Electricity costs reflect the cost of constructing, financing, maintaining, and operating power plants and the electricity grid. In addition to a financial return for owners and shareholders, some utilities incorporate a financial return for owners and shareholders in their power pricing. Having an energy bill at the end of the month is unavoidable, and it’s frequently a substantial expenditure for homes and business owners alike.

Due to changing demand and multiple providers, typical energy costs in the United States vary greatly based on your state and maybe even your area within that state. That’s why it’s always a good idea to know the average power cost in your state so you can decide whether you need to reduce your energy consumption and therefore your energy bill, or if you’re in a deregulated state, seek an alternate supplier. But before checking them, let’s dive into the kWh consumption:

5 Q/A About Electricity Costs

1. What are and how to measure kWh?

A kilowatt-hour is a unit of measurement for the amount of energy used by an appliance in kilowatt-hours per hour. For example, if you turn on your washing machine for one hour with a 1,000-watt washing machine, you will use 1 kWh of energy. Your kilowatt-hour usage takes into account how many watts your appliances utilize as well as how frequently you use them. When you see kWh on your monthly energy statement, it refers to the wattage of your electric appliances and the length of time you use them.

In this video from physicshigh you’ll understand how they both work: 

2. How does my utility company measure my electricity costs?

Millions of utility bills are mailed to customers across the country each month. Each bill includes a very extensive description of the rates and consumption, but how many of us understand what all of those data mean? You would be surprised to know that around 60% of the customers don’t know how to read their bills. If you want to understand how utility bills work, check out our entire blog post about it. We’ll go through the measuring system, whose leading actor is the electrical meter.

Your electrical meter, which is usually located on the exterior of your home at the electrical junction box, is the device that displays your home’s power consumption in kilowatt-hours (kWh). Electronic meters can record the quantity of power that flows in and out of your house, which is used to track your electricity usage, and therefore your monthly electricity costs. Your utility company checks your meter once a month to calculate your monthly use.

Meter readings are often presented as a lengthier string of digits on your account, but your electricity costs may be calculated by subtracting last month’s reading from the current month’s reading. Usually, meter readings take place each 28 to 32 days. Electric meters should look something like this:

3. How to calculate the electricity costs of running an appliance?

More often than not, utility companies charge you at kWh rates. So what you will see at the end of each month is the kWh you used during that period. You can run some numbers to know how much your electricity costs (kWh consumption) will be by making a list of your most common appliances. Check out how much kW they use and multiply them for the time you have them running, times the rate. 

To determine the electricity costs of running a specific appliance, multiply the consumption (kWh) by the rate. It would be much easier if you’re in a fixed electricity rate, as that’s set for the whole contract term. To calculate the energy usage (kWh), multiply the device’s wattage (kW or W) by the number of hours used.

For example, if you use a 400W computer for 3 hours each day, you will consume 1200Wh or 1.2kWh per day. The usage cost for one month is 1.2kWh x 30 days x 0.10 $/kWh) = $3.60.

4. What are the costs included in my energy bill?

The electricity costs you get each month on your account are broken into two components: a supply fee and a transmission and distribution price. On a high level, the supply fee covers the cost of generating energy. In contrast, the transmission and distribution charge covers the cost of delivering that electricity to you through the grid. The power rating of the appliances, the time length for which it is used, and the per-unit cost of energy all impact your electricity costs.

Additional electricity costs may appear on your energy bills. For example, if you reside in a state with energy efficiency and renewable energy objectives and programs, a very tiny portion of your power bill may be allocated to a renewable energy charge, distributed solar charge, or energy efficiency charge. These are sometimes referred to as system benefits costs and are not based solely on your consumption like other electricity costs.

On the other hand, many utilities are now charging additional, fixed monthly fees, such as a customer charge, which is part of the electricity costs and is a monthly payment for using the utility’s hardware–your electricity meter–to connect to the utility’s network, similar to how a cable or internet company might charge you monthly for a cable box or modem that they provide you. Alternatively, your utility may now include a demand charge, which is a fee based on the quantity of power you consume in a given month.

5. What is the average kWh rate in my area?

Electricity prices fluctuate according to supply and demand dynamics. If you want to discover the average cost of power in your state, check out the EIA’s chart. When you have expensive power bills, you may be just paying higher energy costs than usual. The average residential rates by August 2021 are:

CENSUS DIVISION RESIDENTIAL AVERAGE RATE (Cents Per kWh)
New England
20.87
Middle Atlantic
16.90
East North Central
14.14
West North Central
13.32
South Atlantic
12.43
East South Central
11.85
Mountain
12.32
Pacific Contiguous
19.58
Pacific Noncontiguous
29.68

 Source: EIA.

These rates arent set in stone though, you can get competitive energy rates by comparing different energy suppliers and choosing the one that works best for you. At Click2Power.com we can help you with this. We do all the research for you, to make sure you end up with the best energy offer, and to give you the lower electricity costs out there:

  • The best rates
  • Easy enrollment
  • Full control of your costs with fixed rates
  • No Hidden fees
  • Exceptional customer service!

Do you want to learn more about how you can benefit from Energy Deregulation? Feel free to call us now at (833) 680-2025 or fill up the form on our website—one of our energy experts will be willing to help you with all the information you may need!

2 Responses

  1. Wow! This could be one particular of the most beneficial blogs We have ever arrive across on this subject. Basically Magnificent. I’m also an expert in this topic therefore I can understand your effort.

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