Understanding Your Electric Bill
Have you ever called in to sign up with an electricity provider and the guy on the phone is throwing all these numbers at you and talking about kilowatt hours but you have no idea if 11 cents per kilowatt hour is a good thing or not? I didn’t know if I was getting good rates either so I asked an expert, here’s what I found.
Simple rate vs Tiered rate
A simple rate is the easiest to understand. Your utility company charges a certain number of cents per kilowatt hour used. A kilowatt hour is power consumption of 1000 watts per hour. There may be a number of items itemized on your bill such as a service charge (flat fee of around 8 bucks usually) and a delivery charge (to pay for the power lines and transmission) and a base rate for power usually like 5 to 9 cents per KWH plus other fees.
The REAL cost of your power is the monthly total bill divided by the number of kilowatt-hours you used that month.
A Tiered rate means you’ll be charged one price until you hit a certain number of kilowatt hours then you’re on the next tier and get charged another price (higher or lower depends on the provider) until you reach the next level.
The national average in the US is about 12 cents per kWh. The state with the lowest average is Washington, due to its abundance of hydroelectric power, which has a zero fuel cost, and in Washington, the average is about 8.9 cents per kWh. (The highest is Hawaii, at 36 cents per kWh, largely because fuel has to be imported. But Hawaii’s mild climate and tropical day-night cycle significantly reduces the need for electricity relative to most mainland locations.)
If your true cost for energy averages to be about 12 cents per kWh then you’re getting a good deal for power. If not, call back and try to renegotiate.