If you’ve noticed your utility bill has been higher than normal, you’re not alone. People around the world are seeing electric bills going up. In fact, electricity bills have soared to unprecedented levels in 2022. According to the World Bank, the energy price index grew by 26.3%, figures not seen since the 1970s. Yep, you read that right — the 70s!
It’s left many homeowners and renters alike wondering what causes the electricity bill to be high and what they can do about it. In this post, we’ll discuss what contributes to a high electric bill, the causes of high-energy consumption, and how we can lower our bills while supporting the environment.
Chances are you’re reading this article because you have one burning question: “Why is my electric bill so high all of a sudden?”
The answer to this is multi-faceted. We all know that the more you use your TV or your air conditioning unit, the higher your bill is. But energy usage and what causes the electricity bill to be high is a bit more complicated than that. Let us explain.
When you think of purchasing in bulk, your first instinct is to think that it’ll save you money. While it’s true that usually bulk purchases translate to discounts, the opposite is true for energy consumption. Many households are shocked to learn that the more you use, the more you pay per individual unit of electricity. For example, someone who experiences a 100% increase in their bills has not necessarily used 100% more electricity.
In all likelihood, your utility provider is charging you a premium for every kilowatt hour over your base rate. That’s why a home and a retail store of the same size will pay radically different rates, even though their actual usage may not be that different.
For example, let’s say you use 900 kWh of electricity per month at an average rate of $0.15. Before the pandemic, you would have paid $135 per month for your electricity. But now that you’re spending more time at home, your energy usage has soared by 30% to 1,170 kWh. Your utility provider may have a rule whereby your kWh price rises to $0.25 per hour for anything over 1,000 kWh. Suddenly, you’re facing an electric bill increase of $192.50, which is a 42.5% increase rather than the 30% more you actually used.
While you can partly blame the utility company, it’s also important to take a good hard look at your own consumption when you ask, “Why is my energy bill so high?” Think about how you consume energy when you’re at home. Then, think about how much of it you may be wasting. Are you falling asleep with the TV on? Using an unnecessarily long washer/dryer cycle? Keeping the lights on during the day? Some of these are unavoidable, but much of it is under your control. For example, try scouring your home for sources of vampire power.
10 Common Causes of High Electricity Bills
There are many contributors to steep utility bills, and these factors will vary depending on location, households, and more. Let’s take a closer look at what causes electric bills to be high in a more general sense so that you can find out why you dread your electricity bill arriving in the mail each month.
Inefficient Light Bulbs
Lighting is one of the biggest sources of energy consumption, but it’s also the one thing our homes can’t go without. There are so many lighting choices to choose from, ranging from older incandescent bulbs to modern light-emitting diode (LED) bulbs. All these bulbs have different energy ratings.
LED bulbs only emit light in a specific direction, whereas traditional incandescent lighting options emit light and heat in all directions. Today, LED bulbs use 75% less energy and last 25 times longer than incandescent bulbs, making them the only choice for reducing electricity wastage.
Make sure you shop around for LED lights certified by ENERGY STAR. This certification guarantees that these bulbs have been tested for their efficiency and are the best solution for reducing your electric bill.
Peak Time Energy Use
Utility providers operate using the same models of supply and demand to determine how much they will charge you for your electricity. These are known as time-of-use rates and are the costs passed onto consumers for the added cost of urgently increasing capacity at peak hours. Your energy costs will be at their highest first thing in the morning and in the evening.
Strategically limit your energy consumption by running those major appliances, such as washing machines and dryers, outside of peak hours. You may be surprised at how big of an impact this can have on your energy consumption.
Global Conflicts
Many of the reasons energy bills are rising are due to factors outside of the average household’s control, and global conflicts play a major role in energy costs. For example, the war in Ukraine has had a huge impact on the world’s fuel prices. According to the Centre for European Reform, oil prices have risen 60%, and natural gas has risen by 400% since the war began.
While the U.S. is largely protected from the direct impacts because of its self-sufficiency, global fossil fuel prices are interconnected. What happens within one section of the market will hit everybody else. Electricity producers are paying more, and therefore so are you.
Today, the U.S. Energy Information Administration has reported that the average rate for residential electricity is 8% higher than in 2021. Some states, such as New York, Illinois, and Florida, are reporting increases of up to 15%. The fact the COVID-19 pandemic has faded into the background has led to a surge in demand as offices reopen and many industries, such as hospitality and tourism, recover.
Other reasons include the increasing prevalence of extreme weather events, such as the Texas power outage of 2021. Damaged electricity grids lead to supply disruption and high repair costs, which are passed on to consumers.
Another of the most prominent causes of high electricity bills is the supply chain crisis. Like all other sectors, energy companies have a tough time sourcing material and staff to meet the increased demand, leading to higher prices.
Rising Electricity Rates/Inflation
Utility providers are just as vulnerable to geopolitical and economic crises as everybody else. Unfortunately, inflation caused by global conflicts has led to the energy market taking the brunt of it.
The average U.S. inflation rate for July 2022 was 8.5%, which is more than twice its historical average for the past 90 years. Rising costs mean rising prices for everybody, and this will be reflected in your electricity bills.
If you’re wondering, “But why is my power bill so high because of inflation?”, keep reading. Generally speaking, high inflation increases the costs of everything from food to gas prices to the cost of a new pair of shoes. Utilities are no exception, and the current high-inflationary environment is expected to last throughout 2023 and beyond.
