Minimum usage fees and usage tiers, explained.

By Evan Wakefield · Updated October 20, 2026

Some plans charge more when you use too little, and some change the rate once you use a lot. Both are in the plan's Electricity Facts Label, and both decide what a mild month or a hot one really costs.

Minimum usage fees

A minimum usage fee is a flat charge added in any month you use less than a set amount of electricity, written in kilowatt-hours (kWh). Use at least that much and there's no fee. Fall short, even by a little, and the whole fee is added to that month's bill.

It's the mirror image of a bill credit. A credit takes money off when you clear a line; a minimum usage fee adds money when you don't. Some labels word the same thing either way, so read what the line does, not what it's called.

Illustrative example, round numbers that describe no real plan: a plan adds a fee in any month you use under 500 kWh. A month at 520 kWh pays no fee. A month at 480 kWh pays the full fee, so it can cost more than the 520 kWh month, even though you used less.

These fees hit homes that use little: apartments, small homes, a house that sits empty part of the year, or any home in its mildest months. A fee that never touches a big summer bill can land on every spring and fall bill.

Usage tiers

A tiered plan charges one energy rate for the first block of kWh each month and a different rate for everything past it. The rate past the line can be higher or lower than the first rate; the label says which.

On most tiered plans, crossing the line changes the rate only for the kWh above it, not for the whole month. That makes a tier gentler than a credit or a minimum usage fee. Over a long, hot summer, though, the kWh past the line can make up a large share of the bill. Check the label's wording.

Charges that apply every month

Base chargeA fixed amount the provider charges every month, whatever you use. It weighs more in a mild month, when it's spread over fewer kWh.

Delivery chargesThe utility that owns the wires sets these, and they're the same whichever provider you pick. They have a monthly part and a per-kWh part.

What it takes to check this yourself

You can check this from the label and your bills. For each plan you're considering, it takes this:

Find the months you used least in the last year. Compare them to any minimum usage line on the label.
Find the months you used most. Compare them to any tier line, and to the ceiling of any credit that stops paying above a set usage.
Read the label's average prices at 500, 1,000 and 2,000 kWh. If a plan's minimum usage line is above 500 kWh, its fee is in the 500 kWh price, which makes that price high.
Price the year, not the average. A fee or tier that only touches some months is invisible in a yearly average.

Then do it again for every other plan in your area. That's the arithmetic watt marshal does for you, for every plan we can price.

How watt marshal prices these

We price each plan we can on each of your twelve months separately. A minimum usage fee lands only in the months you'd fall under its line, and a tier's higher rate applies only to the kWh past it. Then we add the twelve months up.

More guides

Bill credits

How a usage bill credit works, why a month just under the line costs the whole credit, and how your report counts it.

Reading an Electricity Facts Label

Where to find a plan's label, what each section says, and the lines that decide what you pay.

Want your own plans read this way? Start with your ZIP.

We rank every fixed-rate plan we can price in your delivery area on your twelve months of usage, within each contract length.