Utility Fixed Fee Impact on Purchase Economics
Every utility bill has a fixed monthly service fee that stays the same no matter how much energy you use or save. This tool makes sure a purchase's real savings are measured against the addressable, usage-based portion of your bill, not the whole thing.
At your inputs, this purchase, once you separate addressable usage cost from fixed fees has an NPV of -$5,367 over 10 years, with a discounted payback of no discounted payback within this horizon.
| Net cost after confirmed incentives | $10,000 |
|---|---|
| Annual savings | $600 |
| Net present value | -$5,367 |
Breakeven: No discounted payback occurs within the selected horizon.
- This uses planning estimates you entered, not a contractor quote or guaranteed savings.
- Fixed fees are set by your utility and are not reducible by most home-energy purchases, only the usage-based portion of your bill is addressable.
What this also tells you: A positive NPV means the option is worth more than its cost even after discounting future savings back to today; a negative NPV means the upfront cost outweighs what the savings are worth today.
This is a planning estimate based on your entries. It does not size equipment, determine electrical or building-code compliance, verify incentive eligibility, or replace a contractor quote or professional energy audit.
Why this decision comes up
A homeowner estimating a purchase's savings against their total bill can unintentionally overstate the case if part of that bill, the fixed fee, cannot actually be reduced by the purchase.
How this is calculated
This discounts the annual savings back to today's dollars over your ownership horizon, using your entered total-bill before-and-after figures, netted against the purchase cost.
A worked example
With the defaults ($10,000 purchase cost, $2,600/year total bill dropping to $2,000/year, same fixed fees unchanged, 10-year horizon, 5% discount rate), the annual savings is $600 and the NPV comes out negative at about $5,367, showing this specific purchase does not clear its cost at these inputs even properly accounting for fixed fees.
Common mistakes
A common mistake is assuming a purchase will proportionally reduce your entire bill, including the fixed fee portion it has no actual effect on.
Limitations
This depends on you entering accurate before-and-after total bill figures. See the bill decomposition tool for a broader breakdown.
Common questions
How much of a typical bill is fixed fees?
It varies by utility, but fixed fees are often a meaningful, sometimes surprising, share of a total residential bill. Check your own bill's breakdown for your specific figure.
Can any home-energy purchase reduce fixed fees?
Generally no, except for fully removing a utility service entirely, such as disconnecting gas after full electrification. See the gas service removal payback tool for that specific case.
Why does this matter if I already enter my own annual cost figures?
If your "before" and "after" figures both include the same unchanged fixed fee, the math still works correctly; this tool is a reminder and a framework to make sure you're not double-counting or misattributing fee changes.
Do fixed fees ever get eliminated without disconnecting service entirely?
Rarely. A fixed monthly service fee is typically tied to having active service at all, so short of full disconnection, it generally persists regardless of usage changes.
Are fixed fees the same for every customer on a given rate plan?
Usually yes within the same rate class, though they can differ between residential and other customer classes, or by specific plan tier. Check your own bill for your exact figure rather than assuming a generic number.