Why Is My Electric Bill So High?
We use electricity for virtually everything in our homes, from turning on the lights, cooking, keeping our food fresh in the refrigerator to powering our TVs, phones, and laptops. Then the electricity bill arrives at the end of the month and sends u into a wave of budgetary panic.
If you are one of those people who dreads opening the mailbox in a worry that the electric bill is too high again, read on. You might find a few things that you can do to consume less electricity and start seeing significant savings.
Your Energy Contract has Ended
You shopped around for suppliers, found a great offer, signed a contract, and switched. In fact, things were going so well that you completely forgot that the contract duration that you have signed up for is slowly approaching its end date. However, it’s now the first month after your contract end date, and all of a sudden, you are slapped with an unusually high electric bill.
After your contract expiration, the energy supplier often transfers you automatically to another energy plan (for example a variable electricity rate), with a lot higher cost than what you were paying before.
That’s why it’s important to track your energy plans and switch to another electricity supplier as soon as your current contract expires. It is the duty of your electricity provider to notify you in writing at least 30 days prior to your contract’s expiration date, informing you about the contract end date, the new price you will be charged, and your options. If your provider failed to send you such notice, you might submit a complaint with the Public Utility Commission in your state to get out of paying the bill.
Broken or Old Appliances
A broken AC unit might also leave you wondering – why is my energy bill so high? A damaged heater or an air conditioning unit in your house will have to work harder than optimal, which will drastically increase the amount of electricity you use. This is a problem because heating and cooling your house make up approximately half of your final electricity bill.
Always replace your broken AC unit as soon as possible. What’s more, consider investing in energy-efficient appliances that will consume less electricity on average. A home outfitted with ENERGY STAR certified products will use about 35% less energy and potentially save you $250 or more per year on utility bills. It might cost you a bit more upfront, but these appliances will pay for themselves in the first cycle in electricity savings.
Vampire Appliances
You might be surprised to learn that many modern devices in your home, such as the DVR, computer, laptop, or television don’t turn off when you press the ‘Power’ button. In fact, they are put into a ‘Standby’ mode, allowing you to turn them back on faster at a later time. This would be all good and well, except that while in Stand-by, your devices continue to consume energy and cost you money.
They are referred to as ‘vampire appliances’, because their consumption goes unnoticed (and usually happens at night), but little by little, they eat up into your savings. For example, by not turning off your laptop properly (closing it, instead of switching it off with a button), you’re burning through an extra 34 dollars on your annual electricity invoice.
Consider getting a smart power strip, which shuts off electronics that are no longer in use, to avoid steep standby power costs.
Energy Inefficient Light Bulbs
When you need to buy new light bulbs, replace them with LEDs. Incredibly, LED light bulbs to use at least 75% less energy, and last 25 times longer, than incandescent lighting. That means that if you currently have 30 light bulbs at home, you can save up to $200 in a year if you upgrade all light bulbs to LEDs. In addition, the average life expectancy of an LED lightbulb is 50000 hours. That means that if you use it for 10h a day, it should last you 14 years. You are more likely to change your house before you need to change the light bulb.
Peak-Time Usage
One reason why my electricity bill is so high’ category could be the usage during peak times. They are the times of day when many people use electricity at the same time, putting a lot of pressure on the national grid. Think of a late afternoon (approximately 5 – 7 pm) – that’s when everyone comes back from work or school and starts using electricity – to cook a meal, watch TV, play music, or turn on an AC after. These are known as peak-usage times.
The higher demand for electricity during those times also drives up the cost, so the rates are typically higher. The prime example of this is Time-of-use (TOU) tariffs, used by utility companies to incentivize electricity usage at off-peak hours. You pay higher prices during peak times and a lower rate during the off-peak times, such as early in the morning or in the late evening.
One solution is to sign up for a fixed electricity plan, effectively locking in the rate for the duration of the contract, be it six, twelve, or even 18 months. You can also consider switching your consumption to off-peak hours.
Electricity Rates
The average electricity rates are different in each U.S. state thanks to various factors. For example, it costs more in some areas to generate energy, which increases the cost per kilowatt-hour (per kWh). Hawaii has the most expensive electricity because it’s surrounded by nothing but the ocean, it has to import almost all of its energy sources, which adds greatly to the costs. Some states are tightly regulated and cannot benefit from the retail energy competition driving the average prices down.
Fuels
Probably the biggest factor in influencing the average electricity bills is the availability of energy sources in each state. Thanks to large quantities of oil, Wyoming, West Virginia, North Dakota, Montana, and New Hampshire are the five largest power-exporting states while California is the largest net importer, hence one of the highest electricity prices.
