Delivery vs Supply Electricity Charges & How They Are Eliminated With Solar

State Renewable Energy

As the scorching summer sun intensifies, homeowners often find themselves dreading the arrival of their electric bills. With the increase in energy consumption to combat the sweltering heat, additional charges mysteriously "appear" on their statements, leaving many scratching their heads.

In this blog, we will delve into the components of an average electric bill, shedding light on those pesky Delivery and Supply charges that often seem confusing and unwarranted.

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Understanding Electric Consumption Measurement

The journey of understanding electric bills starts with a familiar sight - the electric meter. That dial with multiple numbers on it is the key instrument used by utility companies to measure a home's electricity consumption. The unit of measurement is the "kilowatt-hour" (kWh), which represents the amount of electricity used over time. Your billing period is typically based on the exact number of kilowatt-hours used during that period. These kilowatt-hours are then applied to the individual charges, such as Supply and Delivery charges.

Decoding Supply Charges

Supply Charges, in essence, represent the actual cost of the electricity used by the homeowner. This cost is akin to purchasing gas at a specific price per gallon. It is the portion of the electric bill that makes sense to homeowners, as it corresponds directly to their energy consumption.

Unraveling Delivery Charges

Delivery Charges, on the other hand, are the cost incurred for the delivery of electricity to your home. To put it in perspective, this is like buying gas at $4 per gallon at the pump but having to pay an additional $2 per gallon to have it delivered to the gas station. The existence of Delivery Charges is what can baffle homeowners. These charges cover the infrastructure, maintenance, and transmission costs involved in delivering electricity to individual properties.

Additional Charges and the Role of Renewable Energy

For some utility companies, there may be additional add-on charges, such as the "RGGI Efficiency" charge. The Regional Greenhouse Gas Initiative (RGGI) is a regional program that aims to reduce carbon dioxide emissions from power plants. The charge is meant to fund investments in renewable energy projects like offshore wind farms. While renewable energy projects are beneficial for the environment, some homeowners may question the inclusion of such charges in their electric bills.

Solar Panels: The Solution to Escalating Charges

With the rising concern over high electric bills and the growing interest in sustainable living, solar panels have emerged as a viable solution. The magic behind solar panels lies in the Net Energy Meter (NEM) installed alongside them. This metering arrangement ensures that homeowners are billed only for their net energy usage, which is the difference between the energy they consume from the grid and the energy their solar panels produce.

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Empowering Homes with Solar Panels

When solar panels produce enough electricity to meet a home's needs during a billing period, there are no Supply or Delivery charges to be borne. In essence, solar panels allow homeowners to generate their electricity, reducing their reliance on the utility company and potentially eliminating those pesky charges. Additionally, any surplus energy generated by the solar panels can be carried over to subsequent months, providing even more cost savings.

Solar Panels: A Wise Investment

It's true that solar panels come with an upfront cost. However, homeowners should view this as an investment in long-term savings. Thanks to various state and federal incentives, such as cash payments for Solar Renewable Energy Certificates (SRECs) and Investment Tax Credits (ITCs), the cost of installing solar panels has become more appealing than ever before.

As the mercury rises and electricity bills follow suit, it's essential for homeowners to understand the components of their electric bills thoroughly. Supply and Delivery charges may initially seem puzzling, but they play vital roles in delivering electricity to homes. Nevertheless, installing solar panels with a Net Energy Meter (NEM) can significantly reduce or even eliminate these charges.

The shift to solar power not only empowers homeowners to produce their electricity but also contributes to a more sustainable future. With the current array of incentives available, there has never been a better time to harness the power of the sun and take control of your energy costs. Embrace the opportunity to embrace solar panels and watch as they bring both environmental and financial benefits, akin to the ever-fresh bounty from a backyard garden.

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Atlantic City Electric


Tiered Electric Bill

Utility companies are using a legal loophole to charge homeowners more money when they use more electricity and until NOW there really was no way to avoid it. Most homeowners are aware of supply charges on their electric bills. They see them every year. What MOST of them are missing is the tiered delivery electric charges. They usually look like this:


Transmission Service Charge:      
853 kWh  x  $0.0204348        $17.43          

Basic Gen Service Tier 1:    
First  417 kWh  x   $0.0821823        $34.27

Basic Gen Service Tier 2:    
First  436 kWh  x   $0.0823256        $35.89


Distribution Charge Tier 1:  
First  417 kWh  x   $0.063900         $26.64

Distribution Charge Tier 2:  
Last  436 kWh  x   $0.065700         $28.64

Never mind the…

Customer Charge:        

Market Transition Tax:        
853 kWh  x  $0.0010217          $0.871

Environmental Surcharge:      
853 kWh  x  $0.0042609          $3.63

Franchise Tax:      
853 kWh  x  $0.0062         $5.29  

 RGGI Energy Efficiency:      
853 kWh  x  $0.004130         $3.52

YOU READ THAT RIGHT? A total of $68.59 worth of fees buried in a $121 electric bill! 

Notice the fee structure for Distribution (under Delivery) Charges. The cost increased when going above the first tier (417 kWh rate). YES, the cost increased for using more electricity.

Most homeowners are missing the beat with utilizing a renewable energy source such as solar panels. They would no longer be charged ANY distribution or supply charges through the Net Metering (NEM) program with their utility provider. This means the homeowner literally only pays the Customer Charge. With a state allotment for up to 99% solar production of the current consumption, homeowners are nearly completely eliminating their electric responsibilities. 

About The Author

State Renewable Energy (SRE) is a reliable information hub for learning more about the ever changing federal and state renewable energy incentives throughout the U.S.