Most business owners glance at the total, pay the bill, and move on. But buried in those line items are clues about where you're overpaying—and opportunities to save hundreds or thousands per year.
The two sides of your bill
Every commercial electric bill has two main sections, whether you're in a deregulated state or not:
Supply Charges
The cost of the electricity commodity itself. In deregulated states, you can shop for this portion.
Typically 40-60% of total bill
Delivery Charges
The cost to transport electricity to your building. Set by your utility, non-negotiable.
Typically 40-60% of total bill
Supply charges explained
This is the "generation" portion—what you're paying for the actual electricity. Here's what you might see:
Energy Charge (¢/kWh)
The per-unit rate for electricity consumed. Multiply by your total kWh usage.
Can you shop this? Yes, in deregulated states.
Capacity Charge ($/kW)
Covers the cost of having generation capacity available. Based on your contribution to regional peak demand.
Can you shop this? Sometimes bundled with supply, sometimes passed through separately.
Transmission Charge (¢/kWh or $/kW)
Moving power across the high-voltage grid from generators to your utility's territory.
Can you shop this? Usually a pass-through, but varies by supplier.
Renewable Energy Charge
Cost of Renewable Energy Certificates (RECs) to meet state mandates.
Can you shop this? Included in supply rates; some suppliers offer different green options.
Watch out: When comparing supplier quotes, make sure you're comparing "all-in" rates. Some quotes exclude capacity or transmission and add them later.
Delivery charges explained
These charges cover the "poles and wires" that bring electricity to your building. They're set by your utility and approved by state regulators.
Distribution Charge (¢/kWh)
Covers local power lines, transformers, and utility infrastructure in your area.
Distribution Demand Charge ($/kW)
Based on your peak demand. Covers the infrastructure capacity needed for your facility.
Customer Charge ($/month)
Flat monthly fee for meter reading, billing, and account maintenance.
Riders and Surcharges
Various regulatory-approved charges: grid modernization, storm recovery, energy efficiency programs, nuclear decommissioning, etc.
Note: You can't shop delivery charges, but you can sometimes change your rate class if your business qualifies for a different schedule. This is worth investigating.
The demand charge: Your bill's wild card
Most commercial bills include demand charges—fees based on your peak power draw, not total energy consumed. This single line item often represents 30-50% of the total bill.
How it works
Your utility records your power usage in 15-minute intervals. The highest 15-minute average in the billing period becomes your "billing demand." If you hit 100 kW for just one 15-minute period, you pay for 100 kW all month—even if you averaged only 40 kW otherwise.
Reading your actual bill: A walkthrough
Here's what to look for when you open your commercial electric bill:
Account summary section
Shows previous balance, payments, current charges, and amount due. This is your "quick glance" section.
Usage summary
Total kWh consumed and peak kW demand. Compare to previous months to spot anomalies.
Supply/generation charges
If you have a competitive supplier, their charges appear here. If not, your utility's "Price to Compare" rate is shown.
Delivery/distribution charges
Your utility's charges for infrastructure and delivery. Look for the demand charge line item here.
Taxes and fees
State and local taxes, regulatory fees, and any applicable assessments.
Rate schedule/tariff code
Usually a code like "GS-2" or "GP-1". This determines your rate structure and pricing tiers.
Where can you save money?
Shop your supply rate
In deregulated states, competitive suppliers often beat utility default rates by 10-25%.
Manage peak demand
Stagger equipment startups, install demand controllers, or shift loads to reduce your peak.
Review your rate class
If your business has changed, you might qualify for a more favorable rate schedule.
Check for billing errors
Estimated reads, meter malfunctions, and rate class mistakes happen. Verify your charges are accurate.
Want us to review your bill?
Send us your commercial electric bill and we'll identify specific savings opportunities for your business.
Get a Free Bill AnalysisFrequently asked questions
Why is my commercial electric bill so complicated?
Commercial bills include more components than residential bills because businesses have higher and more variable energy needs. You're billed for energy usage (kWh), peak demand (kW), delivery infrastructure, and various regulatory charges. Each serves a specific purpose in covering the cost of generating and delivering electricity.
What's the difference between supply and delivery charges?
Supply charges cover the actual electricity commodity - generating the power you use. Delivery charges cover the infrastructure to get that power to you - poles, wires, transformers, and maintenance. In deregulated markets, you can shop for supply but delivery charges are set by your utility.
Which part of my commercial bill can I control?
In deregulated states, you can shop for lower supply rates by choosing a competitive supplier. You can also reduce demand charges through load management strategies. Delivery charges are regulated and fixed, but vary by rate class - sometimes moving to a different rate class saves money.
What are riders and surcharges on my electric bill?
Riders are additional charges approved by your state utility commission to recover specific costs - like renewable energy mandates, grid modernization, or fuel cost adjustments. They appear as separate line items and change periodically based on regulatory proceedings.
How do I know if I'm on the right rate class?
Your rate class is determined by your demand level and usage pattern. If your business has grown or changed operations, you might qualify for a different rate with better pricing. Contact your utility to review your rate class assignment - an audit often reveals savings opportunities.