Supply vs delivery charges: how to read your electric bill

Electric bills are full of lines with names like "generation," "transmission," "distribution" and "customer charge." It is easy to feel lost. The good news is that almost every line fits into one of two groups. Once you know the two groups, the bill makes a lot more sense.

What are the two main parts of an electric bill?

1. Supply. This is the electricity itself. You may also see it called generation.
2. Delivery. This is the cost of getting the electricity to your home. You may also see it called distribution.

Then there are a few extras, like a monthly customer charge and taxes. I'll cover those too.

Here is the key point: if you switch to a new electric company, only the supply part changes. The delivery part stays with your local utility, the company that owns the wires. The Ohio Consumers' Counsel (OCC), Ohio's consumer advocate, says delivery costs are paid to the utility "separate on their bills from their electricity supply costs."

What is the supply (generation) charge?

This pays for making the electricity you use. The OCC defines generation as "a kilowatt-hour based volumetric charge to produce electricity." In plain words, you pay a price for each unit you use.

That unit is the kilowatt-hour, or kWh. Your bill shows how many kWh you used this month. The more you use, the bigger this charge.

This is the part you can shop for. If you never picked a supplier, your utility charges you its standard price for it. In Ohio and Pennsylvania, that price is called the Price to Compare. Illinois uses the same name, even though the bill may not print it.

How big is it? The OCC says generation "typically makes up about half your bill" in Ohio. Pennsylvania's utility board says it can be about half of the bill or more.

What is the transmission charge?

Transmission is moving electricity over the big high-voltage lines, from power plants to your local utility's wires. The OCC describes it as moving "high-voltage electricity from power plants to the electric utility's distribution lines."

These big lines are overseen by a federal agency, not the state. The OCC says transmission lines "are owned by utilities but regulated at the federal level by the Federal Energy Regulatory Commission."

Where transmission shows up depends on your state:

• Ohio: the OCC says the Price to Compare is "the electric utility's price for generation and some related transmission charges."
• Pennsylvania: if you use a supplier, PA Power Switch (opens a new tab) says transmission "is rolled into generation." So the supplier's price covers both.
• Illinois: Plug In Illinois (opens a new tab) figures the Price to Compare as the supply charge plus the transmission charge. On a ComEd or Ameren bill, both sit in the supply section.

What is the distribution (delivery) charge?

This pays for the local wires, poles, meters and other equipment that bring power from the big lines to your home. The OCC defines it as the charge "for delivering electricity to your home, including the use of local wires and other equipment."

This part always goes to your utility, like Ohio Edison, PECO or ComEd. It doesn't matter who sells you the electricity. Your state's utility board oversees these prices.

The OCC says that in Ohio, delivery costs (transmission and distribution together) "typically account for about half your bill."

What is the customer charge?

The customer charge is a set amount you pay every month, even if you use very little power. The OCC calls it "a monthly fixed fee established to pay for the costs associated with equipment, maintenance, and grid connection." PA Power Switch says it covers costs for "billing, meter reading, equipment, maintenance."

It is part of delivery. Switching to a new supplier does not change it.

Don't mix it up with a supplier's monthly fee. Some suppliers add their own monthly fee on top of their price per kWh. That one you can avoid by picking an offer without it.

What about taxes and the other small lines?

Most bills also have taxes and a few small charges or credits. Utilities sometimes call these "riders" or "adjustments." The OCC notes that "some electric utilities could list other company-specific charges or credits."

A few examples you might see:

• Pennsylvania: a State Tax Adjustment Surcharge, which PA Power Switch describes as "a charge, or a credit" to reflect changes in state taxes.
• Illinois (ComEd): a Taxes & Fees section, plus a Purchased Electricity Adjustment in the supply section that moves a little each month. Plug In Illinois says that adjustment goes away if you switch to a supplier.

If a line puzzles you, call the customer service number on your bill and ask what it is for.

Where does a supplier's name show up?

If you buy from a supplier, you usually still get one bill from your utility. The supplier's charges take the place of the utility's supply charges.

• Ohio: the OCC says most people who switch "will see the marketer's charges separately identified on their monthly utility bill." (A marketer is another word for a supplier.)
• Illinois: Plug In Illinois says almost all suppliers put their charges on the ComEd or Ameren bill, and some send their own bill.
• Pennsylvania: look for a supply or generation section with the supplier's name in it.

Look in the supply section for a company name that isn't your utility. If you see one, you have a supplier. My guide Do I have an electric supplier? shows how to tell for sure.

What can switching change, and what can't it?

Switching can change:

• your price per kWh for supply,
• whether that price is fixed or can change,
• any supplier monthly fee or fee to cancel early.

Switching can't change:

• delivery (distribution) charges,
• the customer charge,
• most taxes and utility riders,
• who fixes outages and reads your meter. That is still your utility.

So even a great supplier price only lowers part of your bill. If your supply cost is about half your bill, a 10% lower supply price saves you about 5% on the whole bill. That is why I always show savings in dollars, not just cents per kWh.

Why are my delivery charges higher than my supply charges?

It happens. Delivery prices are set by the utility board and can rise after a rate case, which is when a utility asks to raise its prices. Supply prices move with the power market. In some months one part is bigger, and in some months the other is. A supplier can't lower your delivery charges, so be wary of anyone who promises to cut your "whole bill."

State tips

• Ohio: see what the Price to Compare means on an Ohio bill, including where each utility prints it.
• Pennsylvania: see the Pennsylvania Price to Compare.
• Illinois: see the ComEd and Ameren Price to Compare.

Who to call

• Ohio: PUCO at 1-800-686-7826, or the Ohio Consumers' Counsel at 1-877-742-5622.
• Pennsylvania: the PA PUC at 1-800-692-7380, or the Office of Consumer Advocate at 1-800-684-6560.
• Illinois: the Illinois Commerce Commission at 1-800-524-0795, or the Citizens Utility Board at 1-800-669-5556.

What to do next

• Let me read your bill for you. Try the free check. Send me a photo of your bill. I'll find your supply price, set the delivery part aside, and tell you in dollars whether any offer would save you money.
• See prices for your area: Ohio, Pennsylvania or Illinois.
• More plain answers: the Help page.