What Does the Supply Charge Mean on My Electricity Bill?

Key Points of This Article:

• The supply charge on your electricity bill covers the cost of the actual electricity you use, calculated by multiplying your usage in kilowatt-hours (kWh) by the supply rate set by your utility or energy supplier.
• Supply charges differ from delivery charges, which pay for the infrastructure that brings electricity to your home. While delivery rates are regulated and fixed, supply rates can vary depending on your energy plan and provider.
• To make supply charges more predictable, customers can opt for fixed-rate or unlimited energy plans, which help avoid fluctuations due to market conditions, seasonal usage, or fuel costs.

What are the Supply Charges on my Electric Bill and What Do They Mean? 

The electricity supply charge (usually charged monthly) is the part of your bill that covers the actual electricity you use.  

Typically, all supply charges are measured in kilowatt-hours (kWh), which is how much power your home consumes over time.  

For example, if you run a 1,000-watt space heater for one hour, that equals to 1 kWh. Your supply charge is calculated by taking the number of kilowatt-hours you use in a specific billing cycle and multiplying it by the supply rate (the price per kWh). 

Here's an example: The average U.S. household uses about 875 kWh per month. If your supply rate is 12¢ per kilowatt-hour, your monthly supply charge would be:
875 kWh × $0.12 = $105. 

How To Read Your Electric Bill and Understand Your Supply Charge 

Electric bills can feel overwhelming at first glance, filled with line items, numbers, and technical terms. But once you know what each part means, it becomes clear where your money is going and which charges you actually have the power to influence. 

We've consulted out energy experts and have pulled the key sections you'll typically see on a Midwest energy bill: 

1.Your Usage (kWh): This shows how much electricity your home consumes during the billing period, measured in kilowatt hours. This of course fluctuates over time depending on your energy habits, household members, and weather. The more you use, the higher your supply charge will be. 

2. Your Supply Charge: This is the cost of the electricity itself. As you know, it's calculated by multiplying your total usage by your supply rate that's set by either your utility or your third-party supplier if you choose one. 

In some cases, depending on your plan type, your supply charge can fluctuate even if you've used less energy this month than you did last month. 

3. Your Delivery Charge: This covers the cost of bringing electricity to your home through the poles, wires, substations, and meters. Delivery charges are regulated by your state and are handled by your main utility. 

4. Taxes and State Programs: Most bills also include taxes and small fees that support state-mandated programs, such as renewable energy initiatives or efficiency upgrades. These are required by law and apply to all customers. 

How the Supply Charge is Different from the Delivery Charge 

While the supply charge is the cost for supplying the electricity itself, the delivery charge covers the cost of getting that electricity to your home. This includes maintaining power lines, poles, substations, and meters, as well as restoring power when there's an outage.  

The key difference between an electricity supply charge and a delivery charge is control: you can shop around and choose a plan that controls the predictability of your supply rate, but your delivery rate is set by your utility and cannot be changed. 

What to Know About Your Electricity Supply Charge: Key Characteristics 

The supply charge might look confusing, but it really comes down to a few simple facts. Here's how it works and how it can work for you: 

1.Your Utility Offers a Basic Rate 

Your local utility typically offers a supply rate that reflects the cost of purchasing electricity from the wholesale market each month. Usually with no frills, just a direct pass-through of their purchase costs. 

When you choose to work with a retail energy supplier like Santanna Energy Services, you gain access to more options. We design plans that fit your budget and preferences! 

2. It Can Change

Your supply rate, and therefore your total supply charge, can vary depending on the type of energy plan you select:  

• On an Unlimited Energy Plan your monthly supply charge* stays the same throughout your contract term, giving you cost predictability and leading to reduced bill shock. How cool is that? 

• On a Fixed-Rate Plan your price per kilowatt-hour remains locked in for your contract term, but your total supply charge changes based on how much energy you use each month. 

• On a Variable-Rate Plan, your rate per kilowatt-hour can fluctuate month to month based on market conditions AND your supply charge can fluctuate depending on how much electricity you use. 

