Understanding Your Commercial Utility Bill (Line-Item Breakdown)

The two halves: supply and delivery

Every commercial bill in a choice state is built around one split. Plug In Illinois puts it plainly for ComEd customers: you pay delivery charges "regardless of whether you purchase your electric supply from ComEd or a Retail Electric Supplier" [il-plugin-comed-bill-breakdown]. Supply is the commodity, delivery is the wires.

Supply is the electricity itself, priced per kWh. On a default-service bill this is the utility's price to compare plus any adjustment; on a competitive contract it is whatever your supplier agreed to, which is why the deregulation page matters. EIA notes that "the cost of generating electricity is the largest component of the price of electricity" for the average customer [eia-electricity-prices-factors], but for a demand-heavy load that ordering can flip.

Delivery is what the utility charges to move power from the transmission system to your meter and to maintain the equipment that does it. It is regulated by your state commission, it is the same whoever supplies the energy, and it is where the per-kW demand charges live. For a cultivation facility, delivery is often the larger half.

Everything else on the bill, transmission, capacity, riders, and taxes, attaches to one of those two halves. The sections below take each line in the order it usually appears.

Delivery lines, one at a time

Customer charge. A flat monthly amount for having an account: meter reading, billing, and a share of the customer-service system. It is set by rate class and does not change with usage. A facility that has landed in a larger class than it needs pays a bigger customer charge for nothing; see utility rate classes.

Metering charge. Some utilities bill the meter separately, and interval or AMI meters can carry a higher charge than a basic meter. If you are paying for an interval meter, use the data; the interval data page explains how.

Distribution facilities charge, or distribution demand. The big one. Priced per kW of your billed demand, which is the highest average draw in any 15- or 30-minute interval of the month, sometimes subject to a ratchet based on prior months. Santee Cooper's explanation is representative: billed demand is the maximum 30-minute interval in the period, and the utility applies a 30 percent ratchet against the highest demand of the prior 11 months [santee-cooper-demand]. NREL's tariff survey found demand can account for 30 to 70 percent of a commercial bill and identified nearly 5 million commercial customers facing demand rates above 15 dollars per kW [nrel-demand-charge-survey]. The demand charges page covers how it is measured and what moves it.

Distribution energy charge. Some tariffs also recover distribution cost per kWh, sometimes called a distribution facilities charge (energy) or an electricity distribution charge. Low per unit, but it scales with a grow's large kWh.

Transmission services charge. The cost of the high-voltage network between generators and the utility's substations. Plug In Illinois describes ComEd's version as designed "to allow the utility to recover costs associated with transmission service" [il-plugin-comed-bill-breakdown]. It is regulated federally through the RTO's tariff and passed through by the utility. In PJM territories, part of it is allocated by your network service peak load contribution, your load at the hour of the zone's single annual peak [pjm-oatt-m2-comed]. In Texas, transmission cost is allocated by your load during the four coincident peaks, the highest 15-minute settlement intervals in each of June, July, August, and September [ercot-dr-overview-2023].

Riders and adjustments. Separately approved surcharges layered on the base tariff. Common ones: energy efficiency program cost recovery, renewable energy adjustments (Illinois' was 0.189 cents per kWh as of June 2019 [il-plugin-comed-bill-breakdown]), storm or infrastructure recovery, franchise cost recovery for the municipality, and rate true-ups. Individually small, collectively a few percent of the bill, and they change more often than the base rates.

Power factor adjustment. If your tariff bills in kVA, or applies a penalty when power factor falls below a threshold, it shows up here. Santee Cooper defines power factor as the relationship between real power in kW and reactive power in kVAR and applies a charge when average power factor drops below 85 percent [santee-cooper-demand]. Grow rooms full of drivers, ballasts, and motors are prime candidates; the power factor page has the fix.

Supply lines

Energy or electricity supply charge. Price per kWh times kWh. On default service, Plug In Illinois describes it as "the price you pay per kilowatt-hour ('kWh') for the electricity you use" [il-plugin-comed-bill-breakdown]. On a competitive contract it is the contracted rate, and whether that rate is fixed, indexed, or a block-and-index structure is the subject of the contract structures page.

Purchased electricity adjustment. A monthly true-up on default supply. For ComEd, it is "the difference between the revenues from the monthly ComEd Price-to-Compare and the actual cost of electricity supplied" [il-plugin-comed-bill-breakdown], and it can be a credit or a charge. Customers on a competitive supplier do not see it.

