Whether to power our home or run our business, electricity is one consumable that we rely on the most. Every day, something as simple as turning on the lights, charging your laptop, putting food in the refrigerator or watching TV happens without thought by millions across the United States.
At least until the electricity bill arrives.
Your electricity bills shouldn’t come as a shock — if there’s a heatwave and your air conditioner has been running at 72 degrees 24/7 for weeks, you should know your bill is going to be half your rent or mortgage that month. If your bill(s) do come as a surprise to you, the good news is that if you take the time to learn more about the different things that you can do to consume less electricity, you will start to see significant savings.
To help you better understand why your electricity bill might be so high, we’ve put together a list of reasons, accompanied by tips and tricks you can use to try and bring that number down to a more comfortable level.
Conserving Energy
If you aren’t trying to conserve energy in your home, chances are your electricity bill is pretty high. Energy conservation is something everyone can do to reduce their electricity bill. It is different from energy efficiency because it requires you to simply find different ways of consuming less electricity (instead of finding different technologies that use less electricity).
To conserve more energy in your home or business, make sure you turn off lights when they aren’t in use, or turn down your refrigerator’s temperature. Plant trees near your home to keep it cool naturally, and insulate your walls to retain more heat. Finding different ways to use less electricity every day will certainly help to reduce your electricity bill every month.
Energy Efficiency
The different types of technology you have in your home can make it quick and easy to consume more electricity. Things like, computers, cell phones, televisions, light bulbs, refrigerators, and washing and drying machines are all great examples of technologies that consume electricity.
Making sure that you have the most energy efficient appliance model will go a long way in ensuring that you don’t end up with a huge electricity bill. There are many things that you can do to lower your electricity consumption by being more energy efficient. For example, unplugging appliances when not in use ensures that electricity is not consumed unnecessarily. Updating all your light bulbs is another great way to reduce your bill.
Heating & Cooling
Air conditioners and heating units can have a big impact on your electricity bill. Many people all over the country turn their heaters on in the winter season and then turn on their air conditioning units in the summer season. Both systems consume a lot of electricity, which can also send rates soaring because so many people are using so much electricity at the same time.
Check to make sure that your heater or air conditioner isn’t turned on too high, or isn’t running when you don’t need to heat or cool your home or business.
Peak-Time Usage
There are certain times during the day where many people use electricity at the same time. In the evening, for example, is when a lot of people like to do laundry or run the dishwasher. This is known as peak time usage. The same can be said for different seasons during the year. In the winter when it is very cold, many people will turn on the heat. In the summer when it gets hot, many people will turn on their air conditioners.
Electricity rates are typically higher during these times, because the demand for electricity is also higher. Therefore, if you want to save money on your electricity bill, try to do your laundry on the weekend. Many electricity providers offer incentives to their customers for using electricity during off-peak times. Whether you signup with an electricity provider or not, keeping an eye on peak-time usage and working your electricity consumption around those peak times, will certainly help to shave some of the cost off of your electricity bill.
Building Design
The way your house or commercial building was designed and constructed is crucial to understanding how much electricity you will consume. Some of these design elements include,
Cool Roof: These types of roofs help to reflect the sunlight and keep temperatures cooler. This means that in the summer time, your house won’t heat up as quickly, which reduces the amount of air conditioning you require.
Flooring: Installing the right floor will help you to conserve electricity. Investing in carpets and rugs will help to keep naturally generated heat in your house.
Skylights: Letting more natural sunlight into your home also means that you can also take advantage of heat that doesn’t consume electricity.
Other design elements you might consider include,
- House framing
- Insulation
- Exterior doors
- Fixtures for bathroom and kitchen
- Treatments for windows
Electricity Rates
The amount you are charged for electricity you consume has a significant impact on your electricity bill. There are some states that charge more per kWh and some that charge less. Hawaii for example is a state where electricity rates are typically very high. For example, in September of this year the average residential rate was 27.84 cents per kWh. Meanwhile, in Washington, the average residential rate only reached 9.64 cents per kWh.
Across the United States, there are several general factors that have an impact on the rates that you pay for electricity. These factors include,
Fuels
One of the biggest influences over electricity rates has to do with the per unit cost per ton or thousand cubic feet for coal or gas. More often than not, if an electricity generator has high costs, those high costs trickle down to the rates that the consumer needs to pay.
