Want to Lower Your Monthly Electric Bill? First, Calculate Your Usage

Paying your electricity bill is a depressing monthly task.

The frustration usually lies with the uncontrollable — energy rates, utility charges and unavoidable fees baked into the electricity cost. Unless you live in a deregulated state — where you can choose your electric supplier and electric rate plan — there is only one factor you can control: your electricity usage.

CNET’s Eric Mack learned the importance of monitoring his home’s energy consumption the hard way when he moved his family completely off the grid in 2020. The Mack family relies on solar energy, which has helped them become “stingy with electricity” and focused on conservation. 

“I can tell you how much energy every light or gadget in my house uses. I know how much wattage my laptop is using when its fan is running or when it’s plugged in and in sleep mode,” Mack said in his personal account about living off the grid.

Electricity is essential for survival. It’s crucial to be mindful and efficient in our use if you want to save money and optimize energy consumption, says Jake Edie, an adjunct professor at the University of Illinois Chicago, who teaches a course on clean energy in the electric grid.    

If you want to understand your energy usage on a deeper level, it requires knowing a few (lightly) technical terms and understanding some (basic) math. We’ve got all that — and a bit more — below. Both knowledge and electricity are power: Learn what you need to make your electric bill look the way you want it to.

Glossary of key terms

• Joule (J): A unit of energy equal to the work done by a force of 1 newton when moving the distance of 1 meter
• Watts (W): The flow of 1 joule of energy per second
• Watt hour (Wh): 1 watt of power over 1 hour
• Kilowatt (kW): 1,000 watts
• Kilowatt hours (kWh): 1 kilowatt hour (or 1,000 watts) over 1 hour
• Megawatts (MW): 1 million watts of electricity 

Understanding your electricity usage

To understand your electricity usage, you need to know a few key terms. 

Your energy bill is likely to deal in kilowatt-hours, though it might be useful to first understand watts and kilowatts.

All energy-consuming devices are rated in terms of power, Edie said. Household devices are typically rated in watts or kilowatts.

A watt is the measure of a specific amount of energy (a joule to be exact) over a certain amount of time. (One joule is the energy it takes to lift an apple one meter into the air, Edie said. If you use one joule of energy continuously over the course of one second, you’ve used one watt. If you use 1,000 watts you’ve used a kilowatt.

Watts might be familiar because of lightbulbs. It takes 40 watts to turn on a 40-watt lightbulb. If you run that lightbulb for an hour, you’ve used 40 watt-hours (or .04 kilowatt-hours). Your utility charges you for electricity measured in watt-hours or kilowatt-hours. If your electric rate is 15 cents per kilowatt-hour, you’d pay 6 cents for turning on that light for an hour.

If a hair dryer is rated at 1.5 kilowatts, it uses 1.5 kilowatts of power when in operation, but how much energy it uses depends on how long it’s on and how much electricity used. It uses 1.5 kilowatt-hours of energy if used for an hour. That’ll cost you 22.5 cents at our imaginary electric rate of 15 cents per kWh, but if it’s only used for 15 minutes, it uses a quarter of that energy and you pay less than 6 cents. This understanding is vital when calculating electricity usage.

You can use the same understanding for power-generating equipment like solar panels. A solar panel with a maximum power of rating of 500 watts will, in an hour under ideal conditions, generate 500 watt-hours of energy — or 0.5 kilowatt-hours, if it operates for 2 hours, that’s 1 kilowatt-hour of energy produced.

Watts, kilowatts, watt-hours and kilowatt-hours

Here are some handy formulas to understand the relationship between the units of energy discussed above. 

Watts to kilowatts

watts / 1,000 = kilowatts

A kilowatt is 1,000 watts, so just divide the number of watts by 1,000 to get the number of kilowatts. A dishwasher’s power rating of 1,200 watts could also be written as 1.2 kilowatts. To go from kilowatts to watts, just multiply instead of divide. 

