Energy Insights & Resources

UNDERSTANDING YOUR ENERGY BILL

In most competitive energy markets, your bill includes three primary components: supply, delivery, and taxes and fees.

Supply is the cost of the electricity or natural gas you use. In eligible competitive markets, this is the portion Alignegy can shop among retail energy suppliers to help you secure competitive pricing and contract terms.

Delivery covers the utility’s cost to transport energy to your facility and maintain the local infrastructure. These charges remain with the utility and generally do not change when you select a retail supplier. Your utility also continues to maintain the lines, pipes, meters, and other infrastructure and remains responsible for outages and service emergencies.

Depending on the market and billing arrangement, your supply charges may appear directly on your utility bill, you may receive one consolidated bill from your retail supplier that includes utility delivery charges, or you may receive separate bills from the supplier and the utility.

Sample Bill Source: ComEd.com

ENERGY BY THE NUMBERS

Measurements of Electricity

An average U.S. home consumes approximately 11,000 kWh per year, or 11 MWh. The kWh is the familiar unit shown on most electricity bills.

A restaurant might consume around 200 MWh per year, while a large manufacturing facility could use tens of thousands of MWh.

A 100 MW data center operating continuously would consume about 876 GWh per year. Gigawatt-hours are useful for understanding very large individual facilities, campuses and communities.

The United States consumes roughly 4,200 TWh of electricity annually. At this scale, electricity is typically being measured across entire countries or major power systems.

An average U.S. home consumes approximately 11,000 kWh per year, or 11 MWh. The kWh is the familiar unit shown on most electricity bills.

A restaurant might consume around 200 MWh per year, while a large manufacturing facility could use tens of thousands of MWh.

A 100 MW data center operating continuously would consume about 876 GWh per year. Gigawatt-hours are useful for understanding very large individual facilities, campuses and communities.

The United States consumes roughly 4,200 TWh of electricity annually. At this scale, electricity is typically being measured across entire countries or major power systems.

Electricity Supply Components

Electricity supply costs include more than just the energy itself. Several components work together to make up the total supply price, each influenced by different market and grid conditions. Understanding these components can help explain what drives electricity costs over time.

Energy ~60% of supply: The electricity commodity produced by natural gas, nuclear, solar, wind, coal, and other energy sources.

Capacity ~21% of supply: Capacity charges help ensure enough generation is available to meet peak electricity demand.

Transmission ~15% of supply: Charges associated with transporting electricity across the high-voltage transmission system.

Ancillaries ~2% of supply: Charges for services that help maintain grid reliability and balance electricity supply and demand in real time.

Losses ~2% of supply: The cost of electricity lost as it travels through the transmission and distribution system.

Illustrative breakdown only. Actual supply cost components vary by market, customer, usage profile, and contract period.

Measurements of Natural Gas

Natural gas can be measured by volume (the physical amount of gas delivered), or by energy content (the amount of heat that gas can produce). Because the heat content of natural gas can vary, the conversion between volume and energy is not always exact.

Customer bills typically use therms or dekatherms (Dth), while industry and market reports often use larger volume measurements such as Bcf (billion cubic feet) and Tcf (trillion cubic feet).

Measurements of Volume

CCF - Hundred Cubic Feet

Mcf - Thousand Cubic Feet

MMcf - Million Cubic Feet

Bcf - Billion Cubic Feet

Measurements of Energy

Btu - British Thermal Unit

Therm - 100,000 Btu

Dth - Dekatherm = 10 Therms

MMBtu - Million Btu = 1Dth

Natural Gas Supply Components

Natural gas supply costs include more than just the gas itself. Several components work together to make up the total supply price, each influenced by different market, regional, and operational conditions. Understanding these components can help explain what drives natural gas costs over time.

Gas (Commodity): The market price of natural gas, commonly benchmarked to the NYMEX Henry Hub contract.

Basis: The difference between the Henry Hub benchmark and the price at the regional delivery point serving your market.

Transportation: The cost of moving natural gas through interstate and local pipelines to the customer’s utility system.

Storage & Balancing: Costs associated with storing gas and balancing supply with actual customer usage, particularly during periods of high demand.

Operations: Pipeline fuel and losses, administrative costs, credit requirements and the supplier’s operating margin.

Illustrative breakdown only. Actual supply cost components vary by market, customer, usage profile, and contract period.

UNDERSTANDING ELECTRICITY MARKETS

The U.S. electric grid is divided into regional markets, many coordinated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs). These independent organizations manage the flow of electricity, balance supply and demand, maintain grid reliability, and operate wholesale electricity markets.

For businesses in competitive electricity markets, the RTO or ISO serving a facility can have a significant impact on cost. Energy, capacity, transmission, congestion, and other market charges are structured differently from region to region—which is why location matters when developing an effective energy procurement strategy.

Source: FERC.gov

Competitive Energy Markets

Every business operates in a different regulatory environment. Competitive (sometimes referred to as deregulated) markets open the door to supplier choice and strategic procurement, while regulated markets work differently. Our Competitive Markets map shows, at a glance, which states are open for electricity, natural gas, both, or neither — so you can quickly see where procurement strategy can make the biggest impact across your locations.

How Capacity Works in Competitive Markets

Capacity is one of the most significant—and most regionally variable—components of electricity pricing. Each market takes a different approach to ensuring enough generation is available to meet future demand, which means the way capacity costs are determined and passed through to customers can vary considerably.