High electricity costs are an increasing worry for most households, with pricing continually spiking. As we grapple with energy issues, solar energy systems are saving homeowners money on their monthly bills while reducing their carbon footprints.

With over 3% of electricity coming from solar sources, it is one of America's most prevalent and affordable energy sources. A study estimated a whopping 284.5% growth in U.S. solar power capacity, skyrocketing from 0.34 GW in 2008 to 97.2 gigawatts today. This is enough to power 18 million American houses.

So, what is the average electric bill? This guide answers some of the most common questions regarding electricity bills, the factors that affect them, and how to bring about financial gains with the help of a solar energy system.

Top 8 Factors Affecting Your Electric Bill

The average electricity bill reflects the combined calculation of fixed and variable electric charges. It is a financial statement inclusive of the cost of production, distribution, maintenance, and operation of electrical grids and power plants. It also includes the electricity rate of an area and the amount of energy you use per month. While that's a straightforward definition, most people are unaware of the factors affecting the electricity bill. Let us discuss some of the significant aspects that can change the monthly amount you pay for electricity.

1. The Summer Season

Power bills show a sudden summer hike due to climate change, global warming, and other environmental factors. Additionally, more expensive and high-voltage generation sources are used during summer to meet the public's demand. Air conditioners, fans, blowers, and refrigerators are the most common appliances used in high temperatures.

2. Vicious Chain of Demand and Supply

International events affect our power use. After all, we are a part of a global society. The Russia-Ukraine war has surged fuel prices. Now, the cost of powering turbines has naturally increased. Also, European countries depend on the U.S. for their energy requirements, thereby reducing domestic supply and increasing costs.

3. Plugged-In Appliances

Modern appliances are designed to work quickly and efficiently. Therefore, even when the power is turned off from the socket, they are in 'almost-ready' standby mode to switch back on in a matter of seconds. Appliances with timers like ovens, microwaves, and DVRs extract a lot of electricity if connected to the socket, even when they are technically off.

4. Using Old Appliances

The retro aesthetic and vintage look is popular in many households; however, old appliances affect your house and pocket more than you think. ENERGY STAR-labeled appliances use 10-50% less energy than their old, energy-heavy counterparts.

5. Residential or Industrial Locality

Like any other business, retail electricity prices are higher for residential consumers, whereas industrial areas receive more efficient and less expensive electricity at high voltages. Besides this, the proximity of power plants to your locality can impact your electric bill. In 2021, the annual average retail price for electricity varied from 30.35¢ per kWh in Hawaii to 8.17¢ per kWh in Idaho.

6. Charging an Infinite Set of Appliances

If you have a lot of electrical devices in your home, you’re aware of the amount of charging cables that can get tangled up. But did you know that charging most of these devices can cause your electricity bill to soar? From mobile chargers to AC adapters, your gadget-friendly house is full of electricity-sucking wires that can add up to a handsome number by the end of the month.

7. Insufficient Insulation

When energy seeps out of cracks in your home, your pocket takes a hit in the process. The North American Insulation Manufacturers Association (NAIMA) has gauged that approximately 90% of American homes are under-insulated. Since AC and thermostats are approved devices used in regular households, improper insulation extends the run-time of these appliances, thereby increasing the monthly bill.

8. Using Inefficient Light Bulbs

The market is full of a variety of options for lightbulbs. There are many to choose from halogen bulbs to light-emitting diodes (LED), from incandescent bulbs to compact fluorescent light (CFL). Many people don’t realize how energy-inefficient light bulbs affect their electric bills. Choosing energy-efficient LED bulbs can reduce your energy consumption by 75% and extend their durability up to 25%.

How to Calculate Your Home Energy Usage

Before understanding how to reduce electricity costs, you will first have to figure out how different appliances factor into your electricity bill. Studying your monthly bill is essential to reducing your carbon footprint and financial stress.

