|Understanding Your Electricity Bill
Your electricity bill has three primary components, i.e. 1) commodity rate, 2) distribution rate (sometimes called transportation rate) and 3) taxes. The commodity rate is what retailers are competing on. The distribution rate and tax rate are regulated. The total of the commodity rate and distribution rate times kWh of electricity used equals your electricity cost before taxes.
In different geographical areas there is a distribution company that has the exclusive right to distribute your electricity in your area. However, there are many retailers of electricity in deregulated areas that you may purchase electricity from. The retailer that sells electricity to you collects from you the commodity charge, distribution charge, and taxes.