Here’s Where Your Energy Bill Goes

Nov 15, 2022 | Energy Conservation

We get it — paying your monthly energy bill can be a pain. Especially when you may not know exactly why that bill is so high, or where the money you’re paying is even going. At Energy Texas, we’re all about transparency and creating an energy service that’s better for you, the consumer. So let’s lay it out. When you pay for your energy bill every month, here’s exactly where that money ends up.

Step 1: You pay your bill

The money you pay doesn’t just line the pockets of the electricity company you’ve sent it to, even if it feels like it sometimes. With Energy Texas, you’re paying to a retail electric provider. Retail electric providers have already purchased the electricity and are selling it to you for a negotiated price. For other electric services, you may be paying a co-op or a city-owned utility. This is the first stop for your money — a cut is taken to pay the provider.

Step 2: The energy company pays ERCOT or ICE

In Texas, your money next goes to the Electric Reliability Council of Texas (ERCOT) or the Intercontinental Exchange (ICE). These are marketplaces that your provider works with to get the energy from a power generator. It’s similar to a service like Ticketmaster — they’re not the actual venue, your provider is just buying through them. So another cut of the bill goes to these marketplaces.

Step 3: The marketplace pays the power line company

The energy coming into your home has to be transmitted somehow, right? It comes through power lines — which are owned by a specific company, who also gets a cut of your money.

Step 4: The power line company pays the power generators

Energy Texas uses green renewable energy from the great state of Texas. But just because it’s green and renewable, that doesn’t mean it comes without a price. The power line company draws power from a generator, like wind farms, natural gas plants, or solar panel farms. Then the generator draws a bit of the money from the remaining amount you paid.

Step 5: Natural gas companies pay the pipeline

This is the final step in the process. The people generating the actual electricity and shipping it to the power generators need to get paid. So part of your bill goes to them, known as the pipeline.

Along the Way: Pensions

The other important part to this whole energy production situation is both your pension and energy investors. Sometimes some of the bill you’ve paid makes it back to you in the form of a pension or 401K fund. This doesn’t always happen, but it might depending on your personal situation.

Along the Way: Investors

At every step of this process, part of your money also goes to investors — the people who are helping to fund operations of the company that’s handling that step. They’ll get a little bit of money from your bill to compensate them for helping monetarily run the company.

 

Paying your bill is a one-stop moment to you — but for the energy company providing it, it’s a long line of people who need to be paid. Hopefully with this breakdown, it makes more sense!

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