Weather
Frequent extremes in temperatures, whether too hot or too cold are not good for average electricity rates either. An extremely cold week might require you to keep your central heating on at all times and be one of the reasons for the unusually high electric bills.
Regulations
There are currently 18 U.S. states with a deregulated retail energy industry, which means that the residents of these states are free to switch electricity suppliers by shopping around on the energy marketplace. The increased competition brings down average electricity rates and lowers the bills. If you are curious about how energy deregulation works in your state, read our comprehensive guide.
Power Plants
Operating costs associated with running a power plant can vary in different areas and are often directly passed on to the customers through electricity rates. If you are moving to a new location, do some research about the average rates in the area and factor it into your decision-making.
Deregulated vs. Regulated Energy
Put simply, energy deregulation gives residential and business customers the freedom of choice. Residents in the deregulated electricity states don’t have to purchase electricity from the state utility company for a regulated price. Instead, they can shop around to find more competitive, convenient energy plans from retail energy providers, or REPs.
As previously mentioned, today there are 18 states with a deregulated utility market for electricity and 27 states for natural gas, giving customers the power to choose their suppliers. Customers in California, Connecticut, Delaware, Washington DC, Illinois, Maine, Maryland, New Hampshire, New Jersey, Ohio, Texas, Rhode Island, New York, Pennsylvania, Michigan, Montana, Oregon, and Massachusetts have the power to switch and reduce their utility bills.
Reducing Your Electric Bills
We have hopefully helped you answer the pressing question of ‘why is my power bill so high’, so let’s now turn our attention to what you can do to fix it.
Schedule An Energy Audit
According to the Department of National Utilities Refund, an average of 79% of companies suffer overcharges and billing errors. One way to know for sure is to hire a utility invoice auditor. Such an audit can help answer why your electric bill is high by untangling the web of your many monthly charges and fees and help you make sense of them.
If you think that the reason why is the electric bill so high is that you’ve been overcharged, you should look for an experienced auditor to analyze your monthly electricity invoices and help identify any errors.
Awareness of How and When You’re Using Electricity
One way to both reduce your bills and be more energy-efficient at the same time is to try to be more mindful about how you consume electricity. Research shows that 35% of the used residential electricity goes to waste, so why not do something about it.
Next time you are wondering ‘why is my electricity bill so high’, try to look for ways to avoid using too much energy. You can read our 25 Clever Ways How To Save Money On Utilities In Every Room guide to learn energy-saving tips for every room of your house.
Opt for Solar to Reduce Your Reliance on Grid Electricity
It seems like a good time for going solar, with the typical solar payback period in the U.S. is just above 8 years and costs falling each year. Solar panels can save you a lot of money in the long run by making you independent from the grid and allowing you to produce your own low-cost, low-carbon electricity. In addition, having solar panels installed can increase the value of your property, putting you in a better financial position.
FAQs
How Do I Find Out Why My Electric Bill Is So High?
An abnormally high electric bill is not welcome by anyone, especially if you are on a tight budget. To analyze the root causes, you should start by understanding what is considered a high electric bill – do a quick research on the average electricity rates in your area. If you can see if you can switch electricity suppliers and find a better electricity price per kilowatt-hour. Pay attention to overusing the most energy-intensive appliances, such as air conditioning and heaters. If you think that your bill contains errors, consider scheduling an energy audit.
How Can I Lower My Utility Bill?
Lowering your bill might require some research into the potential causes of the high electric bill. If you live in one of the deregulated states, consider switching electricity suppliers and finding a better electricity price per kilowatt-hour. Pay attention to how much electricity you use on average – review your electric meter often and try investing in energy-efficient appliances.
What Uses the Most Electricity in a House?
A typical household in the U.S. spends more than $2,000 a year on energy bills, out of which approximately 42% goes to heating and cooling, 21% on powering your electronics, and approximately 13% each on appliances, lighting, and using your water heater. Next time you are wondering ‘why was my electric bill so high’, consider revisiting any of these are and see if you can cut back on your usage.
Why Is My Electric Bill So High in the Winter?
Frequent extremes in temperatures, whether too hot or too cold are not good for average electricity rates either. An extremely cold week might require you to keep your central heating on at all times and be one of the reasons why is your electric bill unusually high.
If you’ve ever wondered ‘is my electric bill too high’ or even ‘how much should my electric bill be’, you certainly aren’t alone. However, rather than accepting it, you’ve resolved to do something about it, and reading this article is the first step. Hopefully, the next time your electricity bill arrives in the mailbox, you can open it not with fear, but with confidence that it’s lower than the one before.
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