An electricity rate is the set of rules a utility or supplier uses to convert electric service into a bill. The familiar cents-per-kWh number is only one part of that structure.
Electric service has several physical stages
Electricity is generated, moved over high-voltage transmission systems, stepped down through substations, and delivered through local distribution wires. Different organizations may own or operate different parts of that chain.
Bundled utilities combine more of the relationship
In a traditional bundled utility structure, the customer receives electricity service through one utility relationship that combines supply and delivery. The utility may own generation itself or purchase energy, but the residential bill is presented as one utility account.
Competitive retail markets can split supply from delivery
In some states, customers can choose an electricity supplier while the local distribution utility continues to own the wires and deliver power. That means an energy-only price does not describe the full delivered bill. This distinction is why our utility/provider pages keep EIA bundled, energy-only, and delivery-only service types separate.
Fixed customer charges
Many tariffs include a monthly charge that does not depend directly on kWh usage. This can cover metering, billing, service availability, or other system costs. Because it is fixed, it should not always be treated as the cost of running one additional appliance.
Volumetric energy charges
This is the familiar price per kWh. A simple flat rate uses one price for all usage. More complex tariffs can divide usage into blocks or change prices by season.
Time-of-use rates
Time-of-use tariffs charge different prices at different hours. Peak periods generally correspond to times when the system is more heavily loaded. Customers can sometimes reduce cost by shifting flexible loads—such as EV charging—to lower-priced hours.
Demand charges
Demand charges are common for commercial customers and appear in some residential programs. They are based on the highest or near-highest power draw during a defined interval, measured in kW rather than kWh. A customer can therefore have moderate total energy use but still incur a demand charge after a short period of very high power.
Riders, fuel adjustments, and taxes
Utilities may add separate line items for fuel costs, transmission, storm recovery, efficiency programs, regulatory adjustments, taxes, or other approved charges. These can make the effective bill price differ from a headline energy rate.
Why average provider prices are still useful
An annual average based on reported residential revenue and sales summarizes what a provider collected per unit of residential energy over a year. It is useful historical context, but it does not reproduce the tariff for a particular customer today.
Source
For an overview of the grid and provider structure, see the U.S. Energy Information Administration's Delivery to consumers guide.