What Makes My Electric Bill So High?

by Gary Foreman

Whta Makes My Electric Bill So High photo

Is your electric bill out of control despite your best efforts to keep it down? We explore what can increase an electric bill as well as what can lower it.

Dear Dollar Stretcher,
I always do my best to keep the electric bill down in our home. I’m constantly turning off lights and appliances and reminding my family to do the same, yet our electric bill never seems to decrease.

Am I missing something? Where does electricity waste happen normally in homes? Is there something more I can be doing? I’ve noticed companies that provide services to manage energy usage in homes. Is this something worth looking into?
Jaxon from Santa Fe, NM

Good question. For most of us the electric bill is one of the larger bills that we pay each month. Therefore, it’s only natural that we’d want to reduce it if possible.

So let’s look at your question three ways. First, how does your bill compare to the average? Second, what makes the average electric bill so high? And, finally, what can you do to reduce your bill?

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How does your electric bill compare to the average?

Good question. For most of us the electric bill is one of the larger bills that we pay each month. Therefore, it’s only natural that we’d want to reduce it if possible.

So let’s look at your question three ways. First, how does your bill compare to the average? Second, what makes the average electric bill so high? And, finally, what can you do to reduce your bill?

New Mexico is one of the states with the lowest average electric bills. The rate in December 2020 was 12.27 cents per kilowatt hour. That’s the 20th highest rate in the country. But the average monthly usage was only 640 kWh bringing the average bill to $78.50. (source: Saveonenergy.com)

How does that compare to the national average? The average rate is 12.80 cents per kWh. Average usage is 887 kWh for a monthly bill or $113.59

You don’t say how high your bill is, but if it’s concerning you, I’d have to assume it’s above average. Of course, the difference could also be explained by an above average sized home.

What makes the average electric bill so high?

Next, let’s take a look at what devices consume the electricity we pay for. The EIA released a paper that answers that question.

  • 41% was for heating our homes
  • 34% was for appliances
  • 17% was for water heating
  • 6% was for air conditioning

Let’s break down that appliance figure. Duke Electric assembled an impressive list of what it costs to run various appliances. They used a cost per kWh of 8.2 cents. You’ll want to compare that to your rate (which should be clearly stated on your monthly bill).

A computer with monitor and printer left on without sleep mode 24 hours a day would run $8.86 per month

Leaving your whole house furnace fan run 24 hours a day would cost $29.52 per month. By comparison, a ceiling fan on high speed would cost $3.84.

A newer model freezer would consume $4.94 in electricity each month, but an older model would consume $7.97. (See Will New Energy-Efficient Appliances Save Money?.)

You probably wouldn’t use a 1500 watt portable heater 24 hours a day in New Mexico, but for our northern readers, it would cost $88.56 each month. You’re more likely to use a 1000 watt heater that only runs 50% of the time for $29.52.

Lighting might not be as bad as you think. Consuming 1875 watts for 8 hours per day would run $36.90 per month. To think of it another way, you could have 18 lamps with 100 watt bulbs running 8 hours per day.

A new medium-sized refrigerator consumes $5.90 per month. The same mid-sized fridge that’s over 10 years old would double that cost running $11.80 per month.

An LCD television consumes $2.21 per month. A standard TV consumes the same amount, but a plasma TV would use $5.17 per month. The standby (instant on) feature alone costs you $1.18 per month.

Your water heater will consume $29.71 per month assuming the heater is housed in a warm space. You’ll spend $8.46 for clothes washing alone, assuming you wash 8 loads per week. (See The Cost of Using Your Clothes Dryer.)

How can you reduce your electric bill?

Now that we have some interesting facts, let’s look at your situation. While it’s foolish to waste electricity powering lights in an empty room, the cost of a few hundred watts isn’t going to bloat your bill too badly. Especially if you’re replacing burnt bulbs with LEDs.

The culprit is more likely among the big consumers of electricity in your home, which is generally heating and cooling if you have a larger home.

If you haven’t had an energy audit, you should have one. It’s the best way to find out if your home is properly insulated. Proper insulation is the first step in controlling costs. (See Reduce Energy Bills by Hundreds Per Year.)

Also have your air conditioner serviced. It’s not uncommon to find a unit that’s cooling your home, but running much longer than necessary. That wastes money. If possible, keep the outside unit in the shade and make sure that bushes aren’t blocking airflow. (See Perform Your Own Annual Air Conditioner Inspection.)

Even though you live in the southwest, it’s prudent to have your furnace checked every few years. You’ll want to do this to make sure it’s operating efficiently and also for your family’s safety. (See How to Prepare Your Furnace for Winter.)

Next move on to second level appliances like your water heater and refrigerator. Consider an insulated water heater blanket, and clean the refrigerator coils regularly. (See Cutting Your Electric Bill: The Refrigerator.)

As to the energy management systems, you can probably gain nearly the same savings with a programmable thermostat or even by adjusting your heating/cooling temperatures manually. In a few years, they may provide big savings, but right now you’re better served checking for insulation and making sure your heating and cooling systems are running efficiently.

Finally, do encourage your family to turn off lights that aren’t being used, but don’t get too hot under the collar if they’re not perfect. That’ll only give you an excuse to increase your air conditioning!

Reviewed May 2021

About the Author

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. You can read Gary's full bio here. Gary shares his philosophy of money here. Gary is available for audio, video or print interviews.

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