Watts to watt-hours

watts x time in hours = watt-hours

The same dishwasher rated at 1,200 watts that runs for an hour will use 1,200 watt-hours.

Kilowatts to kilowatt-hours

kilowatts x time in hours = kilowatt-hours

That dishwasher, which is rated at 1.2 kilowatts, that runs for 1 hour will use 1.2 kilowatt-hours. After 2 hours, it will use 2.4 kilowatt-hours.

How to calculate your electricity usage and cost

The simplest way to determine your daily or annual usage is to look at your utility bill, Edie said. 

To locate your monthly energy usage on your electric bill, look for a section labeled “Usage” or “Electricity Consumption.” It is usually displayed in kilowatt-hours and is accompanied by a breakdown of your usage for each billing period.

To understand how your usage breaks down even further, Edie suggests looking up and logging your appliances power ratings. Using these power ratings, multiply these figures by the watt hours per day that each appliance is used daily and annually.

This auditing process can bridge the gap between the abstract concept of energy consumption and its actual effect on your household, he said.

To get an annual cost estimate for each common appliance, you can use this appliance energy calculator provided by the US Department of Energy. 

There are tools on the market that can help you measure your appliance usage on a granular level. “A little device called a Kill-a-watt has become one of my best friends,” Mack wrote in this CNET story about living off the grid. “It reveals precisely how much power any appliance is consuming.”

Formula for daily appliance usage

Power in kilowatts x hours used per day = daily energy usage in kilowatt-hours

To calculate daily energy usage for an appliance, multiply the power consumption of an appliance in kilowatts by the number of hours it’s used per day. 

A dishwasher that used 1.2 kilowatts to run will use 1.2 kilowatt-hours daily, if it runs for an hour. At the electricity rate of 15 cents a kilowatt-hour, that will cost you 18 cents.

Formula for annual appliance usage

Daily energy usage x number of days it’s used per year = annual energy usage

To check an appliance’s annual energy usage, multiply the daily energy usage by the number of days it’s used in a year. 

If that dishwasher gets used three times a week (or 156 days each year) over the course of the year, we’ll use 187.2 kilowatt-hours, because 1.2 kilowatt-hours x 156 = 187.2. If you get charged 15 cents per kilowatt-hour, the electricity your dishwasher used costs $28.08 a year. 

All appliances have energy guide labels that provide information about their energy consumption. These labels are on the appliance itself or in the product documentation. In addition, the energy guide label offers details on the estimated annual electric usage and cost for the appliance.

You can refer to the US Department of Energy’s website to find out how much energy your appliances use and what it costs you annually. Here are a few examples of common household appliances and their average power consumption:

• Refrigerator: 100 to 400 watts
• Air conditioner: 500 to 3000 watts
• Washing machine: 500 to 1,500 watts
• Laptop computer: 30 to 180 watts
• LED light bulb: 5 to 20 watts

How to lower your electricity bill

Here are some practical tips to help you with energy costs and reduce your electric bill:

• Unplug unused devices: When not in use, unplug devices and appliances that consume standby power, such as chargers, electronics and small appliances. These devices can still draw power and contribute to your energy consumption even in standby mode.
• Switch to energy-efficient appliances: Consider upgrading your appliances to energy-efficient models. Look for appliances with Energy Star labels, which consume less energy without compromising functionality.
• Use energy-efficient lights: Switch to energy-efficient LED bulbs, which use significantly less energy than traditional incandescent bulbs. Turn off lights when not in use and make the most of natural light during the day.
• Insulate your home: Insulate your home and block all nooks and crannies that allow air or heat to leak.
• Adjust thermostat settings: Adjust your thermostat settings in summer and winter to conserve energy. 

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Correction Aug. 18: This story originally presented some statements as direct quotations that were actually paraphrases of what the individual cited had said. Those passages have now been rendered appropriately as paraphrases.