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A Beginner's Guide to Understanding Your Energy Bill

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A Beginner's Guide to Understanding Your Energy Usage and Charges


Electric Bill 101

An electric bill is the monthly statement that you receive from your utility company. It shows your electricity usage for a certain period and the amount you owe for it. The electric bill also includes other charges such as taxes, fees, and surcharges. The total amount due is usually due by a certain date, which is also shown on the bill. Understanding how an electric bill works can help you better manage your energy consumption and save money on your bills.

Common Charges on an Electric Bill and How to Calculate Your Cost

When it comes to electricity bills, there are a few common charges that you need to be aware of when calculating your usage cost. Most electricity bills will include the cost of energy (measured in kilowatt-hours), delivery fees, taxes, and other surcharges or credits. Additionally, depending on your area, you may also have access to different energy rate plans or electricity rate plans that can affect your overall costs. To accurately calculate your usage cost, it is important to understand these common charges and how they will impact the total amount due on an electric bill. The cost of energy is charged in kilowatt-hours, and it reflects the total amount of electricity you use to run your home or business. This can be a fixed rate or an on-demand rate.

To calculate the cost of energy for your usage:

(power wattage/1000) X the number of hours you used each month X the amount per kilowatt hour (kWh) = energy cost

For example, assume a household uses approximately 1,200 watts per hour with an average electricity cost of $0.12.


1.2×24×0.12/kWh=$3.46 per day or $103.68 a month

To estimate the power wattage usage in your home, check out the Energy Sage guideline for average appliance draws.

Understanding the Different Types of Electricity Rates

  1. Fixed-rate: Fixed-rate electricity plans are becoming increasingly popular as they provide you with the security ofSimple Circle Profile Photo Instagram Post knowing that you will pay a set rate for electricity, regardless of how much or how little you use. This type of plan makes budgeting and managing energy usage easier and can help you save money in the long run. Fixed-rate plans are a great option for households who want to ensure that their energy costs remain consistent and predictable.
  2. Variable-rate: Variable-rate electricity plans allow you to take advantage of changing market conditions. Prices for electricity can fluctuate significantly depending on the time of day or season, and households can save money by choosing variable-rate plans that charge different rates throughout the day. By taking advantage of these dynamic pricing structures, you can reduce your energy costs and maximize your savings.
  3. Time-of-use (TOU): Time-of-use (TOU) electricity tariffs are typically used by households who are looking to save money on their energy bills. TOU tariffs charge different rates depending on the time of day or season, with peak times costing more than off-peak times. This allows you to shift your energy use to times of the day or season when energy is cheaper and can help reduce your overall energy costs significantly.
  4. Real-time pricing (RTP): Real-time pricing (RTP) is an innovative way for households to take control of their electricity costs. It allows you to access the energy market and buy energy when prices are lower. You can then save money by purchasing electricity at times when the price is lower than your regular rate. RTP gives you greater flexibility and more control you’re your energy consumption and bills.

Tips for Reducing Home Energy Usage & Lowering Your Electric Bills

With rising energy costs, it is important to find ways to reduce your home's energy usage and lower your electric bills. By following some simple tips, you can save money on your monthly utility bills while also helping the environment. Here are some tips for reducing home energy usage and lowering your electric bills:Simple Circle Profile Photo Instagram Post (1)

  • Install a programmable thermostat: Programmable thermostats allow you to set temperatures at different times of the day so that you don't waste energy when no one is home or sleeping.
  • Use Energy Star appliances: Energy Star appliances are certified by the U.S. Environmental Protection Agency (EPA) as being more efficient than standard models and can help reduce your energy consumption significantly.
  • Unplug unused devices: Even when devices are turned off, they draw power from the wall outlet if they are still plugged in. Unplugging them will help save electricity.
  • Switch to LED lightbulbs: LED lightbulbs use 90% less electricity than traditional bulbs and last longer. If possible, make the switch
  • Check your water heater: The average water heater accounts for 20% of home energy use. Ensure your water heater is working properly and consider turning down your tank’s thermostat to reduce overall usage and save money on electricity costs.
  • Turn off your pool pump: The pump runs constantly unless someone turns it off, which wastes energy and money needlessly. You can still have a clean pool and reduce your pump’s run time. Test it out by reducing the run time a little each day until you find the right time for both a clean pool and less energy usage.
  • Go Solar: Solar panels can save homeowners up to $75K throughout the life of the panels and reduce a home’s overall demand on the energy grid.

Start Your Journey to Taking Control of Your Electric Costs

With energy costs rising, it is important to take control of your electric bill. There are many simple tips and tricks that can help you save money on electricity and reduce your monthly bills. From using energy-efficient appliances to installing solar panels, there are a variety of ways to make sure you get the most out of your electricity use. There’s no time like the present to start your energy savings journey. Contact PosiGen to learn more about our solar and energy efficiency assessments.



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