If you can, avoid signing up for an electricity plan with a base fee or a base charge. There are other plans that do not include these extra fees that can help you save more money on your monthly bills.
Are you puzzled by the base charge on your electricity bill and wondering “what is a base charge?” Wondering whether you should enroll in an electricity plan with a base charge at all? Here are the basics of what you need to know.
Base charges refer to the fixed monthly fees imposed by electricity companies to supposedly cover administrative costs. They are separate from and unrelated to how much electricity you consume throughout a billing period.
Some electricity providers include base fees on all of their plans, others include them on just a few of their plans, and providers like us at BKV Energy, never include a base fee in our plans.
Base fees on electricity bills can range anywhere from $5 per month to $20 per month depending on the plan. There are also plans that will waive the base fee if you consume a minimum amount of energy. That is then called a minimum usage fee.
When asked, energy companies that include base fees on their contracts typically explain the fees are needed to cover the costs of:
The explanation makes sense until you notice how many plans there are without base charges included. Clearly, they are a necessary part of an electricity plan.
Depending on your home’s overall energy consumption, the percentage of your bill dedicated to the base fee varies.
For example, if you live in a one-bedroom apartment that uses around 500 kWh per month. Your energy bill will be very low, potentially less than $100 per month depending on your price per kWh. If you were enrolled in a plan that required a base fee, then between 10-15% of your bill goes directly towards paying for something other than your electricity usage. That’s not a very good deal.
The impact of the base fee decreases as your energy consumption increases along with your total monthly payment. Regardless, there is no reason to pay a base fee when there are other plan options without them.
In addition to the base charges, your electricity bill may include:
TDU delivery charges encompass the expense of supplying electricity to customers, whereas TDU meter charges encompass the expense of maintaining and reading the meter. Both charges contribute to your monthly bill and are applicable to all electricity customers in the TDU’s delivery area. Bear in mind that TDU delivery charges stay the same across all providers in the same delivery area, irrespective of the retail energy provider you opt for.
Base charges can be deceptive because the providers that add these fees to plans will claim they are necessary to cover the cost of administrative expenses, customer service, and billing. This story fails to stand on its own when other companies, like BKV Energy, do not include these fees in their terms.
These fixed fees are charged regardless of the actual energy usage, making it possible for customers to be charged for a service they are not fully utilizing. This perception of gimmickry arises from the disparity in base charges between different utilities or service providers, which makes it difficult for customers to make accurate comparisons.
To avoid the base charge pitfall, carefully review and compare the Electricity Facts Labels of various plans, considering not just the base charges but also other fees and charges. This will allow you to choose an electricity plan that best suits your energy usage patterns and financial situation.
Opting for electricity plans without base fees can be advantageous as it eliminates the fixed monthly charge regardless of energy usage. This can be beneficial for individuals with low energy consumption or those who desire to have more control over their electricity costs.
Advantages of plans without base fees include:
Exploring such plans offered by your electric company could lead to potential savings on your monthly electricity bill and allow you to customize your energy consumption to better suit your needs and budget.
In conclusion, understanding base charges and their impact on your electricity bill is crucial in choosing the most cost-effective energy plan for your needs. Remember to carefully review and compare the Electricity Facts Labels of different plans and take control of your energy consumption to make the most of your hard-earned money.
