Most Texan anxiously open up their monthly power bill and immediately scrutinize the bottom line; they ignore the mumbo-jumbo about meter readings and electricity breakdowns because, well, it’s complicated. Most homeowners simply don’t have the time to sit and consider the algorithms behind their energy bills. However, with a little science-class refresher, Texans can better understand how electric companies calculate their electricity bills.
Let’s go back to the basics: a watt is a unit of power. The actual word is attributed to James Watt, an 18th-century Scottish inventor. One watt is equal to one joule (energy) per second. Nearly all electrical devices use watts to express their safe power capacity. Homeowners, on average, use a substantial amount of watts to power their homes, so energy companies employ the use of the kilowatt to assist in making power calculations more manageable. A kilowatt is equal to 1,000 watts of power.
Home electricity usage is measured in kilowatts per hour, written as kWh. Practically every appliance and device in the home relies on electric power. An incandescent light bulb needs about 60 watts each hour it is used (say four hours each day and thus, 240 watts per day); multiply this for a month (7,200) and divide by 1,000 (to change it from watts into kilowatts), this totals to a little more than seven kWh each month to power that one lightbulb.
The cost of powering a lightbulb is minimal when compared to heavy hitter appliances like an air conditioning unit or a space heater. A central air conditioner run for just four hours each day demands almost 15 kWh per day! Homeowners can inventory their own major appliances and determine a general daily kWh daily average. Each appliance (e.g., refrigerators, dishwashers, water heaters, ovens, and air fryers) should have a small tag that displays the model number and the range of watts (W). From there, it’s simple algebra: (W x Hours per day the appliance is used) / 1,000 = average kWh per day.
Once the kWh/day is calculated, the next step is determining the actual utility cost per kWh. Electricity rates vary dramatically depending on where an individual lives. The U.S. Energy Information Administration provides an annual breakdown of statewide energy costs per kWh. In 2021, the U.S. average price per residential kWh was 14 cents. Hawai’i residents paid the most (33 cents per kWh); Idaho and Washington residents tied for the least costly electricity (10 cents per kWh). Whether a dime or a quarter, this seems like a pretty reasonable cost, but consider how much power is needed every month. The average American homeowner uses more than 800 kWh each month, which quickly totals over $100 on the electric bill. Electricity rates in Texas can vary widely depending on what electricity provider you choose.
Rather than fearing the monthly electric bill, homeowners can turn it into a useful tool. Energy companies show monthly kWh usage and break down how they calculated the total charge. The bill includes more than the simple costs of electricity. Utility customers are on the hook for the infrastructure used to generate power, transmission, distribution, operational costs, and sometimes sustainability incentives. In some cases, homeowners pay a different rate depending on the number of kWh used (using a tiered billing structure). Other times, the rate adjusts depending on the time of day homeowners use power. Energy companies often provide free online tools to help consumers better understand monthly costs or to provide tips and resources to bring costs down. When you know what your energy bill is saying, you know how to make the numbers work in your favor.