Understanding Your Utility Bills: Homeowner’s Edition (Part 2)

Note: This post has two parts.  In the first part, I covered the key energy characteristics that go into your utility bills.  In this second part, I’ll show you one of my utility bills and tell you how to find your base energy loads and heating/cooling energy loads.  I’ll also give you some basic tips on how to reduce your home’s energy consumption. 

I’ll also be doing a similar series of posts on reading and interpreting industrial/commercial utility bills.  So if you are a larger energy consumer, check back soon for more information! 

Electricity Charges

OK, so let’s take a look at some of these electricity charges on an example bill.  The pictures below happen to be from one of my utility bills that covers the period from February 16th, 2012 – March 19th, 2012.  In it, you can see that I consumed 514 kWh of electricity at my house.  Since all of the charges are billed based on my consumption (per kWh), and my consumption for that month was 514 kWh, that’s why “514” is the multiplying factor to get all of the actual $ charges that are seen in the right hand column of the picture.  As I mentioned in Part 1 of this post, I am not billed for my electricity demand, so that is why there are no charges being multiplied by a “kW” value.

I’ve done my best to label all of the line items, depending on which type of energy charge they are.  Sometimes, it’s really obvious (ex: anything labeled with “adjustment” is going to be adjusting for something!).  Sometimes the line items are only labeled with a cryptic acronym (<cough> ESRM, anyone?), which needs some additional research to sort out (it stands for Electricity Supply Reconciliation Mechanism, just in case you were wondering).

Under “Electricity Supply”, you can see that it says “Supplier: National Grid”.  If I had chosen to receive my electricity supply from a company other than National Grid (which I can do because I live in New York, which has a deregulated market), it would say “Supplier: X”, and then X would be whatever company I chose to use.

Note: While looking at my sample bills, please keep in mind that your charges and rates will be different depending on where you live and what you utility you use! 

Natural Gas Charges

OK, now here is the natural gas portion of my bill for that same month.   The natural gas supply charges are pretty straight forward—all of the supply is based on a flat rate for all of my natural gas consumption.  There is one adjustment made on the natural gas supply, which I labeled in the picture below.

Similar to the electricity bill sample, under “Gas Supply” you can see that it says “Supplier: National Grid”.  If I had chosen to receive my natural gas supply from a company other than National Grid (which I can do because I live in New York, which has a deregulated market), it would say “Supplier: X”, and then X would be whatever company I chose to use.

Natural gas delivery is usually billed in “blocks”, which means that for the first X units of natural gas you use, you’re charged one rate.  For the next Y units that you use after that, you’re charged another rate and so on and so forth.  Looking at my bill, you can see that the first 3 therms of natural gas that I use are actually included with the “basic service charge”, which is essentially the monthly meter fee.  After those first three therms, the next 47 therms that I use are charged at a supply rate of $0.4189/therm. Any additional natural gas that I use over that is charged at a rate of $0.06385/therm.

These “block” sizes may vary based on the utility that you have, and the specific natural gas rate that you are on.  In fact, it’s possible that your utility doesn’t even do something like this with your delivery charges.  But if you were to use 98 therms of natural gas in one month, but see charges based on a number of therms smaller than that, then chances are this is what is going on.

The natural gas delivery charges also have some adjustments and charges/taxes made to them.  I labeled those as accurately as I could to give you an idea of which type of charge each line item was.

Base Load vs. Heating/Cooling Load

By looking at your electricity and natural gas consumption for a period of several months to a year, you can start to see some of the patterns and trends.  For example, the graph below shows my natural gas consumption for the past 17 months.  As you can see, my natural gas usage drops off significantly when the weather becomes warmer because I shut my furnace off during the summer.  The only appliances that I have that use natural gas are my dryer and my water heater.  This gas consumption from my dryer and water heater is constant year-round regardless of the outside temperature. In the energy industry, this is referred to as the base load.  The remaining gas consumption beyond that base load during the winter months can be attributed to my furnace, and is called the heating load.

Note:  See how my natural gas consumption for the winter of ’11-’12 is a bit lower than the previous winter of ’10-’11?  This is because we had a really mild winter this past year! 

