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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.

Your electric bill

Determining your costs:  Electricity is measured in units known as kilowatt-hours (kWh). As with many other products, how much you pay depends on both 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.

Breaking down your bill:  Electric bills are made up of two components: delivery charges and power supply charges. Your power supply charge accounts for approximately one-quarter to one-third of your bill and is the only part of your bill that is affected by your choice of a competitive power supplier.  You can find information about competitive power supply at the link below.

Delivery charges include: distribution, transmission, and transition charges, as well as costs related to the development of renewable energy sources and efficiency programs. Although the rates for delivery service will vary depending on which town you live in, your choice of supplier has no bearing on the costs of delivery. The only way to reduce the delivery portion of your bill is to use less electricity, which in effect, lowers both your delivery charges and your power supply charges. Many distribution companies and suppliers now offer efficiency programs to help you limit your energy use.

Example: Harry pays a total of 10 cents per kWh for electricity. Of that ten cents, delivery charges are 7 cents per kWh and power charges are 3 cents per kWh. On average, Harry uses 500 kWh per month, giving him a monthly bill of $50 (10¢/kWh x 500 kWh = $50). Since the power supply charge is 3 cents, the power supply portion of the monthly bill is $15 (3¢/kWh x 500 kWh = $15). This $15 portion is the only part of the bill that is subject to competition. Harry will pay an average of $35 per month to his distribution company no matter which competitive power supplier he chooses.

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Your natural gas bill

Determining your costs:   Natural gas is measured in units known as therms.  As with many other products, 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.

Breaking down your bill:  Natural gas bills are made up of two components: delivery charges and supply charges.  Your supply charge recovers the costs associated with purchasing and transporting natural gas to Massachusetts. Your supply charge is the only part of your bill that is affected by your choice of a competitive gas supplier.  You can find information about competitive gas supply at the link below.

Your delivery charge recovers the cost of delivering natural gas through the gas company’s distribution system to your home or business. Although the rates for delivery service will vary depending on which town you live in, your choice of gas supplier has no bearing on the costs of delivery. The only way to reduce the delivery portion of your bill is to use less natural, which in effect, lowers both your delivery charges and your gas supply charges. Many distribution companies and suppliers now offer efficiency programs to help you limit your energy use.

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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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