Why do we need your electricity bill?
By analyzing your electric consumption history, our designers will size the system appropriately to meet your assumed future demand. Companies who provide you estimate without looking at your electric bill are giving you a ballpark estimate. Chances are it is wildly inaccurate and most likely lower than it should be to draw you in. Incorrect system size is the reason some customers still get an electric bill from their utility company after going solar.
How is your electric usage calculated?
According to the Energy Information Administration (EIA), as of February 2022, the average cost of electricity in the United States was 13.83 cents per kWh. Different utility companies charge customers in different ways for electricity. These rates are what you will pay based on the amount of kWh you use each month.
Wattage of appliance
Number of hours
You’ll see kWh (kilowatt-hour) across your electric bill and it’s important to understand this metric. A kWh defines the amount of energy used in one hour. An average house uses about 900 KWh each month. To help make this easier to understand, let’s take an average air conditioner into consideration.
Let’s say you are paying a rate of 14 cents for each KWh. The average central air conditioner uses about 5KW of power per hour. If you run your AC for 8 hours a day, then your AC uses 40 KW. If each KWh costs 14 cents, your air conditioner will cost $5.60 every day, or about $168 a month.
Unfortunately, calculating KWh from your electricity bill is not easy because different utility companies charge customers in different ways for electricity. The most common rates are fixed, time-of-use, and variable rates.
1 KILOWATT-HOUR (kWh) is approximately:
6 hours of fridge usage
17 hours of light per bulb
20 hours of TV watching
Fixed rates – Your utility company will charge you a specific amount per kWh used. No matter the time, day, or season, you will be charged the same electricity price per kWh.
Time-of-use rates – Utility company charges you a different amount based on which time of the day you use your electricity. During peak hours (e.g., first thing in the morning or in the evening after work), some utilities will charge a higher price for electricity.
Variable rates – Utility companies implement variable rates in different ways. The price you pay fluctuates and the electricity rate changes monthly or even hourly. The benefit of this type of plan is that if the market price goes down, so will your bill. However, if you experience extreme heat or extreme cold, the price per kWh may increase dramatically, causing a spike in your monthly bill.
What are the charges in your electric bill?
Two charges make up the bulk of your bill – (1) Delivery Charges and (2) Generation Charges.
The Generation Charge includes the cost of generating the amount of electricity that was supplied to you whereas the Delivery Charge cover the costs of delivering you the electricity via the grid and power lines. You will be surprised to know that generally Delivery Charges are two times more than the Generation Charges. The U.S. grid loses about 5 percent of all the electricity generated through transmission and distribution costing consumers approximately $6 billion annually in higher energy bills. This Delivery Charge is meant to pay for upgrades required for our power grid and will most likely increase over the years as climate change leads to more grid failures.
Lower your electricity bill by going solar
The cost of electricity bills will continue to go up as an ongoing liability. Adding solar reduces ongoing costs, helping homeowners save a lot of money for years and years to come. Good news is there is no out-of-pocket costs to install solar panels.