Wal-Mart (NYSE: WMT) is fed up. For too long the company has been paying its AEP (NYSE: AEP) electric bill in Ohio having no idea how to even read that bill. The company went as far as to say that it's "untenable for customers to be able to evaluate their rates given the array of multiple riders that apply under the company's rate and rider framework."
Wal-Mart is asking Ohio's Public Utilities Commission to require AEP Ohio to issue a simple base rate for its customers by May 2018. Currently, utility bills in Ohio from AEP have up to 23 riders on them for commercial customers like Wal-Mart. While AEP says these riders are there to provide transparency, Wal-Mart and many others would rather have simplicity.
Your bill is probably complicated, too
Wal-Mart is far from the only utility customer that has no clue what's actually on their local utility bill. The bills are filled with numbers and abbreviations that make absolutely no sense whatsoever to the average American. But there is a way to better understand what impacts these bills each month. By understanding the bill customers can take control and then take actions to actually lower the bill.
Many utilities provide their customers with online instructions on how to read their bill. Duke Energy, for example, provides a sample electric bill for its customers in Ohio to show them how to read their own bill. It's just one of the many utilities that provide this service to their customers. Even AEP Ohio has a sample electric bill for its customers that helps to explain some of the complexities of their bill.
This is the one number that matters
While utility bills vary by location and customer type, there is one number that has the greatest impact on the average utility bill, and that's usage. Understand that and the rest of the bill will make much more sense, especially the bottom line of what's paid each month.
Somewhere on the bill it should have the kilowatt hours, or kWh of electricity used in the billing period. In addition to that the bill might also have the therms of natural gas used if gas is provided to the location. These numbers have the greatest impact on what's paid to the utility each month. To the left is a screenshot of the usage history of my bill. It's one of two places where my bottom line number, in this case 1066 KWh, is found. I've only been in my house a few months, but one thing is pretty clear: My electric usage has been going up every month since I moved in. That would certainly explain why my bill keeps going up!
This number is of course the sum total of all of the electricity that has been used in the house. It's the air conditioning keeping me cool, the laptop that I use for work, and so on and so forth. But by understanding this number I can compare it back to previous months, and with enough history even to previous years, to see if I'm starting to use too much electricity. It could be a signal to adjust the programmable thermostat a degree or two in order to cut back, or instead of turning the lights on in the hallway a smaller night light would be a better option.
Take back control of your utility bill
The reason why this number is so important is because it is the only one controlled by the customer. We can't always control the price paid for electricity or the seemingly random charges on the bill, but we can control our usage. So, take back control. Learn the one number that matters on the bill and then find ways to reduce it.
Matt DiLallo has the following options: long January 2016 $55 calls on Wal-Mart Stores and short September 2014 $77.5 calls on Wal-Mart Stores. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.