Making Sense of Your Gas Bill

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Your natural gas bill is generally divided into three categories: delivery charges, supply charges and taxes.

Delivery fees, such as the customer and distribution charges, cover the cost of getting gas to homes—plus a profit for the utility—and are set by the Illinois Commerce Commission (ICC). The supply charge covers the cost of the actual gas. It varies monthly and is set by the market.

Natural gas usage is billed by the therm. One therm is roughly the amount of natural gas needed to run a typical residential furnace for one hour. Your gas meter measures the volume of gas in cubic feet, which is converted to therms on your bill.

A customer’s previous and current meter readings are listed on the bill, and the difference between the two is the gas usage for the current billing period.

Utilities should read a customer’s meter at least once every other month. But in the months your gas utility doesn’t visit your home, it will estimate your usage, based on last year’s usage for the same month, adjusted for weather.

Check your bill to make sure your usage is not being estimated more than two months in a row. If it is, call the utility, ask why it’s not reading the meter, and request an actual reading.

Distribution charge
The ICC sets the rate your utility charges you for delivering gas through its pipes. Gas usage is converted to therms and multiplied by the rate to come up with the charge. It’s also sometimes called the energy charge or the delivery charge.

Storage Service Charge
Peoples and North Shore Gas bills include a separate line item to recover the cost of storing customers’ yearly supply of gas. Other utilities roll these storage costs into the distribution charge.

Customer charge
This fee covers a company’s fixed service costs, such as billing and meter readings, that don’t vary with usage. It’s also called the basic service charge or the account charge.

Purchased gas adjustment charge
Under the law, utilities don’t make a profit off this per-therm charge, which is used to pass along the price of gas that utilities pay on the market. The ICC doesn’t approve the charge in advance, but it does review the charge annually and can order a refund for customers if it finds the utilities weren’t using sound business practices to buy gas at a reasonable cost. Also called the cost of gas charge, natural gas cost, gas charge adjustment or gas supply charge.

Efficiency Program
Covers the costs of energy efficiency and on-bill financing programs mandated by the Illinois General Assembly to help homes and businesses save money. Also called Gas Energy Efficiency Cost Recovery and Natural gas Savings Program.

Qualified Infrastructure Charge
This legislatively approved fee (also known as Rider QIP) covers the costs of natural gas pipe improvements. Also called the “Qualifying Infrastructure Plant Surchg” or “Qual Infrastructure Charge.”

Volume Balancing Adjustment
This ICC-approved per-therm adjustment provides the gas utility with a set amount of revenue to cover its delivery costs, regardless of usage. The formula for this adjustment ensures that weather extremes and other factors don’t result in an over- or under collection of gas revenue.  As a result, the amount can be either a charge (if gas consumption is lower than expected) or a credit (if gas consumption is higher than expected).

State utility tax
This charge is 5 percent of current charges before taxes or 2.4 cents per therm, whatever is lower. The tax also is called the public utility tax or the Illinois gas revenue tax.

Municipal tax
Municipalities can impose their own utility taxes, but state law caps the amount they can collect. It’s also called a franchise tax.

Regulatory tax
This tenth-of-a-cent tax helps fund the ICC, which regulates Illinois utilities. It’s also called the Illinois CC assessment, the Illinois gross revenue tax or the utility fund tax.

Environmental adjustment charge
The ICC allows companies to charge customers for the cost of cleaning up toxic waste at old gas manufacturing sites. This per-therm charge also is called the environmental charge, the environmental activities adjustment, the environmental activities charge and the environmental recovery charge.