How to Understand Your Electric Bill

Let’s be honest, most of us don’t pay that much attention to all the details of our energy bills. Sure, we see the amount due each month and that can give us a “seat of the pants” sense of if we need to be better-managing our household power usage, but how many of us really take the time to look over our bill and see all the info provided? While it can be daunting to try and really understand your electric bill and understand energy efficiency, doing so can provide us with money-saving opportunities when we put in the effort to analyze it a bit more deeply, especially with electricity costs on the rise.

How Electricity Use is Calculated

At the core of your electricity bill is a calculation of how much energy you’ve consumed, and understanding this calculation is key when reading your bill each month. Typically, you’ll see a power meter reading for your current month and the previous month, with the difference being how much you’ve used in the current billing month. For example, if your previous meter reading was 10,000 kWh and this month’s meter reading is 10,500 kWh, that means you used 500 kWh during the current billing period.

But what is kWh? kWh is shorthand for kilowatt-hours, which is a calculation of how much energy is used over a specific time period. The amount of energy a piece of equipment (for example, an appliance, a TV, or a phone charger) uses is measured in watts (and a kilowatt just means 1,000 watts). A kilowatt-hour is how many kilowatts of energy something uses over the course of an hour. So your overall monthly energy usage is calculated in these kilowatt-hours, showing you – in one number – both how much energy you’re drawing and for how long.

Fixed Rate vs. Variable Rate Billing

When you signed up for your current power service, you may recall being asked to choose between a “fixed rate” billing plan and a “variable rate” billing plan. It’s a question that some people don’t pay much attention towards, but knowing what they mean, which plan you have, and which one makes the most sense for you can be a huge benefit.

A fixed-rate billing plan for electricity usage is pretty straightforward – you sign a contract which locks you into a set cost per kilowatt-hour for the entire duration of the contract. Many people choose a fixed-rate plan because it’s easy to process and allows for relatively predictable budgeting. This doesn’t mean your bill stays the same every month, but it does mean that the only variable is your usage, not the rate itself. 

A variable-rate billing plan means that the amount you’re charged per kilowatt-hour can change, sometimes dramatically, based on the time of year or even the time of day when you’re consuming energy. Typically, rates rise during high-use times such as Summer/Winter vs. Spring/Fall or morning/evening vs. middle of the night. This means that your billing can change quite a bit month to month, but it also allows you to have some control over your savings – with a variable-rate plan, you can make conscious efforts to minimize energy use during high-rate time periods while taking advantage of low-rate periods to save money.

Pay Attention to Usage to Save Money

Most utility companies will include a variety of usage graphs with your monthly bill. These sorts of graphs can be intimidating if you’re not sure what you’re looking at or how to read them, but with a little bit of time spent looking them over, you can find great ways to save money on your power bills.

One of the most common bits of data included in your bill is a monthly usage graph, which shows how much electricity you’ve used each month over the past 13 months – the past year, of course, but also the current month from the year before. This allows you to see energy usage trends for your home over the past year, as well as make a direct comparison to how much energy you were using at this time last year. 

Usually these graphs will follow fairly predictable trends – energy usage going up in the Summer and Winter when we use a lot of energy for cooling and heating, then going down in the milder seasons of Fall and Spring. But this data can also show you unusual spikes (especially year-over-year) that can tell you how to change your habits and save money in the future.

Spotloan: A Smarter Way to Borrow

A power bill doesn’t have to be something completely out of your control – in fact, the energy we use is one of the areas of spending we really have the power to manage, but only if we know what we’re looking for and can spot the opportunities for change and for saving money. That’s why it’s crucial to understand your energy bill and to be able to read every part of it, because that’s how we find these ways of lowering our costs for ourselves.

But sometimes, just unplugging an appliance at night isn’t enough to save you all the money you need at the moment. At Spotloan, our simple online application process can help you qualify for the money you need, even if you have bad credit or need a same-day loan. All you have to do is go fill out our application to see if you qualify, and you could receive a decision within minutes. Fill out our application now!