How much electricity costs, and how they charge you

Last update: February 2015

What is a kilowatt hour?

Before we see how much electricity costs, we have to understand how it's measured.  When you buy gas they charge you by the gallon. When you buy electricity they charge you by the kilowatt-hour (kWh).  When you use 1000 watts for 1 hour, that's a kilowatt-hour.  For example:

To get kilowatt-hours, take the wattage of the device, multiply by the number of hours you use it, and divide by 1000.  (Dividing by 1000 changes it from watt-hours to kilowatt-hours.)  That's exactly what I did in the table above. If you'd rather not do the math then my handy calculator above will do all the work for you.  You might also be interested in my list of wattage for most household devices.

Here's the formula to figure the cost of running a device:

For example, let's say you leave a 100-watt bulb running continuously (730 hours a month), and you're paying 15¢/kWh.  Your cost to run the bulb all month is 100 x 730 ÷ 1000 x 15¢ = $10.95.

If your device doesn't list wattage, but it does list amps, then just multiply the amps times the voltage to get the watts. For example:

(If you're outside North America, your country probably uses 220 to 240 volts instead of 120.)

You can't always trust the wattage printed on the device, because many devices don't use the full listed wattage all the time.  For example, the compressor in a refrigerator doesn't run constantly, only sometimes, so you can't go by the listed wattage for a fridge.  My calculator takes this into account by listing the average wattage for fridges.  The most accurate way to find the average wattage of a device is to measure it with a watt-hour meter.

Exercise #1.  Go get your electricity bill and see how many kilowatt hours you used last month.

Exercise #2.  Assume that the lights in your kitchen and living room together use 400 watts.  How much does it cost if the lights are on 24 hours a day, for a whole month?  How much per year? Assume 15¢/kWh. (see answer)

Exercise #3.  Assume your window AC uses 1440 watts.  How much does it cost to run it continuously for a month?  How much per year?  Assume 15¢/kWh. (see answer)

Watts vs. watt-hours

Many of my readers get confused about the difference between watts and watt-hours.  Here's the difference:  

• Watts is the rate of use at this instant.
• Watt-hours is the total energy used over time.

Here's a question I frequently get, which makes no sense:

"You say that some device uses 100 watts. What period of time is that for?"

It's not for any period of time, because watts is a rate at that instant.  One might as well ask:

"The speedometer in my car says I'm going 35 miles an hour. What period of time is that for?"

It's not for any period of time.  You're going 35 miles an hour at that instant.

The difference is:

• We use watts to see how hungry a device is for power.  (e.g., 100-watt bulb is twice as hungry as a 50-watt bulb.)
• We use watt-hours to see how much electricity we used over a period of time.  That's what we're paying for.
  

So, just multiply the watts times the hours used to get the watt-hours.  (Then divide by 1000 to get the kilowatt-hours, which is how your utility charges you.)  Example:  100-watt bulb x 2 hours ÷ 1000 = 0.2 kWh.

How much does electricity cost?

The cost of electricity depends on:

1. where you live
2. how much you use
3. the time of year (summer rates are usually higher than winter)
4. possibly when you use it (some utilities have lower rates in the evenings)
5. who your provider is (every utility has different rates).

Average rates

More on tiered rates

California has a ridiculously complicated way of figuring its tiers.  First you have to find your "baseline quantity" (different for every area, and for winter vs. summer) and then multiply that by the number of days in the billing cycle.  For example, an all-electric (no gas) San Francisco household has baseline quantities of 11.1 for summer and 20.2 for winter.  In a 31-day month, the baseline is 11.1 x 31 = 344 kWh for summer and 20.2 x 31 = 626 kWh for winter.  Once you know the baseline, you can see the tiers, as follows (along with some sample pricing from PG&E as of January 2012):

• 12¢ / kWh - up to the baseline
• 14¢ / kWh - 101 to 130% of baseline
• 29¢ / kWh - 131 to 200% of baseline
• 33¢ / kWh - >200% of baseline
  

(Yes, I know that PG&E has petitioned to change to a 3-tier system...in the future.  Feel free to let me know when that actually goes into effect.)

