What are Utility Bills? [Comprehensive Guide]

Utility bills provide a lot of information right, from basic ones like the customer’s (business) name, address, and account number to advanced ones like the utility service used for the particular billing period and the detailed breakdown of charges for the service. 

They are simple statements that are easy to read, understand, and interpret data to make necessary decisions. But in reality, utility bills are quite complex. Mainly, when businesses focus on reducing costs and saving money, it can be challenging to understand why they're being charged higher than usual. 

In this blog, we've compiled essential information to help you understand different types of utility bills, their components, and tips to reduce costs on utility bills.

Utility bill definition

A utility bill is a statement that shows the amount a household/ business owes for essential utility services. Utilities include electricity, gas, water, internet, cable, waste management, and sewage. 

Utility bill processing gives information about the customer's name, address, account number, service name, meter readings based on the service, and the amount charged in a structured format.

Types of Utility Bills

Let’s look at the five common types of utility bills.

a. Electricity bills

Components of an electric bill

There are four main components in an electricity bill.

• Customer charge - Meter reading, billing, maintenance, and advanced metering charges. 
• Generation charge - This is charged for generating and producing electricity and varies depending on your chosen provider. 
• Transmission charge - Charges for the transportation of high voltage electricity from the generation place to the transmission lines of the electrical company. 
• Distribution charge - Distribution charges are for distributing electricity from the transmission lines to your home/business. This is charged for the poles, local wires, transformers, and substations used in delivering the electricity.

Understanding kWh

Electrical meters measure the consumption of electrical energy in kilowatt hours or kWh. A kilowatt hour equals the amount of energy used by a 1000-watt appliance running for an hour. 

b. Water bills 

Components of a water bill 

A water bill comprises three main components. 

• Service charge: A fixed fee for the utility charges to cover meter readings, billing, and maintenance of water storage and purchases.
• Delivery charge: This is for acquiring, storing, and delivering water from river basins to your business. 
• Water usage charge: Variable costs for the water you use in a billing period. This charge depends on the cost of local and imported water. 

Measuring water consumption 

Water meters measure the consumption of water in cubic feet. This is then converted to gallons by multiplying cubic feet by 74.8. 

For example, 100 cubic feet = 100×74.8 = 748 gallons. 

Conservation tips

a. Check for water leaks 

Ensure no water leaks to avoid wasting a significant amount of water every day. If you notice water pooling in the sink or toilet seat, fix the leak by contacting a plumber immediately. 

b. Turn it off

Turn off your faucets when not in use. For example, while brushing your teeth and shampooing your hair, don't waste water by keeping your faucets on. Be mindful and turn off the faucet whenever possible. 

c. Save rainwater

Try to collect rainwater in a barrel and use this to water your plants and lawns. This reduces the amount of tap water being used. 

d. Reuse water

Water used to wash and boil veggies can be reused to water the plants and gardens. 

e. Cover the pool

Cover the pool to prevent water from getting evaporated by the sun, especially during the summer seasons. 

f. Use dishwasher

Using a dishwasher saves more water than washing utensils by hand. Also, clean large pieces of food before loading in the dishwasher.  

c. Gas bills

Components of a gas bill

There are three main components in a gas bill. 

• Customer charge: A fixed fee is charged for maintaining and repairing the customer lines, meter readings, and billing of the gas service. 
• Delivery charge: The utility charges this amount for delivering the gas to your house/business.  
• Gas charge: This charge for the gas you use during the billing period varies depending on the amount of gas and the cost of gas. Apart from these, taxes, supply, and storage charges are added to the bill. 

Understanding Therms or Cubic Feet

Gas is billed to customers in Therms. However, utility meters can't read therms, so the gas volume is first measured in Centum Cubic Feet (CCF). This CCF is then converted to therms for billing. 100 CCF is approximately equal to 1 Therm energy. 

Energy efficiency practices

a. Lower down the thermostat

Try lowering the thermostat by each degree and get adjusted to it. This is one of the most obvious ways to lower your gas bill. According to the Department of Energy, save as much as 3% on your gas bills for each degree you're lowering the thermostat. 

b. Dress up accordingly

Stay warm by wearing a sweater and use socks to cover your feet. Try to cover using more blankets at night to feel the warmth. 

c. Invest in a smart thermostat

Investing in a smart thermostat allows you to turn it down from anywhere using Wi-Fi. Adjust the thermostat according to your needs, even when you're away from your home or business place. 

d. Close the windows and doors

Avoid cold air seeping into the room by closing the windows and doors promptly. 

d. Internet and cable bills

Breakdown of internet and cable charges

• Service package: This is charged for the internet plan you choose for the month. Depending on the internet service provider and the internet speed, this could range from $30 - $300. 
• Add-ons: For bundled services like TV and add-ons, you'll be charged for premium and sports channels. 
• Equipment charge: You'll be charged for your equipment, from the TV box and modem to the wireless router. Also, expect taxes and one-time charges like activation, installation, and late fees, depending on your situation.

Bundled services 

Choosing a suitable bundled service can save you money as you'll be given promotional offers and discounts. The key here lies in selecting the bundled service according to your needs. 