Now, it’s time to revisit our question: What is the average electric bill? The U.S. Energy Information Administration suggests that the normal electric bill costs around $115/month. Before diving into the actual calculation, let's familiarize ourselves with electrical terminology.

Keywords to Remember

  • kW:  This is the unit of electricity equalling 1,000 watts.

Watts = (Amps) x (Volts). Amps (ampere) is the base unit of electrical current, and volts represent electric potential.

  • kWh: Kilowatt-hours is a unit of measure to calculate how many kilowatts an electric device uses per hour.

Kilowatt-hours = (Watts) x (Usage) / 1000

What’s an Average Electricity Bill? Components to Consider

  • Electricity Cost: It is the basic cost of electricity at a particular time in your locality. This is the variable section of your electric bill, which is totally under your control and is affected by your electricity usage.
  • Capacity Cost: This cost is usually incurred for commercial purposes. It is the rate paid to ensure sufficient supply in a particular power grade during peak time.
  • Utility Delivery Charge: Similar to everything else that is delivered to your home or business, electricity also comes with transmission fees. Generally, this charge appears as “TDU Delivery Charges” on your electricity bill.

How to Calculate Your Electric Bill with Ease

A simple formula can go a long way when determining how to save your electricity usage and monthly budget. Here's the most efficient method to calculate your power bill with ease:

Electricity costs = (Electricity usage by your appliances) × (Duration you use your appliances for) x (Rate of electricity)

Or simply, Electricity Costs = (Kilowatt-hours) x (Electricity rate)

Electricity Bill Calculation Process

The items on your electricity bill are not as clear as you would think. Unfortunately, your bill does not lay out different items in a separate list. An electricity bill is a fusion of charges drawn by all the appliances you use in a particular month. Therefore, to calculate and manage your bill accurately, you must follow a systematic step-by-step process.

  1. Make a list of all the appliances used in your house on a regular (or occasional) basis.
  2. Next, find the wattage of each appliance. It is usually mentioned on gadgets. If not, you can consider a typical wattage for appliances. It will not affect your calculation substantially.
  3. Now, divide the wattage of an appliance by 1000 to get its kW power.
  4. To calculate kWh, multiply the number of hours an appliance is used. This will give you its kW value.
  5. Since we are calculating the monthly charges, multiply kWh by 30 to figure out how much electricity a particular device use in a month.
  6. Now, multiply the monthly kWh of each appliance by the kWh rate. You will have a total amount you pay using a specific machine.
  7. Finally, add the charges for each appliance to get the total sum.

Sample Calculation

If you like to watch your 55-inch smart TV for two hours a day, you can assume that its power is going to be 0.154. The typical wattage of a 55-inch TV is 77 watts. When you multiply 77 by 2, it gives you 154, and dividing it by 1000 results in 0.154 (77 watts × 2 hours a day ÷ 1000 = 0.154).

Assuming your current electricity rate is 11 cents per kWh, the cost of operating your TV turns out to be (0.11× 0.154) 0.01694 per day. After multiplying it by 30, you will get (0.01694 × 30) $0.5082 as your monthly charge for watching TV.

How Can Solar Panels Improve Energy Usage?

Did you know that the sunlight shining on Earth for an hour and a half can power the entire world for a whole year? The potential of solar energy is astounding. If an area of 22,000 square miles (about the size of Lake Michigan) is covered with PV panels, it can power ample electricity to sustain the entire country. They play a vital role in our efforts to find a clean energy source.

Non-Dependence on Fuel

Unlike fuel, time will only decrease the cost of technology. Solar energy is a tech-prime procedure with no dependency on fuel. According to Lazard, a financial advisory firm, the price of 1MWh solar production was slashed by 86% between 2009 and 2017.

One-Time Investment

Solar panels are mindful and profitable investments. Due to climatic conditions, you can say goodbye to power blackouts, high electric bills, load shedding, and electrical disturbance in your area.