3. It's Influenced by Real-World Market Conditions 

Even if your plan type stays the same, the energy market itself plays a big role in how supply rates are determined. Factors like fuel costs, weather extremes, and overall electricity demand can drive prices higher or lower in the wholesale market depending on what plan type you're on. 

Deregulated Energy Markets and How It Affects Your Supply Charge 

One of the most important things to know about how your electricity supply charge is set is recognizing which energy market you live in. Each energy market controls the rate you pay for your supply charge in different ways. 

If you live in states like Illinois, Ohio, or Pennsylvania, you are in a deregulated energy market. That means your electricity and natural gas bills are split into two main parts: the supply charge and the delivery charge if you choose to supply your energy from a retail energy supplier. States within deregulated energy markets have the choice to do so if they'd like to. 

On the other hand, in a regulated market, your utility company does everything and you don't have the option to choose where your energy is supplied from. 

Your utility supplies the electricity or natural gas you use, sets the supply rate, and delivers the energy to your home. In a deregulated market, those roles are separated.  

If you choose to supply your energy from a retail energy supplier like us, your utility company is still responsible for delivering electricity and natural gas safely to your home, but your retail energy supplier supplies your energy and sets the supply rate; often at a more competitive one that what your main utility might offer. 

How Your Choice Between Your Utility and a Retail Energy Supplier Impacts Your Supply Charge  

The supply charge is one of the most competitive parts of your bill. t's the portion where you have control. While your local utility's supply rate is typically set by state regulators and updated a few times a year, retail energy suppliers update their pricing more frequently giving you the chance to capitalize on a better deal or a plan that better fits your lifestyle. 

For example, in Illinois, your electricity bill might come from ComEd. ComEd will always deliver the electricity to your home and handle outages. But the supply portion of that bill can either come from ComEd's default service or from a supplier you select, such as Santanna.  

In the Midwest, utilities do not profit from supply service they simply pass through costs, while suppliers compete to offer better options. 

Most utilities are limited in the types of plans that they offer and even more so when it comes to control over your supply charge costs. There is, however, one silver lining we offer to our Santanna Energy Services customers. 

The exception is our Unlimited Energy plan, where your supply charge* stays the same every month, no matter how much electricity you use. Take a look at your bill. In most cases, the supply charge is one of the highest charges on your monthly electricity bill. If this charge scares you, an Unlimited Energy plan is just what the doctor ordered! 

Why Is My Supply Charge So High? 

Noticing a higher than usual electricity supply charge? Let's debunk that for you. Several things influence why your supply charge may go up or down. Some are tied to the broader energy market, while others depend on your own household usage. Let's breakdown the most common reasons for a high supply charge: 

1. Market Prices for Energy Are Higher Than Usual: Supply rates change with the market. They can rise or fall depending on fuel costs, how much electricity is being used overall, and how much supply is available on the grid. 
2. There's High Demand During Extreme Weather: When everyone is blasting the AC in a heat wave or cranking up the heat in a cold snap, demand for electricity spikes. More demand means higher costs, which show up in your supply charge if you aren't in a contract that protects you from supply charge spikes. 
3. There's a Growing Electricity Use Nationwide in General: New technologies like electric vehicles, the rapid growth of AI data centers, and more manufacturing are all putting extra strain on the grid. This added demand can push supply rates higher. 

In Illinois alone, ABC 5 Chicago reported that in June 2025, "ComEd bills increased, on average, 10% as part of a capacity charge increase." 

4. Fuel Prices: Because natural gas is a major fuel for generating electricity, according to the U.S. Energy Information Adminstration, its price plays a big role. When natural gas costs rise, electricity supply charges usually rise too. 
5. Transition to Renewable Energy: Building new wind farms, solar arrays, and battery storage systems requires significant investment. Some of those costs are passed along to customers in supply charges as states shift toward cleaner energy.
6. Your Own Energy Usage: The more electricity you use, the higher your supply charge will be. If your usage goes up(for example, running multiple space heaters in winter), your bill and supply charge will too, unless you're on a plan that protects yourself from fluctuations in your supply charge. 
7. Tiered Pricing Plans: Some utilities use tiered rates, meaning the price per kilowatt-hour increases once you cross a certain level of usage. Hitting that higher tier can make your bill jump quickly.

