How to read a commercial demand-metered electric bill
Commercial electric bills carry far more than a kWh times a rate. A demand-metered account can have a customer charge, energy charges split by season or time of use, a demand charge, riders and surcharges, power factor adjustments, taxes and fees, and credits. Layouts differ by utility but the logic is the same. This guide takes you through the bill in the order the utility calculates it, so each line can be tested against what the tariff says it should be.
For ap managers, facilities managers and energy analysts · 8 min read
- 1
Find the account header
Record the account number, service address, meter number, rate schedule code and billing period dates. Check that the service address matches the site and that the period length is between 27 and 34 days.
- 2
Check the meter readings
Look at the previous and present readings, the multiplier, and whether each read is actual or estimated. Usage equals the difference between reads times the multiplier. Confirm the multiplier matches the meter and any instrument transformers.
- 3
Read energy usage
Find kWh, and on time-of-use schedules the kWh in each period such as on-peak, mid-peak and off-peak. The periods should add up to total kWh.
- 4
Read demand
Find measured demand in kW, and the billing demand actually charged. They differ when there is a ratchet, a minimum billing demand, a power factor adjustment or a contract demand. If billing demand is higher than measured demand, find the reason on the bill and in the tariff.
- 5
Check power factor lines
If kVAR, kVA or power factor appears, compute power factor as kW divided by kVA and compare to the tariff's reference. See whether a penalty is applied and whether the tariff provides one for this schedule.
- 6
Separate the charge groups
Identify delivery charges, supply or generation charges, and riders. Where the customer buys supply from a third party, the utility bill may show only delivery and a pass-through.
- 7
Test each rider and surcharge
Riders and surcharges are published separately from the base schedule and change on their own dates. Confirm each applies to your schedule and that the rate in effect matches the period.
- 8
Check taxes and exemptions
Identify state and local taxes and franchise fees. If a portion of use qualifies for an exemption, confirm it was applied and that the tax base is correct.
- 9
Recompute the total
Rebuild the bill from the tariff using the billing determinants on the page: customer charge, energy, demand, adjustments, taxes. A difference from the invoice total is a lead to investigate.
Energy and demand are different things
Energy, in kilowatt-hours, is the total electricity used over the period. Demand, in kilowatts, is the highest average rate of use over a short interval, typically 15 minutes. A site that runs a 100 kW load for one hour uses 100 kWh. A site that runs 400 kW for 15 minutes and nothing otherwise uses 100 kWh too, but its demand is 400 kW. Demand charges recover the cost of capacity the utility must have ready for the peak.
Because demand is set by a single interval, it is sensitive to metering errors, restarts after outages and equipment overlap. It is also where many billing errors sit.
Time-of-use and seasonal structure
Many commercial schedules price energy differently by time of day and season. Check that the on-peak window on the bill matches the window in the tariff, including how holidays and weekends are treated. A misapplied window moves usage into a more expensive period.
Seasonal schedules change rates and sometimes ratchet percentages at season boundaries. A bill that straddles a boundary should show the proration.
Find out what your utilities owe you.
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