: These charges allow the electric company to adjust its storm reserve fund.  The storm reserve fund is used for restoration expenses caused by extraordinary storm events.  The electric company may use this charge for storm costs that are exceed the amount of storm reserve funding amortized in base distribution rates.
  10. Tax act credit factor: This is a credit to customers of a tax benefit resulting from the Tax Cuts and Jobs Act of 2017.  
  11. Vegetation management factor: This charge applies to Eversource East customers only.  This charge recovers incremental expenses associated with the electric company’s vegetation management.  Vegetation management includes removing unwanted plant growth from areas surrounding the electric companies’ wires and infrastructure. This removal helps reduce damage caused by extraordinary storms. 
Other delivery charges

Other delivery charges fund programs specifically designed to further policy objectives of the Commonwealth and are typically enacted in state law.  The calculation of these charges may be found in the electric company’s tariff, which is a DPU-approved contract between the customer and the company. These charges apply to all customers because they help the state meet our policy goals established through legislation.  Some of the line items on your bill that fall into this category may include:

  1. Distributed solar charge: This charge recovers the costs associated with the Solar Massachusetts Renewable Target Program. The goal of this state-wide program is to create a long-term sustainable solar incentive program that promotes cost-effective solar development in the Commonwealth. St. 2016, c. 75, § 11(b)(xi).
  2. Energy efficiency reconciliation charge and system benefits charge: These charges collectively called the energy efficiency charge (EEC) or energy efficiency surcharge (EES) fund electric energy efficiency programs (initially established through the Green Communities Act in 2008 and approved every 3 years by the DPU in the three-year energy efficiency plans, which are primarily funded by electric ratepayers through charges on their electric bills.  These charges include:  

    1. a fully reconciling charge called an “Energy Efficiency Reconciling Factor” (EERF); and
    2. a legislatively-mandated system benefits charge (SBC) of $0.00025 per kWh.  G.L. c. 25, §§ 19, 21.

    Electric companies may combine the SBC and the EERF on the bill for presentation under one “Energy Efficiency Charge.”  For ratemaking purposes, however, the SBC and EERF remain separate charges.

    For electric energy efficiency programs, there are additional sources of energy efficiency funding including : (1) funds from the Forward Capacity Market (FCM) as determined by the Department of Energy Resources (DOER); (2) funds from the Regional Greenhouse Gas Initiative (RGGI) as determined by DOER; and other outside funding.  Electric program administrators must seek outside funding (e.g., federal grants) where available.

  3. Electric vehicle charge:  This charge supports transportation electrification and recovers the cost of the company's electric vehicle program (EV), which includes rebates for the installation of EV charging infrastructure and for off-peak EV charging. St. 2016, c. 448; St. 2020, c. 383; St. 2022, c. 179.
  4. Long-term renewable contract adjustment: This charge recovers costs associated with long-term renewable contracts entered into to satisfy the requirements of the Green Communities Act.  St. 2008, c. 169, § 83, § 83A §  83C, section § 83D.
  5. Net metering recovery surcharge (NMRS): This charge recovers net metering credits applied to customers with excess generation from on-site generation facilities and the distribution revenue displaced by such generation. St. 2008, c. 169, § 78; G.L. c. 164 § 139(c).  In D.P.U. 21-100-A, the DPU directed the electric distribution companies to remove the NMRS from the distribution charge and to implement a new line item for assessing the NMRS on customer’s bills. 
  6. Renewable energy charge: is a legislatively-mandated charge of $0.00005 per kWh which funds the Massachusetts Clean Energy Center's work to support development and deployment of clean energy technologies in Massachusetts.  The charge was implemented by the Restructuring Act, St. 1997, c. 164 and provides funding to the Massachusetts Renewable Energy Trust Fund.  For more information, visit MassCEC Financial Information.
  7. Solar cost adjustment factor:  This charge recovers costs associated with the investment and ongoing maintenance costs of solar generation facilities, constructed, owned, and operated by the electric companiesG.L. c. 164, §1A(f) and G.L. c. 164, §1A(g).

Example of how you are charged and how you can lower your bill

Harry pays a total of 31 cents per kWh for electricity:

  • delivery charges - 16 cents per kWh
  • supply charges - 15 cents per kWh

The electricity company tracks Harry's usage, which is about 600 kWh per month. Harry's monthly bill ends up being $196 (31 cents per kWh x 600 kWh = $186 + $10 customer charge). Since the supply charge is 15 cents, the supply part of the monthly bill is $90 (15 cents per kWh x 600 kWh = $90).

The supply portion of the monthly bill ($90) is part of the competitive supply market. Harry can search for the supplier that offers the lowest price and best meets his needs and preferences at DPU’s competitive supply website, Energy Switch.

The delivery portion of the monthly bill is $106 ($196 minus $90 from the supply charge) and goes to the electricity company that distributes electric power, regardless of the supplier.  The delivery charges help support the local electric companies to build and maintain the poles, wires, substations and other infrastructure that provide reliable electric service for customers.  To reduce the delivery charges, Harry can look for opportunities to conserve energy.  For more information about incentives and how to lower your bill, visit the Help paying your utility bill webpage.

Note that delivery service rates vary depending on the local electric company, which depends on the town or city in which you live.  For more information, see DPU’s website to find your electric distribution company

2. Your gas bill

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 plus a monthly customer charge (fixed charge). 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 in your home. You can determine your average monthly usage by looking over your past gas bills.

Breaking down your gas bill

Your gas bill has 2 components: supply charges and delivery charges.

Supply charges

Your supply charge recovers the costs associated with purchasing and transporting natural gas to Massachusetts. There are 2 entities that can provide your gas supply service:

  1. the investor-owned gas company that provides delivery services in your area (Berkshire Gas, Eversource, Liberty Utilities, National Grid, or Unitil), or
  2. a competitive gas supplier. 

View current rates for the investor-owned gas companies.  

Delivery charges

The other component of your bill is the delivery charge.  Your delivery charge recovers the cost of delivering natural gas through the gas company’s distribution system to your home or business.  The local gas companies maintain the pipeline network and other infrastructure to provide reliable gas service.  Reducing your gas consumption will reduce the delivery and gas supply charges on your bill.  For more information about incentives and how to lower your bill, visit the Help paying your utility bill webpage. 

3. Billing and rates

The rates charged for electricity and natural gas vary among the different distribution companies.  Please see the links under "Related" to the right of the webpage for specific rate information.  The DPU reviews all rates proposed by the distribution companies, whether in base distribution rate proceedings or other proceedings.  The DPU licenses competitive suppliers but does not oversee or regulate how they set their supply product prices.

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 2 separate bills. In general, smaller consumers (residential and small commercial) will receive 1 bill from the distribution company with both supply and delivery charges.  

4. Resources

If you are having trouble paying your utility bill, visit the help paying your utility bill webpage.

If you need help resolving a problem with your electric or gas company, the DPU's Consumer Division can assist.  The Consumer Division’s automated telephone system allows consumers to opt for Spanish language recordings and/or Spanish-speaking staff.  Spanish, Cape Verdean Creole, Haitian Creole, and Portuguese speaking staff are also available to answer the toll-free line.

You can reach the Consumer Division via email at: DPUConsumer.Complaints@mass.gov or by phone at (617) 737-2836 or (877) 886-5066 (toll free)

Last updated: December 6, 2024

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