Some of these factors (like market prices and fuel costs) are out of your control. But others, like your personal energy use and your choice of plan, are things you can manage. That's why it's important to know what's driving your supply charge. 

How Can You Make Your Supply Charge More Predictable? 

One of the biggest frustrations for homeowners is that supply charges can change from month to month. Prices can go up when the market shifts, when fuel costs rise, or when your usage spikes during extreme weather.  

That unpredictability makes it harder to plan your budget and often leaves you guessing what your next bill will be. 

Luckily, our Unlimited Energy Plan is designed to take away that uncertainty. Instead of your supply charge going up and down based on how much electricity or natural gas you use, you pay the same amount each month for the length of your contract.* 

Here's why Santanna customers like it: 

• It's Simple – The supply charge you agree to at sign-up stays the same for the entire contract. There's no complicated math or hard-to-read fine print. 

• It's Unlimited* – Whether you're cooling your home in the summer or heating it in the winter, your usage may change, but your supply charge doesn't. 

• It's Predictable – Knowing your supply charge won't fluctuate gives you peace of mind and makes budgeting easier. 

What this plan is not: it's not surprising, it's not stressful, and it's not complicated. With an Unlimited Energy Plan, you get consistency and control. No matter how hot the summer gets or how cold the winter turns, your supply charge* stays the same. 

Easiest Ways to Lower Your Supply Charge – Or At Least Make It More Predictable 

You can't control everything on your electricity bill, but there are smart ways to bring your overall costs down. The good news is that the supply charge is where you have the most power to make changes. Here are some simple, effective steps you can take to do just this: 

1. Shop for the right plan. In deregulated states, compare your current supply charge to other offers in your area. If your rate is higher, it may be time to switch plans. 
2. Check your usage habits. Simple adjustments in your daily life can make a big difference. Doing things like turning off lights when you leave a room, unplugging devices that aren't in use, and running full loads in dishwashers and washing machines avoids wasting electricity. 
3. Adjust your thermostat wisely. Quick but effective, lowering the temperature a few degrees in winter or raising it slightly in summer, can reduce how much energy your heating and cooling systems use. 
4. Spread out high-energy activities. Avoid running your oven, clothes dryer, and air conditioner all at the same time. Spreading out usage lowers demand on the grid and can possibly help reduce costs if you're on a demand-based or time-of-use plan. 
5. Maintain your systems. Replace furnace filters, clean dryer vents, and schedule HVAC tune-ups. A well-maintained system uses less energy and saves money over time. 
6. Upgrade to energy-efficient appliances. ENERGY STAR–certified refrigerators, washers, and thermostats may cost more upfront but pay for themselves in lower bills. Check if your state or utility offers rebates for these upgrades. 
7. Improve insulation and sealing. Seal drafts around doors and windows and add insulation to attics or basements to keep heated or cooled air inside your home, reducing how much energy you need to stay comfortable. 

FAQs 

Why am I paying a supply charge if I already pay for electricity?

You pay a supply charge because it covers the cost of generating the electricity you use, while the delivery charge covers the cost of bringing that electricity to your home and maintaining the grid. 

Who sets the supply charge — the utility or the supplier?

If you choose a competitive supplier in a deregulated state, the supplier sets your supply rate, but if you stay with your utility's default service, the rate is set through state-regulated auctions or procurement overseen by the public utility commission. 

Why are there so many line items on my electricity bill?

There are many line items on your bill because it must show the separate costs of supply, delivery, customer service, state-mandated programs, and taxes so you can see exactly what you are paying for, and regulators can ensure transparency. 

The supply charge isn't a hidden fee, it's simply the cost of the electricity you use. Once you understand how it works, you can make smarter choices: compare plans, plan your budget more effectively, and avoid those unexpected surprises on your bill. 

With Santanna's Unlimited Energy plan, you get peace of mind knowing your supply charges* will stay predictable all year long, no matter how much electricity or natural gas you use. Explore Santanna's plans today and enjoy the confidence of predictable supply charges with no surprises. 

* Restrictions apply. Enrollment based upon program eligibility. Customers using more than 125% of normal monthly usage as determined by Santanna may be required to switch plans.