What Makes Up Your Energy Bill?

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.

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

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.