How much does my electricity cost?

RS.EN.DG. How Much Does My Elec Cost
Reading an electricity bill can be confusing. Understanding kilowatts, how energy is measured and billed, and how household appliances are using electricity can make it challenging to grasp how much you're spending. Keep reading to learn how to analyze your bill, figure out how much your electricity actually costs, improve your energy efficiency, and potentially save yourself some money.

Steps to Calculating Your Electricity Costs & Usage

The first thing to understand is the difference between a kilowatt and a kilowatt hour. Similar to the way a calorie is a unit of measurement for food, a kilowatt (kW) is a unit of measurement for electricity. A kilowatt hour (kWh) measures how many kilowatts you are using.

In other terms, when you buy milk, you're charged per gallon. When you buy electricity, you're charged per kWh. One kWh is equivalent to using 1,000 watts per hour. To calculate your kilowatt hours, take the wattage of a given device, multiply it by the number of usage hours, then divide by 1,000. It comes down to three simple steps:

  1. Choose an appliance or device and find out the watts required for use. Convert that number to kilowatts by dividing it by 1,000.
  2. Multiply that number by the number of hours you estimate using that appliance per month. This gives you the number in terms of energy used.
  3. Find your electricity rate on your bill and multiply your kWh number by that cost.

It may still be a bit confusing. Let’s help you through an example of our own. We’ve calculated the cost of a single-lightbulb light that we used in our home for one month, demonstrated in the chart below:

Example: Calculating Your Electricity Costs 

Step 1: Find the lightbulb’s kilowattage 80 watts / 1000 = .08 kilowatts
Step 2: Determine your hours of use per month  90 hours of use * .08 kw = 7.2 kWh
Step 3: Find your electricity rate $0.07 * 7.2kWh = $0.504

This 80-watt lightbulb that we used for 90 hours in a month when we were charged $0.07/kWh cost us approximately 50 cents.


Factors Influencing Electricity Cost

There are a number of factors that contribute to the cost of electricity, including:

  • Your geographic location
  • How much electricity you use
  • The time of year (summer vs. winter vs. spring)
  • When you use electricity (some companies also offer lower rates in the evenings and nights/weekends)
  • Your electricity supplier

It's important to focus on the factors at play with your electricity bill, as opposed to focusing on the average national electricity rate for two key reasons. First, electricity rates can vary from one region to the next as well as those charged by a single energy supplier. It's not unusual for a single supplier to have rates ranging from 20 cents to 50 cents depending on the area. Second, electricity rates can be tiered, which means that people who use more electricity are billed at lower rates.

When Do People Use the Most Electricity?

Most households use the majority of their energy on heating in the winter and air conditioning in the summer. From there, the biggest sources of energy use are water heating, refrigeration, computers and electronics, and other major appliances, including washing machines, dryers, dishwashers, and electric ovens. If you ever have questions about your electricity bill or any other aspect of your electricity use, get in touch with your energy supplier.

And, here at IGS, we’re always here to help you answer any questions, too.

Learn more about how much electricity your home is using