The Nebenkosten is the price you pay every month for utilities (hot water, central heating, trash collection, etc). The Nebenkosten are included in your warm rent (Warmmiete). In other words, cold rent (Kaltmiete) + utilities (Nebenkosten) = warm rent (Warmmiete). It does not include electricity for the lights and appliances.

The Nebenkosten are adjusted every year during the Nebenkostenabrechnung. Every year, you receive a Betriebskostenabrechnung. It shows how much hot water and electricity you really used. If you used more than you paid for, you will get an invoice. If you used less, you will get some money back.