Weather
Different temperatures can either increase or decrease the consumer demand for electricity. In extreme situations, weather can take down and damage power lines. Despite the fact that some weather lies outside consumer control, rates can increase to help pay for the repair.
Regulations
In general, the Public Service Commission strictly regulates some rates in some states. In other states, rates are regulated for transmission and distribution but not regulated for generators. For more information, check out the “Energy Regulated vs Regulated” section below.
Power Plants
There are different operating costs associated to running a power plant. These costs have a direct impact on the rate of electricity for consumers.
If you are planning to move to a particular area, it is a good idea to investigate electricity rates before making a commitment. Knowing the average monthly cost of electricity for either a home or business will help you to budget and better understand the amount you will need to pay.
Deregulated vs. Regulated
In some situations, living in an area that has a deregulated energy market will save you money on your electricity bill. The reason for this is because energy deregulated markets are open to competition. This means that companies known as electricity suppliers can establish themselves and sell supply related goods to customers within their service area. Since more than one or two electricity suppliers are allowed to offer supply services to customers (as opposed to one or two utilities), companies are encouraged through competition to provide the best rates and the best products. If they fail to do so, or if a customer is unhappy with their current services, they have the right to take their business elsewhere.
If you live in a deregulated area of the United States, it might be in your best interest to investigate switching to an electricity provider — there are typically numerous residential and commercial electricity providers operating in one area.
Rate Structures
While electricity rates are defined by cents per kWh, those rates are also often marketed to the consumer in a tariff, plan or rate structure. Some of these rate structures include,
Simple Tariff: When a fixed rate per kWh is consumed. This means that the price or electricity will neither increase or decrease based on how much is consumed. In many cases, this plan comes with a higher rate.
Flat Tariff: Different classifications of customers are charged at different rates per wKh. Calculating these fees is more complicated because the rate varies depending upon how the electricity supply is used.
Block Tariff: A particular chunk of electricity is charged at one rate. The next chunk of electricity is charged at a reduced rate. The chunk after that is charged at an even further reduced rate, and so on. The consumption amount is broken down into different blocks and a fixed price is associated to each.
Other tariffs can include:
- Two Part Tariff
- Maximum Demand Tariff
- Power Factor Tariff
- Three Part Tariff
Before you sign up for any tariff an electricity provider or utility has to offer, make sure that you understand the pros and cons to each. If, for example, you know that you won’t be consuming a lot of electricity, signing up for a Block Tariff style plan probably isn’t going to save you money on your electricity bill.
It is also important to note that the plans mentioned above are simply examples. Different states and even electricity companies within the state use different names or terms for their electricity rates or tariffs.
Fees
When you sign up for electricity services, you will likely need to sign a contract or agreement. At the very least, you will need to acknowledge that you understand the terms of service. Terms of service include all the information you need when it comes to your electricity — including any associated fees.
The problem with fees is that they increase the amount you need to pay on your electricity bill. For the most part, fees can be completely avoided and so you should do your best to make sure you don’t do anything to make them appear on your invoice.
Types of Fees
In today’s current market there are many different types of fees. Some of these fees include,
Early Termination Fee: This fee applies if the consumer attempts to end a contract before the defined end date. Sometimes the fee is a flat rate and in other situations a fee is applied to every month left within the contract before the end date.
Deposit: A deposit amount is often due when a customer first signs up for electricity services. The reason why many companies require a deposit is to ensure that they receive payment.
Late Fee: Many companies charge late fees if a customer does not pay their bill on time. Fees can range from a percentage amount to a flat rate fee.
Before you sign any contract, it is important to understand all of the fees that are associated to your electricity services. Failing to do so may result in a higher than anticipated electricity bill.
Why is My Business’ Electric Bill So High?
Due to naturally higher electric bills and the complexity/components of many businesses, it can sometimes be difficult for business managers/owners to take a look at an electric bill and immediately tell why their bill might be so high. We can help!
If you run a business and have questions about your electric bill, usage, rates, or just have general questions — please don’t hesitate to contact us!
