How To Reduce Your Electric Bill (or Why Is My Bill So High?)

The entire purpose of Home Power Saver is to help readers reduce their electric, gas, and water bills. We do this by discussing changes in behavior, simple energy saving products, and improvement projects that most readers should be able to do.

Thus far I've looked at many specific areas where you can save energy and reduce your electric bills, but I have yet to take a holistic view of why a bill is what it is.

That all changes today, where I will dissect the average bill for an average family in the USA, and look at the prime target areas where the most savings may be obtained.

Why is My Electric Bill So High?

If you've suffered from 'sticker shock' when opening your summer electric bills, the first step is to understand your bill, and the first question to ask yourself is "Is This Typical (for this house, for me, for this neighborhood)?".

Understanding Your Electric Bill

Power Usage

Take your "problem" bill or bills and take a look at your usage in KwH (killowatt-hours). A KwH is the standard way in which electric companies measure electricity usage. One KwH equates to 1000 watts (a kilowatt) of consumption for an hour duration. Similarly, 100 watts consumed for 10 hours, 10 watts for 100 hours, and other combinations are also equivalent to a KwH.

Your KwH usage for the billing period is the most basic determination of how much power you use.

Example KwH In A Month

Device	watts	Hours per day	KwH per Month	Cost ($0.12 per KwH)
Computer	150	24	108	$12.96
Refrigerator	100	24	72	$8.64
50" Plasma TV	280	8	67.2	$8.06
Typical Household Vampire Power	75	20*	45	$5.40
Incandescent Lightbulb	100	8	24	$2.88
Compact Fluorescent Lightbulb (CFL)	16	8	3.84	$0.46

*20 hours assumed based on 24 hours per day minus 4 hours of actual use

Billing Program

Most utilities have many billing programs, including tiered billing and time of use.

Tiered billing is probably the most common - you are charged a fee per KwH to a certain threshold level, and usage in excess of that is charged a higher fee. This is further incentive to reduce your usage.

Time of use plans charge more during peak hours of the day, and give a discount during off hours. Some utilities even offer a choice of TOU plans with different start and stop hours, and different savings levels.

For households where no one is home during the day and behaviors can be modified to hold off on laundry, dishwasher use etc until after the peak time, TOU plans often make a lot of sense.

A Sample Electric Bill

The sample bill on the left gives you an idea of what to look at.  Click on it for a larger view is needed.

This bill was for 32 days, had 1123 KwH usage, and is on a typical tiered billing plan.  The tier charges 9 cents per KwH up to 500 KwH usage, and then charges 11.5 cents beyond that.  Further, there is a PPCA adjustment adding another 2.85 cents per KwH.

A quick side note on the PPCA - that stands for Purchased Power Cost Adjustment, and typically is only seen on bills from utilities who do not generate their own power.  PPCAs can vary significantly year to year, but most states require utilities to provide notice prior to changes.

Back to the sample bill - this bill is apparently from a hot climate, since the October average temperature (high and low averaged out) was about 88.

Is My Electric Bill Normal?

Now that you understand what your bill is telling you, determine if the bill is "normal".

If Not Normal, Am I Average?

As a starting point, according to US EIA, the average American household uses 920 KwH per month. Obviously, this does not take into account house size, number of people in the house or climate, but it gives you a very rough idea of where you sit comparatively.

Using the bill above as an example, usage of 1123 KwH in October is very high.  But, as we saw it was a hot month, we have no idea how many people are in the house, and no idea how large of a house it is.  So we don't really now if this bill is normal - yet.

Comparative Analysis

The next step to determining if the bill is "normal" is to perform some comparative analysis.

• Compare your bill to other recent electric bills - are they generally in line, i.e. no major changes that can't be accounted for?
• Compare the electricity rate over recent months - has the electricity rate gone up in recent months?  
• Did you have a particularly hot or cold period?
• Was the billing period longer?  For most utilities, billing periods can range from 28 to 34 days, depending on when weekends occur, and a few extra days can really add up.
• Talk to neighbors.  See how much they are using and paying.

If you are lucky, your utility will include ways for you to make those comparisons, such as month-by-month graphs, comparison to the same period a year ago, and average temperatures for the current billing period and year ago period.

If you make those comparisons and see your bill is way out of line for no known reason (for example, indicates double the kWh compared to a year ago), the utility may have mis-read your meter, made a mistake, or your meter may be broken.  Michael Bluejay has a nice article on checking your electric meter.

And if you still have questions, try calling your utility to see if they can help sort it out.

I Use Too Much Electricity. Now What?

Perhaps you've observed a large spike in usage, or in talking to neighbors realize you are using much more power than is typical. Or you just can't figure out how you used 1100 KwH in October. Now is the time to analyze your usage and making changes.

Start With Improving Habits

Pay attention to your energy usage habits, and you could save yourself $20-$40 a month.  Do you leave lights on when you leave a room? Do you leave your computer on all night? Do you leave your TV on while not in the room? Do you turn your thermostat down when you leave the house?

These little items can really add up - easily to $100 or $200 a year at most electric rates, and perhaps more if you have a giant plasma TV, for example.

Try to adjust those habits immediately. You can permanently fix them by using a number of helpers, like smart power strips that automatically shut off outlets, timer switches, and programmable thermostats.

