Each month Michigan residents and businesses receive a bill from their local utility apprising them of the costs of the electricity that they have used for the previous month. But utility bills do not just charge for electricity. There are several other charges and fees on each month’s bill. Here is a sample Michigan electric bill to explain some of the normal charges and expenses Michigan residents pay each month. This section describes some of the main charges seen on a typical Michigan electric bill.
Beginning or Ending Read/Actual Meter Read: A meter reading that exactly measures the electricity used during a billing period and is based on an actual reading of the meter, not an estimate. Customers that retain the traditional analog meter, or a noncommunicating version of the advanced meter will need to have their meter read by a utility employee. This will involve a visit to the service property to allow the meter reader to physically view the meter to collect electricity usage data. Those customers who have a smart meter installed will have their meter read remotely, as advanced metering infrastructure is able to communicate with the utility via radio frequencies, the internet and data transmission networks.
Beginning or Ending Read/Estimated Meter Read: A meter reading that estimates electricity used during a billing period.
Billing Period/Billing Month/Billing Cycle/Days Billed: The days of electricity use recorded on a standard electric bill.
Choice Implementation Surcharge: Public Act 141 of 2000 allows utilities to recover the costs of customers who purchase electricity from an alternative electric supplier. These charges must be approved by the MPSC and are paid by existing customers.
Distribution/Distribution Charge/Delivery Charge/Retail Transmission Services: Charges approved by the MPSC, that are based on the number of kWh used by customers and that cover the costs for infrastructure — substations, transformers, etc. — to deliver electricity from transmission infrastructure to the end user (a home or business).
The charge paid to the utility or alternative electricity supplier for electricity — in kilowatt hours — they have purchased or generated, and that the end customer has used in the billing period. The rate for this electricity is initially suggested by the utility, based on expected generation costs and is then authorized, by the Michigan Public Service Corporation and used to repay the utility for the costs associated with purchasing fuel and generating electricity.
Separate, or higher rates may be set for time of use and/or time of season. These higher rates are typically charged during periods of increased demand — during the summer and during the day. Time of day rates are generally easier for utilities to track with the advent of the advanced metering infrastructure, or “smart meters.” 
- On-peak hours: Weekdays from 3 p.m. to 7 p.m. Electricity costs are higher in on-peak hours.
- Off-peak hours: Weekdays from 11 p.m. to 7 a.m. and all day on weekends and designated holidays. These hours correspond to times when electricity demand and electricity prices are lowest.
- Mid-peak hours: Weekdays from 7 a.m. to 3 p.m. and 7 p.m. to 11 p.m. Electricity prices are similar to utility standard rates.
- Critical peak events: Critical Peak Pricing events occur during periods of extreme demand. During a CPP event, prices rise to 95¢ per kWh. Utilities must notify customers in advance of implementing a CPP and are limited to a maximum of 56 hours of CPP in a calendar year.
- After Jan. 1, 2020, Consumers Energy is transitioning to a Residential Summer On-Peak Basic Rate, which accounts for changing seasonal demand. The new RSP rate delineates “On-” and “Off-peak” rates. On-peak rates are charged from June 1 to Sept. 30 between 2 p.m. and 7 p.m. on weekdays. Off-peak rates are charged between 7 p.m. and 2 p.m. on weekdays and through the weekend. As with the previous rate format, on-peak rates are higher than off-peak. From Oct. 1 to May 31 electricity rates are the same regardless of time of day, or day of the week.
- As utilities work to implement demand response and energy efficiency programs, their pricing structures, times, and details of incentive programs are likely to change. Therefore, reporting a simple, statewide pricing structure will become increasingly difficult.
- Energy for First 600 kWh: From June through September, lower rates are set for the first 600 kWh of a customer’s monthly electricity use.
- Energy over 600 kWh: From June through September, higher rates are set for a customer’s monthly electricity use over 600 kWh.
Energy Efficiency/Energy Optimization: MPSC-approved monthly charges for business customers and per kWh charge for residential customers. These charges pay for utility energy efficiency programs put in place under the authority of Public Act 295 of 2008. Energy efficiency and optimization programs — that encourage the use of newer more efficient technologies to provide similar services using less electricity — can provide rebates and incentives, as well as efficiency education. The Energy Efficiency charges cover the cost of these incentives and rebates.
Enhanced Security Surcharge: A charge ordered by the Nuclear Regulatory Commission to cover increased anti-terrorism security measures, such as vehicle barriers and security staff, at American nuclear generation plants.
Implementation Surcharge: Older bills may show this charge that allowed utilities to impose charges when self-implementing a rate increase and before that increase had been approved by the MPSC. When Public Act 341 of 2016 was passed, utilities in Michigan were no longer allowed to self-implement rate increases. Therefore, this surcharge is unlikely to be seen on current or future bills.
Kilowatt: A unit of power equal to 1,000 watts
Kilowatt Hour: A unit of energy equivalent to the energy needed to keep one 100-watt incandescent light bulb lit for 10 hours.
Low-Income Energy Assistance Fund/Michigan Energy Assistance Program: Public Act 615 of 2012 created the Michigan Energy Assistance Program to provide energy assistance to low-income households in Michigan.159 Public Act 95 of 2013 created the Low-Income Energy Assistance Fund that adds a monthly surcharge to each bill, which is capped at $1.160 Public Act 87 of 2019 extended this $50 million fund to Sept. 30, 2023, providing financial aid, or energy assistance for Michigan’s low-income residents in the heating season, in the form of payments to utilities for overdue bills.161 Utilities may choose not to collect this charge, but cannot disconnect electric service for any residential customer because of nonpayment between the dates of Nov. 1 to April 15.
Nuclear Decommissioning Surcharge: A charge associated with the closure and removal of a nuclear generation plant. As described in the nuclear energy section of this paper, there are four nuclear reactors operating in Michigan. This surcharge collects funds to cover the costs of decommissioning those plants at the end of their life.
Power Plant Securitization Charge/Securitization Bond and Bond Tax Charge: MPSC-approved, per kWh charges applied to customer bills that were established by Public Act 142 of 2000. These charges helped to cover the cost of refinancing higher cost debt accumulated when constructing new power plants, or decommissioning and stranded costs associated with the early closure of plants as a result of changing regulatory requirements.
Power Supply (Energy) Charges/Generation Services: Charges paid by customers to the utility for electric generation — turning fuel into electricity — and transmission that are based on the amount of electricity used by a customer.
Power Supply Cost Recovery Charge Factor: These charges are added to cover the cost — no markup or profit is added — of electricity that is purchased by a utility from an outside source. Each year, the utility must submit and obtain approval for their annual power supply cost recovery charge factor plan from the MPSC.
Rate: The MPSC-approved charge per unit of energy consumed by a customer
Regulatory Asset Recovery Surcharge: A charge to replace utility investments made during a rate cap and rate freeze brought in by P.A. 141 of 2000. Regulatory assets are costs a utility can postpone and count as an asset on its balance sheet. Examples of regulatory assets include energy-efficiency programs.
Renewable Energy Plan Surcharge: MPSC-approved per meter charges to recover the costs of utility renewable energy programs, such as the construction of solar and wind power. This charge is associated with renewable generation built to achieve the minimum required renewable generation — renewable portfolio standard requirements associated with Public Act 295 of 2008.
System Access/Customer Charge/Monthly Service Charge/Availability Charge: Charges approved by the MPSC and separate from energy charges, covering the use of an electric meter and billing.