Regional data

Here are the average rates for each state (Table 5.6.A.) as compiled by the DoE, but remember again that looking at average rates is all but useless.  You really want to know your rate from your utility, and even then you should look for the rate you're paying in your highest tier, since that's the rate you'll save at through your conservation efforts.

Here's a link to the rates at PG&E (Pacific Gas & Electric), one of the larger providers.

Switch electric providers to lower your cost?

Until recently, no one had a choice about where they got their electricity from.  There was only one company (or co-op, or public utility), and that was it.  But recently, some states have allowed new providers to come in and compete, so depending on where you live, you might have the option to pick your provider now.  The idea is that competition would mean lower prices for the consumer.  The reality is that due to the unique nature of electricity as a product, this competition hasn't resulted in very much potential savings so far, and isn't likely to do so in the future.  In fact, in some cases electricity prices went up after deregulation. (WSJ 2008, 2021)  And whatever the potential savings from switching providers, in most cases it pales in comparison to the money you can save by washing in cold instead of hot or dialing up the thermostat in the summer.  You almost always get greater savings from conservation, so please do that first before you look at changing providers.  Only after you've made some progress at reducing your consumption is it time to look for another provider, which you can do at ElectricRate.com.

Demand Charges

Some utility companies impose an additional charge based on the maximum amount of electricity you draw at any one time. This is called a demand charge. The chart  at right from Wisconsin Electric illustrates the concept. The shaded area is how much electricity you used, and you know you get charged for that. But the black bar on top is the demand, how much energy you "demanded" at any given point throughout the day. If your utility company has a demand charge (ask them), then you can save money by spreading out your electrical use throughout the day. Running appliances one after the other rather than at the same time would reduce your demand. And better yet, running them when you're not using much electricity for other purposes (such as at night when the air conditioner is off) will reduce your demand even more.

Possibly cheaper in the evenings

Some utilities have cheaper rates in the evenings.   (Check with them to find out.)  That's because it's harder for them to reach peak demand during the day when everyone's running the AC.  So they might charge less in the evenings to try to get you to move some of your consumption (like laundry machines) outside of those daytime hours.  And even if your utility doesn't have cheaper rates at night, if your utility has a demand charge (see above), it could still pay to shift your laundry to the evenings, because running laundry + air conditioning at the same time results in a higher demand.

"Doesn't my utility want me to use more electricity so they can make more money?"

Most utilities in the U.S. are owned by their members (co-ops) or by the government. (source)  In those cases there aren't any shareholders or owners demanding higher profits.  And even when a utility is a traditional business, they're often regulated and can't just promote electric consumption willy-nilly.  In any event, whether you trust or distrust your utility, you can still save energy by using the strategies listed on this website.

Smart meters are not overcharging you

In recent years utilities have replaced the old spinning-disc meters with new digital smart meters which radio in your usage, for the extremely obvious reasons:  so they don't have to pay meter-readers to trudge through thousands of miles of neighborhoods each month, and so they can monitor demand better.  Of course anti-government conspiracy theorists have decided that the real reason behind smart meters is to spy on us and to overcharge us (the new meters supposedly register more usage than actually occurs).

Always the victims, always getting persecuted.  Whatever.  And of course, since I won't tell the "truth" about these meters, many of the Anti-Smart Meter Warriors for Freedom think that I'm in on the fix, being paid off by the utilities in order to buy my silence.  Oh yeah, I'm rollin' in it.

The smart meters are also not blanketing you with radiation.  The Vermont Health Department actually measured smart meters directly, first by measuring in contact with the meter.  The reading was 50 to 140 μW/cm2, vs. 490 for the cell phone they mentioned.  At a distance of 12", the power dropped further to 10-50, and at three feet, the amount was indistinguishable from background radiation (same as for the measurement on the other side of the wall).  If you disagree, then send me pictures of your own actual measurements that have higher readings.  Otherwise, I'm as likely to be persuaded by your claim as I am that Hillary Clinton is running a child slave ring in the basement of a pizza shop.

»» Now let's examine how much electricity your appliances use. »»