Understanding my Utility Bill: Electricity Consumption and Demand Charges

Understanding my Utility Bill: Electricity Consumption and Demand Charges
  • Opening Intro -

    Keeping your electric bill lower than last year takes a two-pronged approach.

    You need to monitor how much power you use. You also need to pay special attention to when you use it.


Consumption is how much power your home or business uses without regard to the use patterns and loads of those around you. Demand is more of a group effort; your electric usage during points of high demand across your grid will add to your total utility bill.

Tracking and Controlling your Consumption

Your consumption is measured in kWh or kilowatt-hours on your electric bill. Lowering your total kWh use can be much simpler to manage.

If you live in a region that has high summer temperatures, you know that your air conditioning use adds to your total electric bill.
You can tackle your total kWh consumption by

  1. covering windows as the sun crosses the sky
  2. planting deciduous trees to shade the house from the sun
  3. upgrade your windows, HVAC, and insulation

Also, keep fans blowing to move air in rooms where people and pets gather. Ceiling fans are preferable as they pull that warm air and keep it circulating.

Avoid letting your home get too warm during the day; warm air holds more humidity, which will just add to your misery. Finally, avoid in-house activity that adds more heat indoors, such as cooking or baking indoors.

Timing Your Electrical Use to Lower Your Demand Charges

Managing your kWh or consumption can give some benefit in lowering your bill. However, your kW or kilowatt consumption counts for a lot more on your utility bills.

Again, kW is a measure of how much electricity is used at points of high demand. If the grid is overstressed, your utility has to seek out power from other sources, which increases your electric demand charge. Reducing your kWh use can save pennies, but reducing your kW use can save dollars.

Indications are that in many regions with higher summer temps, the greatest demand for electricity occurs between noon and 8 pm. If you can use a programmable thermostat to cool your home down during the overnight hours and in the morning, letting the temperature come up some as the sun goes down, you can save on your electric bill.

Reducing your western exposure can also greatly reduce the amount of power that you have to burn in the afternoon and early evening. You can also lower the intensity of your usage by

  1. meal planning like grilling outside in the afternoon or using your crockpot to cook in the morning
  2. run the dishwasher overnight
  3. start laundry before bed, then run the dryer first thing in the morning

If you have access to a pool, spend your afternoons and evenings going for a swim and let your skin air dry to keep your body temperature lower.

Finally, make sure your energy vampires are turned off during this critical peak time. Put electronics and entertainment gear like your television on a surge strip and either turn it off from noon to 8 or unplug it entirely. Spend this time enjoying the quiet, then turn things back on during the off-peak times.

You Can Also Reduce Consumption in Winter

If your winters get cold, you can reduce your utility consumption in winter with a similar focus on weather protection and using power during non-peak hours. Thermal drapes, open during the day and closed at night, can let the sun warm up your space during the day and keep frigid air out of your rooms at night.

Change the rotation on your ceiling fans and let them turn slowly when you’re home to direct warm air back down toward the folks in the space. If you have a fireplace, get your chimney cleaned and your damper adjusted to carry away smoke but not heat.

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Finally, focus on warming beds at night instead of warming the whole room. Quality slippers and fleece pajamas will keep heat against your skin.

An electric blanket or even a hot water bottle to warm up your feet so you can snuggle in can lead to better quality sleep. Program your thermostat to let the house cool down overnight, then slowly start to warm back up an hour before your alarm goes off.

Image Credit: understanding utility bill by envato.com

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