Also, be sure to set up power saving features on your computer systems.  A monitor and desktop can easily consume 200 watts of power, and if you leave it on all day for convenience, you can easily be throwing $10-$15 away each month.  The 'sleep' mode most PCs have is a great compromise, allowing you to quickly start back up again without having to reboot.

Stay On Top Of Maintenance Chores

OK, I already devoted a page to home maintenance chores that save money earlier in the year, but it is important to do your chores - just like your Mom always said. Among other things:

• Clean the dryer lent trap after every load
• Wipe down the seal on your refrigerator door and vacuum under the fridge occasionally
• Replace your furnace filters as often as the manufacturer recommends (usually 30 days)
• Have your air conditioner professionally checked annually; and hose down the air intake fins at least twice a year - more in dusty climates.
• Adjust your hot water heater temperature for the season.

Spend a Little Money to Save Money

Sometimes you have to spend money to make money. Typically, we think about what the "return on investment" (ROI) will be to decide whether an expenditure makes sense.

You may look at it in terms of money only - i.e. "if I spend $10, it will save me $5 per year, meaning a payback of two years".   Or, you may look at the ROI as both financial and non-financial. For example, improvements to save energy often result in a more comfortable, less drafty home.

In some cases these improvements may improve safety or quality of life in other ways.  For example, sealing your home may reduce insect infiltration; putting timers on your outdoor lights ensures safety and not forgetting to turn them on (or off).

Ratcheting Strike Plates Create a Tight Seal

Consider these ideas where a low cost expenditure may save you money:

1. Purchase and install outlet seals/gaskets.  A surprising amount of air infiltration occurs around electrical outlets and switches!
2. Make sure your doors seal tightly.  Try a ratcheting strike plate, which I profiled before.  If you have an adjustable threshold, get out your screwdriver and make sure it forms a tight fit.
3. Replace heavily used lights with CFLs or LEDs.  Both have come a long way in terms of quality - especially CFLs, though LEDs do have some niche uses.
4. Spend some time sealing your home.  Be sure to read "Mind The Gap - How to Find and Fix Energy Leaks" if you intend to do this.

Bigger Projects That Save Bigger Money

All of the tips mentioned so far are simple, low cost, and easy to implement. However, there are a number of other projects and products you may want to consider.

Attic Insulation

It is recommended that most climates have R-49 levels of attic insulation.  However, even new construction may have R-30 or less.  Older construction may have less  still, and as some insulation ages it may settle and may provide less insulating power.

Adding insulation can be a do it yourself (DIY) project with some planning and the help of a friend.  And better still, you can calculate the payback and annual savings based on your climate, existing insulation, and house size.

Check out my attic insulation series if you intend to take on this project.  In that series, I look at insulation types and demonstrate savings that should be achieved in a variety of climates, as well as provide tips for installation.

New Appliances

Many new appliances offer big efficiency gains. If you are in the market for a new appliance, then make sure you pay attention to the energy ratings.  You may want to subscribe to consumer reports to get more energy information for specific appliances.

A few examples:

1. Front loading washing machines offer large water savings over top loaders.  Not only does that help your water bills, but it will reduce water heating costs.  They offer some electricity savings, too.  Additionally, they spin dry much faster than top loaders, meaning you can reduce your dryer time by 5-15 minutes and save even more energy.
2. Refrigerators have had huge gains in efficiency over the last 10-15 years or so.  I was surprised to learn that my refrigerator bought in 2003 had a new model in 2009 that averaged $12 savings a year.  Gains compared to the 1990's are significantly greater.
3. Get a higher SEER air conditioner unit when replacing your existing unit.  A larger SEER number means a more efficient unit, and many utilities and states offer incentives to help offset the extra costs of high efficiency units.

New Electronics

Similar to the above section on new appliances, pay attention to energy efficiency when buying new TVs and computer monitors. There are huge variations in power consumption - enough to sometimes make it worthwhile to pay a bit extra up front because you'll save it all back and then some during the lifetime of the unit.

Check out my articles on television power usage and computer power usage for more information.

Solar Photovoltaic (PV) Cells

Solar Panels

If you live in a sunny climate, have a nice broad, generally south-facing roof exposure with few chimneys or obstructions, and have good utility or state rebates for solar installations, you may be a good fit for solar.

Solar is a GIANT topic that I plan to cover in depth in the late winter or early spring. But for now my recommendation would be to spend time researching on your own, and make sure you get at least three companies to provide estimates.

Be sure to get rough drawings of their proposed systems, and the names and models of the panels and inverter(s) they plan to use. You'll likely see differences in their designs - ask lots of questions and understand why their designs are different.  Ask if they plan to put all of the panels onto one string, or two (or more) strings, and why. 

Some companies will try extra hard to fit more panels on your roof and claim a higher capacity installation.  On the surface, this sounds good, but this may be to the detriment of the system as a whole (i.e. if one panel is shaded by a chimney, all of the other panels in the string have to reduce their output to match the shaded one). In other words, more panels is not always better, and this is why you must take an active role in understanding the designs.

Reducing Your Bill Further

There a so many cost effective ways in which you can reduce your utility bills that this article only hits the high points. I invite you to subscribe to the site, or just return frequently for many more tips.