As an Electric Choice customer, understanding your electric bill is important as it shifts the responsibility of your electric costs from your utility to you.
If you were still on utility tariff rates, those rates would be set by the Michigan Public Service Commission, however, as an Electric Choice customer you are now responsible for those rates and should be keenly aware of them.
As an Electric Choice participant, you now get 2 invoices for your electricity, instead of one. You now get a supplier invoice and one from your local utility. The information on these invoices can be confusing, and we will attempt to solve some of that confusion below.
The Three Components of Your Electric Bill
First, let’s start with the basic components that make up your overall electricity costs. These can be broken up into 3 basic parts:
- Supply (the actual electrons and ~ 60% of your overall cost)
- Transmission and Ancillary Services (T&A) (the cost of using the high-voltage system to deliver your electrons to your utility ~ 15% of your cost)
- Distribution (the lower voltage cost of delivering your electrons to your facility ~25% of your cost).
Who Bills You for What
Your third-party supplier will invoice you for Supply and T&A, whereas your local utility will invoice you for Distribution.
How This Knowledge Saves You Money
By simply understanding these components, as an Electric Choice customer, you can affect your overall electric costs by negotiating both your supply and transmission costs (~ 75% of your overall costs). For example, have you considered a variable electric rate vs a 100% fixed rate, or a combination of the 2. This simple change could result in added savings to your organization.
So, understanding your electric bill protects you from the complexities and potential pitfalls of a competitive market. Deregulation often brings an influx of “unbundled” charges, such as competitive transition fees or renewable energy surcharges, which can be confusing without proper scrutiny. In a landscape where market power can sometimes lead to higher markups, staying informed is your best defense. Ultimately, a well-understood bill is not just a monthly expense; it is a strategic document that helps you secure both savings and budget certainty.
Your Electric Choice Bill Checklist
In addition, below is a simple checklist that you should be aware of:
- Supply Rate and structure (fixed, index, hybrid)
- Transmission & Ancillary Rates
- Utility Rate – are you on the correct rate for your usage
- Third-party contract expiration date – Third-party supplier default rates can be punitive
- Taxes and Surcharges
- Usage History (Total kWh)