Abundant and Non-Exhaustible

The supply and demand chain cannot be disturbed by local or international affairs. The Southwest region of the U.S. is the world's richest solar resource. Solar energy is free of production and transmission costs, which is a significant slack in terms of cost.

Off the Grid

Solar panels work very differently from power grids. They are no-emission, pollutant-free, recyclable, renewable, and sustainable sources of electricity. You can even store the PV panels' electricity at night. When you're off the grid, local electricity prices and extra charges will also be cut off.

Expenses into Profits

With a successful installation procedure, you can get 100% off your electricity bill in no time. Although your savings will be highly dependent on the kind of panels you've chosen and the size of your house, there will be a considerable profit.

How to Lower Your Monthly Electric Bill

Are you still wondering, “How much should my electric bill be?” and “What’s the average electricity bill?”

According to recent days, a typical American household spends $4,400 a year on utility bills, which include electricity bills. Your average electricity bill can be anywhere between $115-125, keeping the location variable in mind. The average amount you pay can vary between states, as reported by the U.S. Energy Information Administration.

What is considered a high electric bill?

If you are encountering the problem of high electric bills, you are not alone. Due to international turmoil, geopolitical tension, and supply-chain imbalance, many cities are seeing a hike in their electricity bill, especially following the pandemic.

It will be on the higher side if you are paying anything more than the average $125 per month for your electricity. However, your daily usage, size of the house, season, kind of appliances, locality, and festivities play a significant role in this calculation.

What's the average electric bill, and how do you reduce it?

Optimizing your consumption can save you more than just a few bucks. Let’s explore some of the top ways to reduce the cost of your monthly electric bill.

Use Solar Energy

One of the most tangible benefits of using solar energy is reduced electric costs. Solar panels enable you to generate your own electricity on-site without any external help or expenses. Unlike fossil fuels, it does not produce waste or cause contamination.

Change the Supplier

Select an energy supplier with a robust fixed-charge plan to counter climatic, seasonal, or market fluctuations.

Temperature Adjustment

Heating and cooling appliances are major culprits in increasing your normal electricity bill. Therefore, you can tweak the temperature of your refrigerator to around 38 degrees to eliminate extra energy consumption. Adjusting the temperature of your thermostat between 10-15 degrees and your water heater from 140 degrees to 120 can reduce your energy consumption by 10%.

Energy-Efficient Efforts

Choose modern energy-efficient machines. You can save about $75 annually by switching from regular light bulbs to compact fluorescent bulbs and LEDs. You can even replace or exchange your old appliances for new ones. If you cannot make the replacement, then be sure to upgrade the machinery or focus on its servicing periodically.

Power Strips and Dimmer Switches

Since modern appliances are never truly off, plug these devices into power strips to cut off the electric supply. A dimmer switch can add to the aesthetic appeal of your house while saving a significant amount of electricity.

An Energy Audit

Seek expert recommendations on the average electricity bill and how to consume energy wisely. These professionals can also help you identify your electrical use and provide tips on how to reduce the monthly bill.

Tap Into the Power of Solar Energy With Nexamp

Until a few years ago, electric bills were unavoidable. However, with technological advances and environmental awareness, we have come a long way. Our continual conquest for sustainable and clean energy resources has led us to the most abundant energy resource — sunlight.

Along with mitigating climate change and supporting environment-healthy practices, solar energy is the most prolific example of renewable energy that can reduce our financial burdens.

So, what is an average electricity bill, and how much do we spend on it each month? With an average person spending about $1500-2500/month, electricity bills are a significant factor to consider in your monthly budget. When you choose solar energy, you will not only move towards a healthier and environment-friendly choice but also be a step closer to a financially sustainable lifestyle.

The fantastic advancements in solar reliance have overtaken traditional and costly electrical consumption. It is fair to say that countless savings come along with solar.

Visit our site to learn more about community solar and how you can participate in the future of clean energy.