There are generally three types of charges a customer can be asked to pay. What are they?

• A. Energy charge, capacity (demand) charge, and customer charge
• B. Generation charge, construction charge, and maintenance charge
• C. Service charge, metering charge, and convenience charge
• D. None of the above

Answer: (A)

In electric utility bills, charges are built from three different cost drivers: energy usage, peak demand, and the fixed cost of providing service. The energy charge covers the amount of electricity you actually use, billed per kilowatt-hour. The capacity or demand charge reflects the highest level of power you draw during the billing period, billed in kilowatts, to cover the cost of having enough capacity and infrastructure ready to meet that peak. The customer charge is a fixed monthly fee that covers the ongoing cost of delivering service, such as connection and metering, regardless of how much you use.

This trio—energy, capacity (demand), and customer charges—best describes how customers are typically billed, which is why it is the correct choice. Other options mix in charges like construction, maintenance, or convenience, or leave out one of the standard components, so they don’t fit the common billing structure as accurately.