Working Out the Cost: How Much Is My Electricity?

June 8, 2015
Calculating the cost of electricity usage

Reading an electricity bill can be a confusing process. Understanding kilowatts, how energy is measured and billed, and which household appliances are using electricity can make it challenging to grasp how much you’re spending. Learn how to read your bill and work out the real cost of your electricity to gain valuable insight about your usage, allowing you to figure out how to cut back on usage and save money.

Steps to Calculating Your Electricity Costs & Usage

The first thing to understand in order to calculate your electricity costs 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 is a unit of measurement for electricity, and a kilowatt hour is a way to measure how many kilowatts you are using.

When you buy milk, you’re charged per gallon. When you buy electricity, you’re charged per kilowatt hour (kWh). One kilowatt hour 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.

Knowing the math behind the wattage measurements noted on your bill makes calculating your electricity costs easy. It comes down to 3 simple steps:

  1. Choose an appliance or device and find out the watts it uses. 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
  3. Find your electricity rate on your bill, and multiply your kWh number by that cost.

For example, we’ve calculated the cost of a single-lightbulb light that we used in our home for one month, demonstrated in the chart below:

Chart to Calculate Your Electricity Costs

Step 1: Find the lightbulb’s kilowattage 80 watts / 1000 = .08 kilowatts
Step 2: Find your hours of use per month 90 hours of use * .06 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 & nights/weekends) and your electric 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 within 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 contributors to 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.