Solar is a great way to lower your utility costs, but how can you tell how much you’re really saving? We first need to understand exactly how your power bill works and what each charge means, especially in relation to your potential solar savings.
Your utility company breaks down your power bill into multiple categories, with most of the charges coming from your energy usage and delivery fees. We’ll break down those categories even further to show you where your money is actually going.
Your electricity charge is calculated by the amount of electricity you use throughout your billing period. Ontario customers can choose between two types of rates—time of use (TOU) and tiered.
Time of Use: Calculated based on when the electricity is used. Split up between off-peak, mid-peak and on-peak hours based on demand.
Tiered: Calculated based on how much electricity you use. Using more electricity than a certain threshold pushes you into a higher and more expensive tier.
We recommend looking into your consumption patterns to figure out which rate works best for your household.
The global adjustment accounts for the difference between the guaranteed price for electricity that your utility company produces and how much money they make in the wholesale market. It also includes conservation program costs.
Customers will have to pay for a part of the global adjustment. If you’re using TOU or tiered rates from your utility company, it should already be included in those charges. If you’re with a retailer, you’ll see a separate line on your power bill to reflect these costs.
Energy isn’t the only thing you’re paying for with your power bill. It costs money to get the energy from generating stations to your home, almost like shipping for online purchases. Delivery fees include fixed charges and variable charges based on your monthly usage. Here is a further breakdown of what your delivery charges include.
Distribution Charge: The distribution system is made up of multiple parts, including underground and overground power lines, transformer stations and poles. Your distribution charge is variable and is meant to maintain the system, so everything works properly.
Transmission Charges: Another variable cost, meant to maintain the high-level voltage transmission system that delivers electricity to your home.
Customer Service Charge: This is a fixed cost associated with maintenance for your account, meter reading, customer service and general utility operations.
Line Loss Adjustment: When power is being transferred from the utility lines to your house, it’s natural for a little bit to be lost. Your utility company considers how much you’re losing by multiplying your energy cost by their adjustment factor.
Your regulatory charges include:
Wholesale market service charge: The wholesale electricity market is operated by the independent electricity system operator (IESO). These charges ensure that the wholesale market is running reliably and that the high voltage power grid is well taken care of and maintained. Your wholesale market service charge also includes renewable generation connection costs.
Standard Supply Service Charge An admin fee is applied for those who purchase electricity directly from your local distribution company.
Lower Your Power Bill with Solar Energy
Now you should be all set. With solar, you can reduce the energy portion of your power bill to $0 and lower variable costs associated with how much electricity you use, such as distribution and transmission fees. Any fixed fees will still apply, even if you can supply 100% of your own power.
For More information on how solar can save you money, take our 15-second survey and qualify for a free quote today.