Electricity

There’s a reason every state employs hundreds of regulatory personnel to assess, verify, and audit utilities. It’s the same reason utilities employ hundreds of people to run billing, review processes, lobby, interpret regulations, automate systems, audit accounts, and collect on bills.

Utility billing is very complicated.

It’s not the fault of the utility or state. It’s the regulatory process that requires review and approval of billing based on rules, not competition.

Realgy, as an energy marketer, has reviewed and modeled utility tariffs and bills for 22 years (creating billing systems that allow for utility billing audits).

MidAmerican is a great example of this complication.

Let’s examine their tax collections.

MidAmerican Energy (MEC) is required to collect Excise Tax and County Tax from its customers. Each of these capitalized terms has a specific regulatory definition that determines the correct tax amount.

Here’s a snippet of a typical MEC bill. This example is for a customer located in Moline, Illinois, who used 2,993 kWh last month.

Here’s how these numbers are calculated:

2,000 x 0.330 = $6.60

993 x 0.319 = $3.17

=$9.77 Excise Tax

2,000 x .6283 = $12.57

993 x .4120 = $4.09

= $16.66 Municipal Tax

This seems straightforward so far. Let’s look at what variables are required for each tax.

The first variable is usage. kWh is required for both taxes.

For Excise Tax, here’s the regulation: You only require kWh, and you can see what rate ($/kWh) applies. As you can see, the more kWh you use, the lower the tax rate applied.

For County Tax, you need to know which county you’re located in and your kWh usage.

Here’s the regulation with Moline highlighted for this example. Like the Excise Tax, each county has a rate based on kWh. The more you use, the lower your effective tax rate.

Next time you look at your utility bill, remember that behind each line item are literally hundreds of people and regulations working to ensure accuracy and compliance.

Realgy Energy Services is a registered Retail Energy Marketer serving commercial customers in the states of Illinois, and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual energy savings. Service Plans include Guaranteed Savings^TM, ManagedPrice^TM, ManagedGreen^TM Index, Fixed and PriceAssurance^TM.

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