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(This applies to North America; I assume it's similar worldwide)

The power company has a meter attached to the electrical service; usually either at the point of entry into the building for smaller loads, or at the transformer for larger loads. The meter shows the total kilowatt-hour usage since it was installed (newer digital ones can be reset, I believe) - every month the meter is checked by the power company, and the difference in readings tells them how many kilowatt-hours you've used for the month.

In urban areas, the company may have someone physically inspect the meter every month, or it may have a radio transciever built into it so that it can be read electronically (usually from a vehicle). In rural areas, they may send someone every now and then to check up on it, but you typically read the meter yourself and report how much you've used.

2015-07-16 18:17:36
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Q: How is the total home electricity usage for the month computed and how are you charged for it?
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