The Basics Behind Your Growing Utility Bill
Your electric and gas bill includes two primary categories of charges: distribution service, and the commodity charges.
Distribution Service
The utility’s distribution (or delivery) service charge includes the costs of the utility’s infrastructure that serves customers and the utility’s operational costs.
The distribution charges that are on your bill include costs associated with the utility’s “rate base,” which is comprised of the utility’s outstanding (not yet paid for) capital expenditures. The utility’s profit largely depends on the size of its rate base. Stated otherwise, the greater the utility’s capital expenditures, the larger the rate base, and the larger the utility’s profits. Customers also pay for the utility’s taxes on its profit through the distribution charges.
Distribution charges tend to increase over time. The utility distribution charges are set by the Public Service Commission in rate cases.
Delivery costs are recovered with two different charges you see on your bill:
- A “volumetric” charge that is calculated based on how much gas or electricity you use;
and
- A fixed “customer” charge, which is a flat monthly fee each residential customer pays regardless of how much or little gas or electricity you used.
Commodity
The commodity charge—sometimes called a fuel charge or supply charge—is for the cost of the gas or electricity you use.
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- The amount of gas used (the gas molecules) is measured in therms.
- The amount of electricity used is measured in kilowatt hours.
- Utilities procure gas and electricity through competitive procurements regulated by the Public Service Commission, and the costs are passed through to customers with a small administrative fee.
- Commodity costs can go up and down with the market, lowering or raising your overall bill.
Other surcharges
Your utility bill also includes surcharges that add to your bill.
Here are explanations of some of thosesurcharges:
STRIDE surcharge: Gas companies may have a “STRIDE” surcharge. The STRIDE surcharge is an additional charge for distribution service related to replacement of old infrastructure. What you pay in the STRIDE surcharge is added into the overall distribution services charges. Click to learn more about STRIDE.
EmPOWER surcharge: This surcharge supports programs to promote energy efficiency, such as rebates for energy-efficient appliances, home energy audits, and related programs. Click to learn more about programs through EmPOWER that can benefit you.
Local taxes: While distribution charges cover the utilities’ tax obligation related to their profits, local taxes may be included as a separate line item on your bill.
Click the left-hand menu to see current and historical utility rates for Maryland’s major utilities.
Glossary
Capital expenditure: Dollars spent on projects and equipment that replace or expand the utility’s infrastructure.
Commodity charge: A charge that is based on the amount of energy you use, calculated in therms for gas and kilowatt-hours for electricity.
Distribution charge: The cost of delivering gas or electricity to your home.
Rate base: The total dollar amount of the utility's long-term investments that have not yet been paid by customers.
Utility infrastructure: The pipes, towers, wires, computers, and other equipment and infrastructure that the utility needs to deliver gas or electricity to your home.