For most households, the answer is to become greener and actively think about their energy usage. Tracking energy usage is expected to become a more common practice. This is a practice that is easy to adopt, doesn’t cost anything to do, and can reduce your energy bills while supporting our environment
Using Older Appliances
Large-scale appliances like washing machines and refrigerators were designed to run for many years before they need to be replaced. While this may sound great, many older models are not great for your electricity bill. The high upfront cost of newer, energy-efficient models leaves many households putting off the upgrade. However, this isn’t actually saving you any money.
Appliances with the ENERGY STAR certification use up to 50% less energy than older, less efficient counterparts. What makes this certification so powerful is while endorsed by the government, the certifications are conducted independently.
If your home is full of older appliances, think about upgrading. According to ENERGY STAR, replacing a refrigerator that’s ten years old could save you $144 in energy bills over the next five years. Due to the increase in national average electricity rates, this figure will likely be considerably higher now. And starting in 2023, you’ll receive a 30% tax credit on energy-efficient & clean-energy home improvements through the Inflation Reduction Act.
Changes in Your Energy Use
Few people are actively tracking their energy use. Why? Because most people assume that their energy usage changes very little over the course of a year. Even during periods of extreme weather, people underestimate just how much their energy usage changes.
For example, you may be running your air-conditioning unit all day throughout the summer. In the holidays, even those outdoor festive lights use electricity equivalent to 14 million refrigerators.
Your electricity usage may have also changed if you’ve recently purchased a new appliance. It doesn’t have to be a major appliance either — even a small space heater can cause your energy bills to spike.
Think about which appliances could be contributing to your increased energy bills and consider unplugging them more often. Or upgrade to energy-efficient models to balance out the increases.
Vampire Devices Draining Your Power
Some appliances must be left on at all times, such as your refrigerator. But if you’re like most people, chances are you’re leaving unnecessary devices plugged in for much longer than they need to be.
Appliances and electronic devices continue to drain your electricity — even if they’re fully charged. Televisions, coffee makers, toasters, lamps, your computer, and your smart speaker are constantly draining energy. Granted, the amount drawn is relatively low because of advances in technology, but leaving your charger stuck in the wall can still cause a surge in your bills.
It may surprise you to learn that 10% of residential electricity usage is purely down to vampire devices, says a study from the Lawrence Berkeley National Laboratory. Before the pandemic, this would have resulted in a $100 increase per year in energy costs. Today, this number is likely more than double. The simple solution is to unplug your devices when you’re done with them. And it’s even easier if you leverage a power strip. These can be found at any hardware store, and all the devices plugged in can be turned off with one flip of a switch.
Running Appliances at Half-Capacity
Understanding what causes an electric bill to be high requires honestly reflecting on how we consume energy in our everyday lives. The modern conveniences everyone has in their kitchens have only accelerated the country’s energy consumption. For example, your dishwasher and washing machine are the two appliances that are the most energy-draining devices of all.
No, you don’t need to start hand washing your clothes like it’s 1865. But you can start only running your washing machine when you have a full load. This also applies to your dishwasher and dryer. Want to take it a step further? Try handwashing dishes if you only have a few, or go old school and begin line-drying your clothing outside in the sun.
Simply put? Wait until you have a full load before pressing the “On” button.
Extreme Weather
Anyone who lives in a state like Florida or Missouri will tell you that the weather can change drastically with no warning. Due to the impacts of climate change, unpredictable and severe weather patterns are becoming more common, long-lasting, and extreme.
If you experience one of these massive changes, be conscious about how you handle it. Heatwave at the beginning of March? Hold off on turning on that AC unit. Frost in October? Grab a cozy blanket instead of running your heater.
This is a major cause of high electricity bills because many parts of the U.S. are experiencing strange weather patterns for the first time. People lack the experience of adapting for a few days before returning to normal. Share these tips with your friends and family to help them mitigate their energy bills when the weather throws a curve ball.
Permanently Charging Your Phone
The digital age has meant that daily life is dominated by electronic devices. And while we mentioned unplugging your devices earlier, that smartphone glued to your hand deserves special mention.
Most people plug their phones in as soon as they start nearing that 30% battery mark. Yet, phones charge faster than ever before. The average smartphone requires only two to three hours to fully charge. That’s why you shouldn’t plug your phone in before you go to bed so you can wake up to 100% battery — leaving electronics plugged in throughout the night can drive that electricity bill up.
It’s also important to note that constantly leaving your phone plugged in for longer than necessary can destroy its battery capacity. As a result, you’ll need to charge your phone more often, contributing to your electricity bill. Modern devices are not designed to be connected to a power source constantly. Instead, most manufacturers recommend only performing a 0% to 100% charge every so often to give the battery a workout.
Plugging your phone in only when it really needs it won’t just benefit your bank account, it’ll help you get more out of your phone’s battery life in the first place.
Go Solar with Nexamp
When it comes to what causes the electricity bill to be high, there’s no single culprit. There are a variety of factors causing energy prices to rise, including the aftermath of the COVID-19 pandemic, geopolitical problems, and rampant inflation.
Putting these tips into action will help, but you could also take it one step further. Tap into renewable energy with Nexamp’s Community Solar program to save 10-20 percent annually on electricity costs. You’ll be supporting the future of life on Earth and aiding the transition away from fossil fuels. Together, we can decarbonize our world and benefit from an emission-free economy.
Combat sky-high energy bills and make a positive impact with Nexamp today.