Your Fuel Charges - What You Pay For

Like electricity charges, fuel charges in your utility bill are also made of several components that are added up. Fuels used for heating and cooking are usually measured in gallons (of oil, kerosene), cubic feet or hundred cubic feet (of natural gas), or kilowatt hours of electricity (kWh). They are also measured by heat content in BTUs (british thermal units) or Therms (100,000 BTUs).

In the United States, the most commonly used value for expressing the energy value or heat content of a fuel is the British thermal unit (Btu). One Btu is the amount of energy needed to raise the temperature of one pound of water 1°F, when water is at about 39°F. The fuel charges in your bill will more commonly express natural gas in terms of therms. The gas meter however, measures the volume of gas used during the billing period in CCF.

The Different Parts of Your Fuel Charges

As with electricity, your fuel has several charges built into it depending on the type of utility company you have (public, private or coop). Again, different utilities will have different terminology in describing these charges, but most will more-or-less have charges that describe several of the following:

  • A basic service charge for meter reading, billing and maintenance,
  • A tarrif surcharge to recover the taxes imposed on the utility by the state,
  • A sales tax,
  • An incremental state assessment surcharge which is usually a time-limited fee on behalf of the state, slated to end sometime in the far away future for most utilities (National Grid’s for example will end in June 30, 2014),
  • Delivery charges regardless of the supplier(could be an addition or a credit)which serves as a buffer between the actual cost and the forecasted cost of electricity supply,
  • Delivery adjustment due to variations from normal weather during the heating months, usually October through May,
  • Transmission revenue adjustment which credits a tiny portion of the electricity charges back to the customer if the actual amount of transmission is lower than the forecasted amount for the month,
  • Systems benefits charges which every resident pays into. support public policy programs, state energy efficiency initiatives that provide rebate and incentive programs, low income assistance, etc., and,
  • Gas supply price which is the market price during the billing period- if you have your own supplier, then the price is what you agree upon with the supplier, and,
  • Gas procurement costs, which would not be billed to you if you chose your own supplier.

Common Types of Heating Fuels

Fuel oil, natural gas, kerosene, oil, coal, electricity, wood, or pellets are all conventional fuel choices. In recent years, utilities have begun to offer users the option to purchase a mix of renewable power through various suppliers of solar, wind, geothermal and hydro power (at a premium) and will itemize these sources in the fuel charges.

How can a user determine the right fuel for their heating or cooking? That depends on a few factors including, the cost and availability of the fuel, the type of heating system and its efficiency, the system’s cost to purchase, install and maintain and its environmental impact. If you are a resident of the Northeastern part of the US, you likely have access to electricity, natural gas and oil. As a rural consumer, your dominant choices may be propane or wood.

As a consumer of wood, pellets, propane, fuel oil (No. 2), kerosene, you can comparison shop with local suppliers and lock in the best “season” price before the start of the cold season (summer is usually a good time to shop around).

The price you choose to lock in can be a gamble, since it usually has to do with the political situation of the time, the price of crude oil, projections for the season’s temperatures (the Farmer’s Almanac online usually provides projections for the upcoming season’s weather), and how competitive suppliers can be in a region.

Find out how how different fuels stack up and what type of heating system is most efficient

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