Understanding your electric and natural gas bills could turn you into a frugal energy user and unleash your inner climate activist.
We need to stop burning fossil fuels and each one of us has a responsibility (if we choose to accept it) to do our part. Decreasing energy consumption in our homes is something everyone can do to help. When millions of people take a small action like switching to LED light bulbs, the energy savings can really add up.
This is the second in a 2-part post exploring how you can use your energy bills to educate yourself about your energy use and make informed decisions about when and how much energy you use in your home.
In the first post, Why You Should Read Your Energy Bills – Natural Gas, readers confronted the facts about the ubiquity of fossil fuel infrastructure in the United States and learned how much natural gas common appliances use, how to read and understand natural gas bills, and had an opportunity to establish a usage reduction goal.
This post is devoted to giving you a high-level overview of electricity use in the United States, helping you unravel the mysteries of your electric bill, and encouraging you to set your own electricity reduction goal.
Electricity Generation in the United States High-Level Overview
Currently, in the United States, power plants generate 65% of their electricity by burning fossil fuels (34% natural gas, 30% coal, 1% petroleum). Nuclear, hydroelectric, and renewable energy make up the remaining 35% of electricity generation.1
Fossil fuel burning power plants are expensive to ramp up and down so operators try to run these baseload plants at levels where they can generate and distribute a consistent amount of electricity continually.
During peak demand times or when electricity use spikes unexpectedly, electric companies bring their peaker plants online and/or purchase electricity from other power providers with excess capacity. This is a bad deal all around. Peaker plants are often the least efficient, most expensive, and worst polluting facilities.
What is a Kilowatt-Hour of Electricity?
Residential electricity is billed by the kilowatt-hour so you need to understand what that means.
Technically a kilowatt-hour is a measure of electrical energy equivalent to a power consumption of 1,000 watts for 1 hour.2 That begs the question, “What is a watt?” which then leads to “What is a joule?” and so on. For the purposes of this post, we will simplify matters by saying a watt is a measure of the operating power of an appliance or a piece of equipment.
You can find the wattage of your electric appliances and equipment on product labels, in user guides, and on the Internet. The examples below illustrate how long you could use several common electrical items for a kilowatt-hour of electricity.
- Dry your hair for 37.5 minutes or about 5 minutes a day for 1 week using a 1600-watt hair dryer.
- Cool your home for about 15 minutes using a 3500-watt central air conditioning system or for about 42 minutes using a 1400-watt window unit.
- Brew 6 to 7 pots of coffee each taking 10 minutes using a 900-watt automatic drip coffee maker (fewer pots if you leave the machine on to keep the coffee warm).
- Use a 1200-watt microwave oven for about 10 minutes a day for 5 days.
- Watch a 48-watt television for 3 hours a day for 1 week (less time if you have a cable box and/or external speakers).
You can do the math for any electrical item in your home using simple equations.
If your appliance runs at x watts, it will run for 1000/X hour.
1600-watt hair dryer example where X is 1600.
1000/1600= .625 hour
.625 hour × 60 minutes/hour=37.5 minutes
What Does a Kilowatt-Hour of Electricity Cost?
In 2016, the average price of residential electricity in the United States was 12.55¢ per kWh. Hawaii had the highest average cost of 23.87¢ per kWh and Louisiana the lowest at 7.41¢. The average price in California where I live was 18.28¢ per kWh.3, 4
How Much Electricity Does the Average Household Use?
In 2016, the average residential electricity consumption was 897 kWh per month or 10,766 kWh for the year. Louisiana had the highest consumption at 14,881 kWh for the year and Hawaii had the lowest at 6,061 kWh.5
This figure varies widely across the country depending on where you live, the weather, and the number, type, and efficiency of the electric appliances and equipment you use in your home. For instance, in my region, the average monthly electricity use is about 417 kWh in the summer and 474 kWh during the winter.6
What Can You Learn from Reading Your Electric Bill?
I live on the California Central Coast and my electric company is PG&E. After looking at electric bills for electric companies in several states, I concluded that there is a fair amount of variability but the basics are similar.
For this section, you will need a copy of your electric bill from last December. If you do not have a paper or digital copy, most if not all electric companies, make bills available online. If you need to, take a break to go sign up, retrieve your bill, and then come back.
Now look at your bill and find the following or similar items.
This field indicates what rate schedule is being used to calculate your bill. You can look up rate schedules on your electric company’s website.
Your home’s location places you in a climate zone that electric companies use to estimate how much electricity you and other customers in the same area will use during various times of the day and during different seasons of the year.
The climate zone assigned to your home is used to determine your baseline allowance, which is an amount of electricity intended to cover about 50-70% of an average household’s use. The baseline is adjusted seasonally. Not all electric companies use baseline allowances.
For example, our town is in the climate zone that covers most of the California coast and a short distance inland. Here the baseline is 7 kWh/day (about 210 kWh/month) May through October and 8.5 kWh/day (about 255 kWh/month) November through April.7
The number of days in the billing period is used in calculations on your bill.
Your electricity usage is calculated by subtracting the previous month’s meter reading from the current month. The difference is the number of kilowatt- hours you used.
Here is where it gets tricky. Electric companies often charge different rates at different times of the day and/or charge higher rates if your consumption is above a certain number of kilowatt-hours.
