This document explains the components and structures of utility bills for services such as electricity and natural gas, detailing how costs vary based on usage and demand. It covers key factors influencing utility expenses including administrative costs, energy sources, demand charges, and rate structures, including seasonal and tiered pricing. Additionally, it discusses the implications of power factor charges, seasonal variations, and the effect of additional surcharges based on demand and consumption.

1. CHAPTER # 3
UNDERSTANDING
UTILITY BILLS
Presentation by: Syed Muhammad Jari Abbas

2. UTILITY BILLS
• The amount a facility (Residential,
commercial or industrial) is expected to
pay for Electricity, water and/or gas each
month. Utility bills vary according to one’s
usage.
• A utility bill is a document sent to legal
addresses requesting payment for a
service usually electric, water or gas. The
cost of utilities varies based on the utility
company and usage.
• Utility bills are almost always a significant
business expense.

3. UNDERSTANDING UTILITY COST FACTORS
Physical
Plant
One of the major cost category; it calls for the
occasional cost required for the technological
modification of sophistication of the plant.
Transmission
Lines
Substation
The cost associated with the step-down transformation
and safe distribution of electricity to local distribution
center.
The cost of transmission lines to carry the
electricity from where it is produced to the
general area where it is needed..

4. Meters
Meters are the interface between customer and utility.
A utility considers them a separate part and charge their
payment which is included in customer charge.
Administration
Administrative costs include salaries for executives,
management, technical and maintenance staff. Costs associated
with office space, equipment, taxes and insurance.
Distribution
It deals with the cost associated with further step
down transformation and distribution of electricity
across poles, lines, capacitor to distribution boards.

5. Interest on
debt
Utilities commonly sell bonds to generate
capital, and these bonds represent debt that
the company must pay interest on
Profit
Finally the utility must generate enough additional
revenue above costs to provide a reasonable profit to
stockholders also known as rate of return.
Energy
Costs associated with primary energy source that
helps in the generation of electricity. (Fuel, Solar,
Wind, Biomass,Water, Fossil fuels)

6. Demand is a charge based on your maximum
or peak rate of using energy.
Actual demand is the highest average
demand recorded in a demand interval within
the billing period. Billing demand is a part of
actual demand for which a charge applies.
DEMAND CHARGES
Service/Customer charges pays for fixed utility
charge every month which pays up for a
portion of ongoing services (maintenance,
distribution, administrative etc.).
SERVICE CHARGES
It is the cost charge per kWh for electricity
consumption i.e. it is based on the total
number of units consumed over billing period
usually 30 days.
ENERGY CHARGES
Provision under which the demand charge for
each month is based on the highest measured
demand (or its percentage) over the previous
year .
RATCHET CLAUSE
This adjustment corrects for differences between
your utility’s budgeted and actual energy costs.This
allows the utility to adjust for variables. (fuel prices,
supply, availability)
POWER OR FUEL
ADJUSTMENTCHARGES
It is a penalty for low “power factor”. Energy
meters measure the real power where as
useless reactive power is unaccounted.
To cope with that, utility proposed a fix power
factor rate. Less then that, you will be fined.
POWER FACTOR CHARGE
UTILITY STRUCTURE

8. ELECTRIC RATE STRUCTURES
A flat rate, as the name implies, is a single
rate which does not vary. Each kWh costs
the same, regardless of how much
electricity is used or when.
Seasonal rates vary according to the time
of year, typically with one rate for summer
and another for winter. This type of rate
generally reflects seasonal differences in
demand and generating costs.
With tiered or block rates, the cost per kWh varies
according to how much electricity is used in the
billing period. In most commercial and industrial
cases, the cost per kWh decreases with increased
use
Each utility has different rate structures or tariffs for different types of users such as residential,
small commercial, large commercial, industrial, farm, irrigation and outdoor lighting.

9. Time of use rates help utilities to manage
demand for electricity by rewarding off-
peak use with lower rates and penalizing
peak electric use with higher rates. It
requires multiple meters measuring
and demand for various periods
the day.
“Real-time pricing” uses interactive
computer technology to vary rates over
time, based on the utility’s cost of
generation. By monitoring fluctuations in
rates, customers can manage their
electric use to take advantage of low
rates and minimize use when rates are
high

10. Residential Rate Schedules
RATE-SCHEDULES
Low Use Residential
Rate Schedule
Standard Residential
Schedule
It is an attempt to meet
the need of people on
fixed income. Their
monthly consumption
never exceeds 500kWh
and can not exceed
400kWh twice in a year.
This is known as
“Lifeline” rate.
It applies to average
residential customer with
average standard condition.

