How Much is the Average Electric Bill?

How is the Average Electricity Bill Calculated?

Depending on your state or municipality there may be taxes or other charges to consider but a good rule of thumb is that:

Average Kilowatt Hours Used x Average Cents per Kilowatt Hour ÷ 100 = Average Electric Bill

A Kilowatt Hour is a measure of the electricity you use per hour to power your heating, lighting, cooling, appliances, devices, washer, dryer, and any other household items. If you are looking at your energy bill, you may see the short form of kilowatt-hour displayed as kWh along with the electricity rate displayed as cents per kWh or ¢ per kWh.

For example, if your television uses 0.20 kilowatts per hour and you use your television 4 hours per day, you will have used 24-kilowatt hours by the end of the month. (0.20 kWh x 4 hours per day x 30 days = 24 kWh) If your average cost of electricity is 10 cents per kilowatt-hour, your television costs you $2.40 for that month.  (24 kWh x 10 cents per kilowatt-hour ÷ 100 = $2.40)

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Electricity Deregulation By State

Before deregulation and energy choice, the state of the energy industry in the United States, consumers did not have the right to choose the company that would supply their energy, based on competitive power prices. However, in 1978 this all changed. The PURPA or the Public Utility Regulatory Act was passed by the federal government. Essentially, the bill passed so individual states could decide how they would supply electricity to electricity users. Yet, it was not until the late 90s, when the first set of deregulated states grew into true competition electricity markets. Those states were CA, TX, RI, NY, PA, and MA. 

Today there are about 18 states that are deregulated meaning that even though your state's utility has the mandate to deliver energy to your property & ensure electric grid operability, you still can choose the company you wish to supply your electricity (based on competitive energy prices).

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A Break Down of the Average Energy Bill

EIA’s Annual Energy Outlook will help you understand how you use your electricity and may even help you target those areas where you are most likely to reduce your usage. Keep in mind that the climate, size of your residence, the efficiency of your appliances, a pool, and the number of appliances you use will all impact the amount of electricity you use. 

You should also know that the type of energy plan you choose will impact your monthly cost. The top energy plans to remember are fixed, variable, and indexed energy plans. These plans are all different in how they charge electricity consumers. The energy rate calculation is based on projected usage, personal consumption, and the public's average usage. 

1. Variable Rate Plan - 

The rate in a variable-rate plan changes month to month or it can also remain the same for months at a time. It is your supplier's decision to change the price based on the specifics of the offer. If your housing option is not permanent and you are not interested in signing up for a long contract, then this could be a great option for you.

2. Fixed Rate Plan -

For the entire duration of your contract, the price will remain the same. Essentially this means that if your contractual agreement is for 12 months then your price point will not change. The only way your monthly bill will be higher or lower is based on the usage amount for that period.

3. Index Rate Plan - 

 This energy plan is rather complex. The energy rate or price point will be split into two separate parts. An adder that is locked in at the time you sign your contract and a real-time market price. The bill rate will be the adder from the agreement on top of the real-time price of energy during the period in which you used electricity. You can save money under this plan, at times. The risk comes with increased market prices though. 

What is the Average Energy Cost for Homes?

The electricity bill for your home is going to be affected by a variety of factors. The primary three are the size of your home, the age of your home, and the number of occupants.

• The size of your home is the biggest driver of your energy bill because it determines the total amount of space that you are heating, cooling, lighting, and cleaning. We have seen estimates ranging from 7 to 10 cents per square foot per month.
• The age of your home contributes to your energy bill in two ways. Newer homes are being constructed with better insulation and more modern windows, keeping the outside out, and your hard-earned dollars in. Newer homes typically have more energy-efficient appliances as well.
• The number of people living in your home also plays a role in the overall cost of your monthly energy bill. Below we will provide a quick breakdown.

What is the Average Monthly Electric Bill by State

The amount that you pay per kilowatt-hour will be impacted by the state that you are in and the distribution company or electric provider that you purchase your electricity from. If you think that you are paying too much, look at your electric bill and see whether your usage or the average cost of electricity should be tackled first.

If you live in California, Connecticut, the District of Columbia, Delaware, Illinois, Massachusetts, Maryland, Maine, Michigan, Montana, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Texas you may be able to select your residential electricity provider and lower your rate. Some of these states also allow you to choose a natural gas provider as well.

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