If you are on a tiered rate schedule, your per kWh rate will vary depending on your overall electricity consumption. Your baseline allocation kWh is charged at the lowest per kWh rate and you pay more for each kWh over the baseline.
For example, PG&E customers on a tiered rate plan pay 20¢ per kWh for tier 1 (baseline allocation), 28¢ per kWh for tier 2 (100-400% above baseline), and a 40¢ per kWh high usage surcharge (above 400%). The baseline allowance of kWh is different in the winter and summer, but the per kWh rate stays the same.7
For customers on time-of-use schedules, you will pay the highest per kWh rate during peak demand (usually during the workweek from the late afternoon to mid-evening) and pay a lower per kWh rate during off-peak hours. Some companies have an interim rate for part peak hours (usually just before or after peak hours). The times considered to be in the peak demand period vary by company.
For instance, during the winter season, PG&E customers on the time-of-use rate schedule pay 23¢ per kWh from 4:00-9:00 p.m. Monday through Friday and 21¢ per kWh for electricity consumed at all other times and all weekend. When the summer season begins in May, rates will go up to 36¢ and 26¢ respectively.7
State Regulatory Fee
As a customer, you are funding the public utilities commission that regulates electric companies in your state.
Other Fees & Taxes
Some costs are spread across all customers like financial assistance for low-income customers, efficiency programs, and rebates. States and/or municipalities may charge tax. In California, we are billed every month for nuclear power plant decommissioning and the cost of the bonds issued to buy electricity during our energy crisis in 2001.
Electricity Usage History
Hopefully, your bill will have a handy chart that shows your total electricity used each month over the past twelve months and a comparison with the same month in the prior year.
It is worth taking a few seconds to read the messages section as it contains information about new programs, rate changes, and rebates.
Establish Your Electricity Reduction Goal
Now that you are acquainted with your electric bill and your electricity use for last December, you are ready to set a reduction goal for this December and decide what you are going to do to achieve it.
Minimizing your electricity use during peak demand times is perhaps the most impactful action you can take in your own home. Keeping peaker plants offline is good for the environment, people’s health, and your wallet.
To help you get your creative juices flowing below are several no-cost ideas about what you can do to minimize electricity use during peak demand times. These actions may seem small and insignificant but if millions of people do them, it makes a significant impact.
- Defrost food for dinner in the microwave oven while you are eating breakfast or reading the morning paper.
- Turn off electronics when you are not using them. Most electronics come to life as soon as you turn them on and computers (even older models) only take a few minutes to boot.
- Turn your dishwasher on after 9:00 p.m. by using the delay button (if it has one) or turning the machine on just before you go to bed.
- Leave your outdoor lights off completely or at least until after 9:00 p.m. If you are expecting guests after dark, turn the lights on near their arrival time and off after they do arrive.
- During the summer, especially when it is hotter than usual, leave your air conditioning off or set it several degrees warmer than you normally would between 4:00-9:00 p.m. Use a portable fan in the room you are occupying (moving air helps you feel cooler).
Once you get in the habit of doing things that reduce your electricity and natural gas consumption, they become routine, meaning you do them without really thinking about it.
I hope this 2-part post has helped you become conversant with your energy bills and inspired you to challenge yourself to use electricity and natural gas sparingly and efficiently as if your life depended on it, which it does.
For readers interested in learning more about fossil fuel energy, electricity, and environmental issues, you will find links to articles and reports in the resources section.
Featured Image at Top: Coal Mining Operation in Tuscaloosa, AL – Photo Credit iStock/toddmedia
- Energy Awareness Month – 10 Energy Saving Tips
- Energy Policy Act of 2005 – Fracking and Drinking Water
- ENERGY: Overdevelopment and the Delusion of Endless Growth – Book Review
- EPA Clean Power Plan – Existing Power Plant CO2 Emissions (2016)
- Gasland – The Movies
- Reinventing Fire – Book Review
- What the Heck is Fracking?
- Why You Should Read Your Energy Bills – Natural Gas
- Electricity Explained: Electricity in the United States – U.S. Energy Information Administration
- Kilowatt Hour – Wikipedia
- Electricity Explained: Factors Affecting Electricity Prices – U.S. Energy Information Administration
- California Electric and Gas Utility Cost Report, California Public Utilities Commission, April 2017
- How much electricity does an American home use? – U.S. Energy Information Administration
- PG&E Residential Accounts 2016 Zone 5 (non-CARE) – California Public Utilities Commission
- E-1 Residential Services – Pacific Gas and Electric Company, 08/18/17
- Californians are paying billions for power they don’t need, by Ivan Penn and Ryan Menezes, Los Angeles Times, 02/05/17
- How Energy Storage Works – Union of Concerned Scientists
- How is electricity used in U.S Homes? – U.S. Energy Information Administration
- How many power plants are there in the United States? – U.S. Energy Information Administration
- How the Electricity Grid Works – Union of Concerned Scientists
- Mapping how the United States generates its electricity, by John Muyskens, Dan Keating and Samuel Granados, The Washington Post, 03/28/17
- Michael Bloomberg’s ‘war on coal’ goes global with $50m fund, by Damian Carrington, The Guardian, 11/09/17
- Oil Stain: How Dirty Crude Undercuts California’s Climate Progress, Center for Biological Diversity, November 2017
- Peaking Power Plant – Wikipedia
- Pollution Kills More People Than Anything Else, by James Conca, Forbes, 11/07/17