How to Compare Electrical Rates

Electricity costs more for customers of some companies than of others. If you have a choice of energy providers in your area or if there are different providers serving a new location you're considering, comparing electrical rates can save you money. Some energy companies charge current customers for past expenditures while others increase rates to accommodate current budget items.

Get the figures for service costs directly from the companies you are considering. Visit electric company websites to look at current billing charges. Most electrical providers include a page to explain all charges that appear on residential bills.

Compare usage costs. The electricity used in a home is measured in kilowatt hours. Electric companies charge a set rate for each kilowatt hour. Look at the rate difference for kilowatt hours between companies you are comparing.

Figure the cost difference with tiered rates. Some electric companies charge lower rates for the first kilowatt hours used in a monthly billing cycle, then a higher rate for all additional usage that month. These companies offer a lower rate for as much as half the average monthly energy consumption in a home. Find an average cost per kilowatt hour to compare tiered rates against fixed rates.

Check the differences in charges for energy purchase or production and delivery between companies. Electricity is either generated or purchased by the provider. Then it is sent to your home through a grid of power lines. The associated costs may be listed as generation, line or maintenance charges. These costs tend to fluctuate with market factors. Each company charges customers for these costs in different ways. Some have higher kilowatt usage rates while others list these charges separately on their bills.

Find out what extra charges customers are paying to buy power from the companies you are comparing. Power companies are legally charging customers for items like new lines to provide service to new developments, funds to provide power to lower-income families and even money lost on past bad investments. The more of these extra charges customers are saddled with, the higher their monthly bills will be. Calculate all extra charges on electric bills to compare the average monthly rates between companies.

Compare deposit rates between prospective providers and how they return these funds. Some companies return deposit money with interest after the first year of service. There are also some electric co-ops that do not return deposit funds to their customers at all, even after they leave the service area. In some cases provisions are made to return co-op deposits to a surviving heir.