How Your Electric Bill Is Calculated and What You Can Do to Lower It

April 9, 2018

Electrical bill There are two types of people when it comes to their electric bill – those that study it and compare month to month, and those that just pay it without thinking twice. But at the end of the day, both groups are likely interested in reducing costs to save money, and lowering usage to help the environment. Knowing a little more about what goes into your bill, or just learning a few tricks that might help you reduce your usage and, by proxy, your monthly costs, doesn’t have to be a time-consuming feat. Here are some of our recommendations.

Breaking Down the Bill

There are a few key things you should take note of if you’re trying to reduce your electricity costs and wish to examine your bill as a first line of defense. You should confirm what type of billing plan you are on – usage-based, or a budget bill. The former bills you monthly based on your kilowatt hours usage for the month, whereas a budget bill takes the number of kilowatt hours you used in the previous year and assumes you’ll likely use a similar amount this year, and then divides the billing up evenly over 12 months for a more consistent billing cycle.

If you live in a hot area, for example, you may see your bill be lower than your neighbors in the summer months when you are using your A/C consistently, because the amount owed is averaged out over the full year – whereas in the winter when you aren’t using your systems as much, your bill will likely be higher than your neighbors. There are advantages and disadvantages to both, but before you can examine your bill much further, you should know what type of billing cycle you are on.

The other key you should use to help you reduce usage and, in turn, costs, is your usage statistics. On most bills, it will give you an idea of what your usage looks like, and you can use that to help predict future bills or find patterns in your usage that might help you identify areas where you can save.

Use Your Tools

Nowadays, many electric companies (like Xcel here in Colorado) offer dashboards on your online account portal that let you get a bird’s eye view of your usage, how it compares to your neighbors, and how it compares to your own past usage. This will help you identify patterns, see months when you tend to use more electricity, and key into your usage trends before they get out of hand. For example, with a year-to-year comparison you can see if you are using more energy than the previous year, and try to adjust if desired. Many electricity and utility companies also offer rebates (in addition to some manufacturers) for installing high efficiency heating and cooling equipment, so this is another tool you could use to your advantage, if you haven’t yet.

Save That $$

It might appear on the surface as though in order to save money on your electric bill, you have to sacrifice Big Time – by either keeping the temperature uncomfortably cold in the winter or uncomfortably warm in the summer – but that simply isn’t the case. There are many ways to save on your usage and your bill without sacrificing comfort and safety. You could install more energy efficient appliances, light bulbs, and get rid of energy-sucking equipment like electric tea kettles.

You may want to consider making your heating and cooling equipment more efficient by swapping out your AC unit for a highly efficient one, or upgrading your furnace to one with an energy efficient blower motor. If your furnace is operating just fine but you are interested in upping its efficiency, you can install a blower motor without replacing the unit. All three of those options qualify for fantastic rebates from Xcel Energy that will put some dough back in your pocket ASAP.

You may also consider installing timers or motion detectors on lights so they turn off automatically, saving you both effort, time, and energy. Reducing usage in general by turning down your thermostat a couple of degrees in the winter (or up in the summer) can make a big difference without sacrificing your comfort.

Installing a central humidifier can also help you achieve desired comfort levels at a lower thermostat setting during the heating season – more money stays in your pocket, while increasing your comfort at the same time. Turning off lights when you aren’t using them, and not using appliances longer than necessary may help, too.

Knowing more about your energy usage, understanding how it translates to your bill, and having a few more ideas under your belt about what to do if you are interested in reducing consumption and the amount of money you pay monthly, is a powerful combination of tools for homeowners to have. If you are interested in learning more about energy efficient heating and cooling systems and appliances in the Denver/Boulder metro area, we would love to help. Give us a call or schedule an appointment today.