Capacity. In PJM, NYISO, and ISO-NE, load-serving entities must buy capacity for each customer, and the cost is allocated by the customer's peak load contribution. ComEd's PJM tariff attachment defines the PJM Five Peaks as "the five hours occurring on different calendar days in a summer during which the electric system served by PJM experiences its five highest daily summer demands," with summer running June 1 through September 30, and sets each customer's capacity peak load contribution from the average of their loads in those five hours, applied from the following June through May [pjm-oatt-m2-comed]. On a competitive contract, capacity is either bundled into the fixed rate or shown as a separate pass-through line; on default service it is inside the supply charge. Either way, a grow that peaks on hot summer afternoons pays more of it.

Ancillary services and other pass-throughs. Some suppliers itemize RTO charges: ancillary services, congestion, losses. Small individually, worth checking against the contract's definition of what is fixed.

Taxes and fees

State utility or gross receipts taxes, municipal utility taxes, and franchise fees are applied to some or all of the charges above depending on the state. They are percentages, so anything that lowers the underlying bill lowers them too, and nothing else you do affects them. Do not let a supplier count tax reduction as a saving it produced.

An annotated sample bill

Every number in this table is a made-up sample chosen to show how the pieces relate. The rates are placeholders, not any utility's tariff. Assume a 30-day month, a facility that used 230,000 kWh, and a billed demand of 550 kW.

Line	Sample amount	Half	What drives it	Can a supplier change it?
Customer charge	250.00	Delivery	Rate class	No
Metering charge	45.00	Delivery	Meter type	No
Distribution facilities charge, 550 kW × 12.00	6,600.00	Delivery	Peak interval kW, ratchet	No
Distribution energy charge, 230,000 kWh × 0.008	1,840.00	Delivery	kWh	No
Transmission services, 230,000 kWh × 0.014	3,220.00	Delivery	Network peak load contribution and kWh	No (allocation follows your load)
Energy efficiency rider, 230,000 × 0.003	690.00	Delivery	kWh, program cost	No
Renewable energy adjustment, 230,000 × 0.002	460.00	Delivery	kWh	No
Power factor adjustment	0.00	Delivery	PF above threshold this month	No
Delivery subtotal	13,105.00
Electricity supply charge, 230,000 kWh × 0.075	17,250.00	Supply	Contract or default rate	Yes
Capacity, 520 kW PLC × 8.00	4,160.00	Supply	Five-peak load contribution	Structure yes, allocation no
Purchased electricity adjustment	0.00	Supply	Default service only	Disappears on a contract
Supply subtotal	21,410.00
Taxes and fees at 5 percent	1,725.75	Both	Percent of bill	No
Total	36,240.75

Read across the right-hand column. Of a 36,000 dollar bill, a supplier contract can touch about 21,000 dollars, and within that it can only change the price, not the kWh or the PLC. The 13,000 dollars of delivery moves only if your load shape or rate class changes. That is why the honest answer to "how much can you save us" starts with which half of the bill you are talking about.

Two things stand out on this sample. The distribution demand line at 6,600 dollars is the largest single delivery charge and is set by one 15- or 30-minute interval. And the capacity line depends on five summer hours from the previous year [pjm-oatt-m2-comed], so it is already fixed for the next twelve months no matter what you do this month. Both are load-profile problems, and both are covered on the peak demand page. You can test your own inputs in the demand charge estimator.

How to audit a bill in ten minutes

1. Find the supply and delivery subtotals. If the bill does not separate them, ask the utility for a bill with the breakdown; choice-state utilities are required to provide one.
2. Find the billed demand in kW and compare it with the measured demand. If they differ, you are on a ratchet, and the tariff will say the percentage.
3. Check the rate class printed on the bill against the classes in the tariff. A facility below the class threshold may be able to move.
4. Look for kVA, power factor, or reactive charges. If present, get a power factor reading from your electrician.
5. List every rider and its rate. Compare with last year's bill; riders drift.
6. On a supplier contract, match every supply line to the contract's definition of what is fixed and what passes through. Capacity and transmission are the usual surprises; the contract terms page lists the clauses.
7. Confirm the taxes are applied to the right base. Errors are rare but not unheard of.

Keep twelve months of bills in one folder. Most of what a broker or auditor does in the first hour is exactly this list, and the glossary has the definitions for anything on the bill this page did not name.