5 Things Most Americans Don't Know About Utility Bills
Unless utilities are included in your rent, you probably pay utility bills every month. In some cases you might pay several between electricity, gas, water, cable and internet.
You might also pay the bills without really understanding them. This is a common problem, according to Cody Schuiteboer, president and CEO of Best Interest Financial.
“Most clients of Best Interest Financial spend about $610 a month on utility bills and many don’t even know what costs are included and why those costs are incurred,” he told MoneyLion. “Budgeting for a monthly utility cost is impossible when you don’t know why you are incurring that cost.”
Here’s a look at five things most Americans don’t know about their utility bills.
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Most of Your Electric Bill Is Not Tied to Consumption
The majority of the value in an electricity bill comes from parts “other than the energy consumed,” Schuiteboer explained.
“An electric bill is not just the product of an amount of energy multiplied by a cost allocated to a unit of energy,” he said. “Instead, electric bills include several components.”
For example, your bill might include a monthly charge that is “not dependent on your consumption of electricity,” Schuiteboer added. There’s also a charge that covers the “cost of maintaining and managing the infrastructure that distributes electricity.”
Your Bill Often Includes Add-Ons
Whenever you move to a new place with a new utility company, you can expect different payment requirements, according to a blog from Utility Billing West.
“You may find add-ons like internet, garbage collection, parking, rental insurance and streaming services. Before you select your next place to live, consider the average utility cost in that area,” per Utility Billing West.
Many Bills Include Charges Tied to Spikes in Energy Use
Another thing you might not know is that your utility bill might be higher than normal due to spikes in energy use.
Bills will often increase if you “maximize the use of multiple high-energy devices simultaneously,” Schuiteboer said. “Your dryer, AC and oven, for example, can easily be coordinated to be run at the same time.”
During these peak periods of use, your energy bill might rise more than it would have if you had operated different appliances and different times.
'Miscellaneous' Billing Items Aren’t Cheap
Many utilities bundle several smaller fees under “Miscellaneous Charges” rather than list them individually. This is done to “streamline the billing layout,” according to a blog from Empire Solar. That doesn’t mean these are minor fees, however — or even “miscellaneous” ones.
“While they may seem small, they can quietly add up month after month. By not itemizing them, [companies] make it harder for homeowners to read their electric bill and see exactly where their money is going and why their bills keep rising,” per Empire Solar.
In addition, some miscellaneous charges show up “only when things go wrong,” Schuiteboer said. “These [include] reconnection fees, early termination fees for fixed-rate energy contracts and minimum usage fees which quietly punish households that choose to be more energy efficient.”
You Could Be Paying for ‘Rental Creep’
When it comes to “rental creep,” Schuiteboer cited internet and cable bills as the “most egregious” examples.
“The ubiquitous $12 to $15 per month modem and router rentals are among the most routine charges I advise clients to eliminate,” he said. “You essentially pay off the cost of a rented modem or router within the year and you eliminate the charge for the duration of your account, which can extend indefinitely.”
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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