Sizu A utility bill looks official, so most of us just pay it. But nearly every bill is the same small sum: units used times a price per unit, plus a fixed daily charge. If you can redo that sum, you can check the bill in a couple of minutes.
The numbers below are made up for the example. Use the figures from your own bill, which will differ.
Step 1: find the four numbers
On your bill look for:
- Units used this cycle (for example kWh of electricity): 412
- Price per unit: $0.16
- Standing charge per day, the fixed fee you pay even if you use nothing: $0.45
- Days in the cycle: 30
Step 2: rebuild the bill
Usage part: 412 × $0.16 = $65.92.
Standing part: 30 × $0.45 = $13.50.
Total: $65.92 + $13.50 = $79.42.
If your total matches the bill (allow a few cents for rounding, and any tax line the bill adds), the bill is internally correct. If it does not, you have found something to ask about, and you know exactly which line to point at.
Step 3: turn it into a cost per day
Dividing by the days gives $79.42 ÷ 30 = $2.65 a day. That is a more honest number than “about eighty dollars”, because cycles are not always 30 days. A 28-day bill and a 33-day bill cannot be compared directly, but their cost per day can.
Over a year, twelve bills like this one come to 12 × $79.42 = $953.04. Your usage will change with the seasons, so treat that as a rough planning figure.
Step 4: is it an estimate?
Bills are sometimes based on an estimated reading rather than the real meter. Say the bill assumed 350 units but your meter says 412 units were actually used. The estimate undercharged you by 62 units:
62 × $0.16 = $9.92.
Nothing is lost, because the catch-up arrives on a later bill. The risk is the other direction: an estimate that is too high means you are lending the company money until it is corrected. Read your own meter, write the date and the number down, and compare it with the bill’s reading. If they differ by much, ask for a corrected bill.
Step 5: compare two plans fairly
Plans trade one price against the other. Suppose:
- Plan A: $0.16 per unit and $0.45 a day
- Plan B: $0.19 per unit and $0.20 a day
At 412 units in 30 days, Plan A costs $79.42. Plan B costs 412 × $0.19 + 30 × $0.20 = $78.28 + $6.00 = $84.28. Plan A wins by $4.86, even though its fixed charge is higher.
Now try a low month of 200 units. Plan A: 200 × $0.16 + $13.50 = $45.50. Plan B: 200 × $0.19 + $6.00 = $44.00. Now Plan B wins by $1.50.
Where is the crossover? Plan B has a lower fixed cost by 30 × ($0.45 − $0.20) = $7.50 a month, but costs $0.03 more per unit. Dividing, $7.50 ÷ $0.03 = 250 units in 30 days. Use less than that and B is cheaper, use more and A is cheaper. So the question to ask is not “which has the lower rate”, but “how many units do I use in a typical month”.
Step 6: three mistakes worth looking for
When a bill does not match your rebuild, the cause is usually one of a few things:
- Wrong number of days. If the cycle was 33 days rather than 30, the standing charge is 33 × $0.45 = $14.85, which is $1.35 more. That is correct, not an error, but it explains a higher bill.
- A rate that changed mid-cycle. Some bills split the usage into two lines at two prices. Rebuild each line separately and add them.
- A reading that does not match your meter. This is the only one that can cost real money. A reading 50 units too high on this bill would add 50 × $0.16 = $8.00.
Keep a note of your meter reading on the same day each month. It takes a minute and gives you proof if you ever need to dispute a bill.
Step 7: a five-minute routine
Once a quarter, do this: copy the units, rate, daily charge and day count from the bill, rebuild the total, divide by the days, and write the cost per day in a note. After a few bills you will have a personal baseline. A cost per day that jumps by a third with no change in your habits is a signal to look at the meter reading, the tariff and the days in the cycle, in that order. The check costs nothing and most of the time it simply confirms the bill is right, which is worth knowing too.
Rule of thumb
Bill = units × rate + days × daily charge. Redo it, divide by the days to get the cost per day, and compare plans at your own usage, not at the headline rate.
Try it with your own numbers
The Usage-Cost Calculator does the units × rate + standing charge sum and gives your cost per day. The Tariff Comparison puts two or three plans on the same usage, and Estimated vs Actual compares your meter readings with the estimate. They come from The Household Bills Math Workout, Book 3 of Math That Pays.
This is arithmetic for planning, not professional advice. The prices here are examples, not any supplier’s real rates.