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How Your Electricity Bill Works

Your electric bill can seem like a jumble of numbers and words. All you know is that you have to pay the dollar amount on the bill by a certain date. But what exactly are you paying for and why? And what is all the information on my bill?

First, a little background on Alberta’s energy market. It is deregulated meaning you can choose the best electricity provider for your needs. It also means there are a lot of providers. For example, a Red Deer resident can choose between at least seven electricity providers.

Each provider includes the same basic information on their bill but each company’s bill format is different.

The Basics

Even though each provider’s bill has a different format, they all include the following information:

the name of your electricity provider and contact information;
your electricity usage (meter readings) in kilo-watt hours (kWh);
days billed (the number of days in this billing cycle, the number of days can vary from bill to bill impacting the amount you pay);
a summary of charges;
the dollar amount due (how much the bill is);
payment due date;
amount of your past payment;
site ID (site identification number), this refers to the address associated with the location of your electricity meter; and
meter number – the number on your meter.

What are you paying for?

Delivery System (Transmission and Delivery) – This covers the costs of delivering the electricity to your home. It is sometimes divided into transmission costs and distribution costs. Transmission costs cover the cost of transmitting the electricity from its source to your local area. Distribution costs cover the cost of transmitting the electricity in your local area. Both costs cover the expense to install, operate, and maintain the infrastructure to get the electricity from where it is generated to your home.

Local Access Fee – your distributor pays a fee to local governments to cover the cost of using local government land for infrastructure (power lines etc.), local government property and land taxes, and the right to distribute electricity to your community. This fee is shared by all customers in your area and is set by each local government.

Balancing Pool Rider – This is also called the Balancing Pool Allocation. The Balancing Pool was created by legislation and, among other things, meets obligations and responsibilities related to Power Purchase Arrangements (PPAs) as set out in the Electric Utilities Act. The balancing pool forecasts if its assets will have a surplus or shortfall, it then shares the surplus or shortfall with consumers as a charge or credit on your bill.

Other Rate Riders – This is a temporary charge or credit on your bill. It‘s an adjustment from your distributor for the differences between expected operational costs and actual operational costs.

Cost of Energy – This is the cost of the electricity you actually consumed. The amount of electricity you used, measured in kilo-watt hours (kWh), is multiplied by the price of the electricity per kWh to determine what you owe.

Other – There is usually an administration fee that covers customer services and billing costs among other things. And in Alberta, you need to pay 5% GST.

Different service providers may include other fees or call them something different. The above covers the basics. If you have further questions about your electricity bill, please contact your provider directly.

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How Your Electricity Bill Works

The Basics

What are you paying for?

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