When I graph my electricity consumption, the pattern isn’t as distinct.  This is because the summers in New York tend to be less extreme than the winters so the trend isn’t as obvious.  You can see a slight uptick in my electricity use during the summer, which is probably the result of using ceiling fans and our central AC.  You also see a slight increase in electricity consumption during the winter months, which may be the result of using more lights because it gets darker earlier, or because my furnace fan needs to operate for longer period as a way to distribute warm air throughout the house.   My base electricity load takes up a larger chunk of my total consumption because I have more electric-based appliances (stove, cook top, refrigerator), plus all of the miscellaneous loads that we use such as the TV, computers etc.

Can you see anything out of place in my electricity consumption graph?  What about August 2011?  Yeah, it looked really high to me too.  Then I started thinking about it.  My husband got an electric welder in the summer of 2011, and spent a good chunk of August welding parts on his car to get it ready for a car show in September.  I guess that one appliance really can make a big difference in your utility bills.

Looking at your patterns of energy consumption may indicate where you could focus your energy reduction efforts.  For example, I might want to focus on reducing my electricity base load since that seems to be consistently high throughout the year.  I might also think about things I can do to reduce my heating load during the winter, since that accounts for a good amount of my energy consumption during the winter months.  Alternatively, if you live in a really warm climate, you probably spend a lot more on your utilities during the summer months so you might want to think about ways to help reduce your cooling load.

Reducing Energy Costs

There are quite a few things that you can do to reduce your monthly utility bills.  Some really easy ones that have little to no cost are:

(The direct link to the thermostat calculator is here)

How many of these do you already do?  I’m pretty good about using CFLs and I already use cold water when I do laundry.  But I am guilty of leaving a light on for my puppy all day when I’m at work during the winter.  (I don’t want the little guy to be alone in the dark!)  I will have to get a timer so that it automatically comes on for him instead.

For more tips on how to reduce your energy costs, check out this Energy Savers Booklet that is published by the US Department of Energy.  The US DOE also runs a website called “Energy Savers” that has additional resources for reducing your home’s energy consumption.

About Sara Aaserud

Sara works as a Renewable Energy Engineer in ANTARES’ Fayetteville, NY office. Her favorite types of projects are solar PV feasibility studies and electricity rate tariff analyses. She can be reached at saaserud@antaresgroupinc.com.


  1. So what does it really mean if the ESRM about is -$115.59?? Is this what I am being overcharged, because that it what it really looks like…
    Someone needs to help customers understand what is really happening. These numbers change monthly!! It is like being robbed every month!!

    • Sara Aaserud says:

      Hi Kim!

      I agree that utility bills are extremely confusing! The short answer is that yes, they probably over-charged you, BUT this isn’t done on purpose. Your utility company will make estimates on what they THINK electricity and natural gas prices are going to do for a given month. As you know, no one is perfect, so sometimes the utility is off in their estimations. Sometimes they estimate high, and sometimes they estimate low. The adjustments that you see in your bill to either credit you for their over-estimations (maybe they estimated high and over-charged you), or recoup their under-estimations (maybe they estimated low and need to make up for that). It all balances out in the end, and they aren’t doing it make an extra $$ on you. Does that make sense?

      Good luck!

  2. My bill has been actual not estimated and theESRM is 85.00. How can that be

    Please advise

    • Sara Aaserud says:

      Hi Jenny,

      Without seeing your actual bill, I can’t really say why you got charged $85 for the ESRM. If you call the utility company and ask, then they should be able to explain it to you.

      Good luck!

  3. My national grid will be shut off due to an esrm charge of 77.00 I am recently unemployed and reside with my 65 yr old grandmother we r not eligible for heap and cannot pay a bill of 653$ what is national grid doing

    • Sara Aaserud says:

      Hi Mason,

      Everyone’s natural gas and electric rates went way up this year during January – March due to the cold spell that we had. I bet if you call National Grid they would be able to work out a payment plan with you and explain all of the charges on your utility bills.

      Good luck!

  4. I have a winter block charge 1 and a winter block charge 2 on my electric bill.
    It is for a cabin that is not used very much.
    It is all electric we turn the water heater off, and place the thermostat to 50 so the pipes will not freeze my bill is over $150 and there is no one there????????
    New home very well insulated.

    • Sara Aaserud says:

      Hi Vaunie,

      Without seeing how many kWh your house used, it’s hard to tell what’s going on. If it’s been a cold winter, there’s a good chance that all of the electricity consumption is valid and needed to keep your house at 50F. If you can, it might be worth it have someone stop by and check to make sure that something hasn’t been left running accidentally.

      Good luck!

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