Some common bundled services are: 

• Internet with cable TV 
• Internet with cell phone plans 
• Internet with home security 
• Internet with smart home service

Negotiating and reducing costs 

Negotiating and getting better deals is possible, but it requires some groundwork. 

a. Research competitors

The first step is to research your Internet service provider's (ISP) competitors in your area. See what each competitor offers, their deals, and additional services. Have this data ready in your hands. 

b. Get on a call with your current ISP

Contact your current ISP and ask if they can connect you with the customer retention team or representative. Most importantly, try to get on a call instead of mail to save time and negotiate better. 

c. Negotiate with the knowledge

Leverage the knowledge gained from your research process and speak politely with the respective person. Tell them you're considering switching to an alternative ISP due to their better deals. Drop the competitor's name and their offer in the conversation. 

d. Get a discount

Any service provider would look for ways to retain existing customers rather than acquire new ones, especially if you're an ideal customer. You'll get better deals and a reduction in your costs. 

e. Try again

Even if it doesn't work out, try again to see if another representative from the team is willing to work with you and offer discounts or deals. But don't give up in the first go. 

e. Waste generation bills

Components of a Waste Generation Bill

There are two main components in a waste generation bill. 

• Administrative charges: Billing charges, sending invoices, and other administrative tasks.
• Environmental charges: Environmental costs cover landfills, maintenance of landfills, disposal of tires and oil, and checking vehicle emissions. 

Understanding waste generation units 

Wastewater is measured in gallons, whereas solid waste is measured in kilograms or tonnes.

Waste reduction and recycling tips

Waste generation bills increase based on the frequency of trash pick-ups and the volume of a business's waste. 

a. Ditch single-use products

Ditch one-time-use products like disposable paper cups and plates. Use glass bottles to drink water instead of canned water bottles and steel plates instead of disposable ones. 

b. Go paperless

Going paperless as a document-heavy industry can seem difficult, but doing so would reduce the significant amount of waste generated. This step saves money and is environmentally friendly. 

c. Segregate waste

Understand the different types, quantities, and sources of waste generated to segregate it properly. You can use colour-coded dustbins to separate metal, paper, wood, and plastic waste. Educate employees/tenants on your waste management plan and empower them to do the same. 

d. Recycle waste

Paper waste, metal waste including steel, copper and aluminium, wood, and electronic waste can be sold to recycling companies to recycle them.

Reading and interpreting utility bills

a. Common terminology

Here are the common terms you must know before reading the utility bills. 

• Meter reading - A meter reading shows the exact figure of the user's consumption of electricity or gas recorded at the meter over time. 
• Billing cycle - The billing cycle, also known as the Billing period, is the time between two billing statements for your utility services. 
• Base charges vs. Usage charges - Base charges refer to the flat fee that the utility provider charges the user to carry out the administrative operations of the utility. On the other hand, usage charges refer to the amount charged depending upon the usage of a particular service. 

b. Identifying anomalies 

Finding irregularity or inaccuracy in utility bills and decoding the causes can help you save money and correct mistakes. They include: 

Unexplained spikes in usage

Shifts in the seasons may cause a spike in your energy usage, such as using the thermostat and air-conditioners too much during winter and summer, respectively. Otherwise, appliances that are aging may be using more power than usual. So, ensure all the appliances in your facility are working properly.

Incorrect meter readings

Meter installations need to be verified frequently. Otherwise, it may show incorrect meter readings. Even if your meter runs without any problem, the meter's reading capabilities, damage, or communication failures can sometimes bring inaccurate readings. 

Billing errors

Billing errors can happen due to various reasons. 

• Charging rates differ according to the classification of residential, commercial, and industrial operations. Sometimes, misclassification in this can be the culprit, causing you to pay more
• Duplicate line items where you are charged twice for the same service or expense
• Look closely at your bill if you're charged false late fees
• Carrying overpaid balances and invoices sent to the wrong people are other reasons

Budgeting for utility expenses

Utility bills vary each month depending on the area you live in the country, seasonal changes, and the increase in energy usage. 

But, collect the past year's utility bills and track down what has been paid each month. Add up each month's bill and divide by 12 to see the average. 

a. Monthly vs annual budgeting

Set aside 10-15% of your monthly income to be on the safer side. If you pay bills annually, allocate a month's earnings to pay utility bills. For example, if you earn $3000 monthly, allocate $300-450 or $3000 annually for utility bills. 

b. Seasonal variations  

When budgeting for utility bills, the crucial thing you shouldn't miss is seasonal variations. Seasonal peaks can increase the usage of appliances. So, always expect a spike in your bills when the season shifts. 

c. Tips for reducing utility costs

• Most utility providers offer free audits, so utilise this audit to get repair recommendations
• Looking to replace your refrigerator, air-conditioner, or any other electric appliance? Invest in energy-efficient models to save on utility bills
• Replacing incandescent lights with LEDs can help to cut costs to a certain extent
• Use a smart power strip to power off electrical appliances like TVs and refrigerators, preventing standby

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Scaling your business requires two main efforts: reducing costs on unnecessary things like utility bills and investing in tools to improve efficiency. With Docsumo, analyze data from thousands of utility bills to look for the possibilities of reducing costs. 

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