11. INDUSTRIAL RATE-SCHEDULES
In the industrial rate schedule, some factors are added in their bill.
• Voltage Levels; How much voltage level does customer need.
• Demand Billing; Level of kWh in period of time decides demand billing
• Ratchet Clause; billed demand for any month is a percentage
(usually greater than 50%) of the highest maximum demand of the
previous 11 months or the actual demand, whichever is greater.
• Power Factor; It accounts for the consumption of power as a result of
magnetizing/inductive current that generates reactive powers. If pf
of a company is less than a certain specified value then they will
charge you in its percentage.
• And certain curtailment factors between priority, small/large
industries.

12. Demand Handling
In this, season of use is a factor
in the rate structure.The utility
charge higher at the
consumption during peak
months say during summer and
winter.
SEASONAL RATE
SCHEDULE
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Graphic DesignerTo handle daily peaking
problem, utilizes charge higher
during the peak times on each
day. For this purpose they install
separate relatively sophisticated
meter.
TIME OFTHE DAY
RATE SCHEDULE

13. Industrial Utility Bill Analysis

14. Natural Gas Rates #1
• This monthly charge
pays for fixed utility
costs.
• These fixed costs are
independent of
energy consumption.
• It covers a portion of
the ongoing costs of
service
(maintenance,
distribution,
metering.)
CUSTOMERCHARGE
As with electricity, a flat
rate is a single cost per
Therm or Ccf, regardless
of how much gas is used
or when.
FLAT RATEENERGY AND DEMAND
• Energy refers to the
total amount of
natural gas flowing
through your meter.
• Demand refers to the
greatest amount of
energy used in any
given day.
• The utility should
provide capacity
required energy use at
its greatest amount
and measures that
demand in peak
therms per day.
SEASONAL RATES
• Many gas utilities also
charge different rates in
winter and summer.
• the summer rates will be
lower, as the demand
for natural gas is less
during non-heating
months.

15. NATURAL GAS RATES
• With a firm rate, the
customer is assured
delivery of natural gas
service under all
weather conditions.
• Firm service is ideal for
businesses with
heating loads that
require uninterrupted
service.
FIRM RATES
• A surcharge for
customers with “dual
fuel” systems, which
typically use an electric
heat pump as the primary
heating system, with a
gas furnace as a
supplement.
• Because the customer
uses less gas, and only
during times of peak
demand.
• the gas companies apply
a surcharge to recover
some of the cost of
serving that customer.
Other FactorsTIERRED OR BLOCK RATES
• Gas utilities assign a
different unit cost for
each “block” of
Therms or Ccfs.
• Generally, the unit
cost decreases as
consumption
increases, much like a
“volume discount.”
• However, in areas
where natural gas is in
short supply, the unit
cost may increase to
discourage excessive
use.
Third-Party Supplier
• You purchase gas from a
different supplier.
• A balancing service is
needed because of the
difference between what
your supplier delivers to
the local distributor and
what you actually use
(daily imbalances).
• Gas utilities often label
the combination of
distribution service with
balancing service as
“utility transportation
service.”

16. Natural Gas Units and Conversion

17. 1. Tariff  B3 (14)T
2. Load  1600
3. Power factor  0.96
4. Units Consumed (kWh Reading)
• Off-Peak Hours  266040
• Peak Hours  44260
5. Units Consumed (KVARH Reading)
• Off-Peak Hours  76220
• Peak Hours  14240
6. Charged Load 1040
7. Energy Fixed Charges
• Off-Peak Hours  3084864
• Peak Hours  395200
8. Extra tax fc surcharge  133429
9. Fuel price adjustment fee  -625090.91
10. E-duty TR surcharge
• Off-Peak Hours  26612.61
• Peak Hours  957504.00
11. Current Bill  5546921
12. Arrears/age  -625091
13. PM relief FPA  -930900
14. Payable within due date  4498227
15. L.P. surcharge  417842
16. After due date  4916069