Understanding Your Residential Electric & Gas Bill

Businessman with bills and smart phone at the table.

Understanding Your Residential Electric & Gas Bill

The Michigan Public Service Commission helps to ensure safe, reliable, and accessible energy services at reasonable rates. Michigan law allows utilities to recover the reasonable costs of providing service. These costs include things like maintaining poles and wires, operating power plants, and supporting the workers needed to keep electricity flowing. The MPSC reviews these costs to make sure they are necessary and reasonable before they can be collected from customers.

Some customers may see additional items on their bills if they participate in optional programs, such as rooftop solar, voluntary green pricing, electric vehicle charging programs, or if they have multiple meters or special service needs.

What Makes Up Your Energy Bill?

Your monthly energy bill—whether electric, natural gas, or both—includes several types of charges. Some reflect the energy you used, while others support the safe, reliable operation of the system that brings electricity or natural gas to your home. This page explains the most common charges you’ll see as a Michigan residential customer. These include:

Energy Charges: an amount that changes based on how much energy you use
Fixed Charges: a set amount billed to each meter each month
Surcharges: taxes, fuel adjustments, etc. Surcharges may be based on a per customer charge, actual consumption, or your demand level

Charges in Depth

Energy Charges
What it is: charges based on the amount of electricity or natural gas you used during the billing period.

What it may include:

For Electricity:

kWh (kilowatt-hours) used by customer

Cost of generating or purchasing electricity (may vary with seasonal pricing or time-of-use periods, if applicable)

Distribution or the cost of delivering electricity to customers. Costs include power lines, poles, and substations

PSCR (Power Supply Cost Recovery)—variable fuel and power costs that rise or fall with market prices

For Natural Gas:

Therms or Mcf (thousand cubic feet) used by customer

Cost of the natural gas your utility purchases for customers

Cost of distribution such as pipes, compressor stations, etc

Gas Cost Recovery (GCR), similar to PSCR, reflecting real gas supply costs

The cost of energy use may be impacted by time periods with on-peak rates and off-peak rates: Most utilities offer lower rates during the off-peak time periods which are typically weekday mornings, weekday evenings and all day on the weekends. Energy used during the peak hours will be billed at the peak rate, and energy used during the off-peak hours will be billed at the discounted off-peak rate. This rate structure reflects the higher cost of generating electricity during high-demand periods.
Fixed Charges
What it is: flat monthly charges that do not change with your electricity use

What this may include:

Frequently referred to as a customer, system access, or service charge

Costs for maintaining equipment to service your residence such as meters and service lines
Surcharges
What it is: Charges that support statewide programs or specific utility projects

What this may include:

Securitization (lower cost financing options for utility projects)

Energy Waste Reduction programs

Infrastructure replacement or safety programs

Low-Income Energy Assistance Fund (LIEAF)

Other MPSC-approved riders or adjustments

Why it appears: these charges frequently exist because of statutory requirements or to reconcile funding outside the context of a rate case. They help ensure long-term reliability, affordability, energy efficiency, and access to assistance programs across Michigan. Surcharges can be flat, monthly charges, or charges that change with energy use.

Pie chart showing example percentages of monthly electricity charges. 86% are energy charges, 8% are surcharges, 6% are fixed charges.

Need Help?

Bill Assistance

We all need a little help sometimes. Last year, hundreds of thousands of Michiganders received help with their home energy bills or received shut off protection for their utility service. If you need help, you are not alone. Visit MPSC's Get Help page for utility customers to learn about available help, shut off protections, and how to apply.

There are also resources available for customer assistance organizations, which can be found at MPSC's information for customer assistance organizations page.

Reducing Energy Usage

Many customers find that understanding their energy use and making a few adjustments helps them feel more in control of their bills. Your utility may offer energy saving programs, rebates, and tips that can help you use less energy at home. A list of resources to help you find practical, low-cost ways to lower your usage can be found at MPSC's Energy Optimization page.

The Michigan Department of Health and Human Services (MDHHS) also administers a Weatherization Assistance Program, funded by the Federal Department of Energy (DOE) and the Low-Income Home Energy Assistance Program (LIHEAP). The program provides energy conservation and related health and safety services for eligible low-income households at no cost to the residents.

Common Term Guide

A simple guide to the most common charges that may appear on your electric or natural gas bill.

Customer Charge

A fixed monthly charge that helps pay for meter service, billing, and keeping your home connected to the system — even when you use little or no energy.

Also called: Availability Charge, Facilities Charge, Monthly Service Charge, System Access Charge.
Distribution / Delivery Charge

A charge for the equipment and labor that deliver electricity or natural gas to your home, such as poles, wires, pipelines, and routine maintenance.

Electric also called: Delivery Services, Distribution Energy Charge.
Energy Charge (Electric)

A usage-based charge for the electricity you used during the billing period, measured in kilowatt-hours (kWh).

Also called: Electric Usage, Energy Usage, Power Supply Energy/Capacity Charge.
Gas Cost Recovery (GCR) Charge (Natural Gas)

A usage-based charge for the natural gas your utility buys to supply customers. These costs are passed through with no markup.
Power Supply Cost Recovery (PSCR) Charge (Electric)

A usage-based charge that reflects changes in the cost of fuel and purchased electricity your utility needs to generate power. These costs are passed through with no mark-up.

Also called: Power Supply Cost Recovery, Wholesale Power Adjustment.
On Peak / Off Peak Rates (Electric)

Rates that change based on the time of day or season. Electricity typically costs more during high-use periods like weekday afternoons and less during nights or weekends.
Surcharges

Small additional charges that help fund statewide programs or specific utility projects approved by the Michigan Public Service Commission (MPSC). Examples include: energy efficiency, renewable energy, infrastructure upgrades, or customer assistance programs.
Energy Waste Reduction (EWR) Surcharge

A charge that supports programs that help homes and businesses reduce energy waste and lower long-term energy costs for all utility customers.

Also called: Energy Efficiency, EO Surcharge, MI Energy.
Low Income Energy Assistance Fund (LIEAF)

A small monthly charge that supports programs helping eligible Michigan households avoid shutoffs and manage energy bills.
Rate Realignment Adjustment

A temporary charge or credit that helps ensure each customer group (residential, commercial, industrial) pays its fair share of the actual cost to serve that group.
Securitization Charge

A charge used to repay low-cost bonds issued to refinance certain utility costs, which can help reduce long-term expenses for customers.
Tax Adjustments or Credits

Credits or small charges that reflect changes in federal or state tax laws and how they affect utility costs.
Sales Tax

A state-required tax applied to energy bills — 4% for residential customers.

Additional Resources

Energy Affordability in Michigan: What You Need to Know

This page explains why and how energy costs change, shows Michigan’s national standing, and outlines how the MPSC improves affordability and reliability, reduces costs, and expands assistance. It also guides residents on understanding their utility bills and directs them to programs that support energy efficiency and affordability for Michigan families.