Understanding your utility rates

Have you ever wondered about your Huntsville Utilities bill or how you can better understand your home’s energy and water use?

For those of us who depend on Huntsville Utilities for electricity, water, and natural gas, getting a handle on how it all works can feel overwhelming. A deeper dive into how these services are structured can empower customers to manage their consumption and navigate their utility needs effectively. 

Here we’re breaking down the basics about your utility bill. 

A lot goes into getting power to your home, and the costs can be broken down into a few main areas.

First, the electricity has to be made (that’s generation, mostly handled by Tennessee Valley Authority (TVA), and includes things like fuel and the cost of the power plants themselves.

Then, it has to travel long distances over big power lines (that’s transmission, also mostly TVA, with costs for upkeep and some power loss along the way).

Finally, Huntsville Utilities steps in to get that power from those big lines to customers’ homes through the local electric network (that’s distribution, and covers things like local power lines and meters).

There are also the costs of running the whole operation (like employee salaries), keeping equipment running smoothly, dealing with routine problems, and customer service, which all add up to what our customers see on their bills. 

At Huntsville Utilities, we work hard to keep rates as affordable as possible. We take a close look at our finances, what we plan to spend on things like upgrades, and even the prices of fuel to figure out if any changes to the rates are needed.

To make sure things are fair, we even have experts come in every few years to study the costs of providing each service. When it comes to our customers’ bills, there’s also a fixed charge for having services available, plus a charge that changes based on how much electricity a household actually uses each month.

Electric rates can go up or down a bit depending on how much it costs TVA to fuel their power plants. Any time Huntsville Utilities wants to adjust rates, we have to get the thumbs-up from TVA and the Huntsville City Council. 

The price our customers pay for electricity can actually change depending on the time of year. 

TVA uses what’s called a seasonal rate structure. That means the cost per unit of electricity (per kilowatt-hour) is a little different in the winter, spring, summer, and fall. Another thing that can affect utility bills is something called the “fuel cost adjustment.” Think of that as the fluctuations in the cost of fuel needed to generate electricity in the first place.

Just like gas prices at the pump, the cost of the fuel used to generate power can go up or down based on what’s happening in the larger commodity markets. So, these seasonal rates and fuel cost adjustments are two key things that can influence the price of the electricity.

The weather can also play a big role in the fluctuating price of electric bills, mostly because of heating and cooling systems (or HVAC units). If it’s freezing outside, a heater has to work harder to keep a house warm. The same thing happens in the summer; when it’s sweltering outside, an AC has to put in extra effort to keep a home cool, meaning your unit runs longer. 

Huntsville Utilities is a not-for-profit utility owned by the city, and our goal is to provide reliable service at a reasonable cost to everyone. As a public power provider, our focus is on making sure the system works well and efficiently for our community. 

Although customers can’t change their residential electric utility rate, they can control their consumption. Simple changes in daily habits can add up to savings on monthly bills.

Find tips on becoming smarter consumers and managing our energy use effectively here.