Why Is My Electric Bill So High?

When your electric bill arrives each month, you may find yourself wondering, ‘why is electricity costing me so much money?’ Your confusion might be especially acute if you have consulted with family members, friends and neighbors, and discovered that most or all are paying less for electricity than you are.

Whether your electric bill can truly be classified as high is, of course, a matter of opinion. But its your opinion that matters the most, and if you are convinced you should be paying less for electric power, you should follow your instincts and investigate why your bills are higher than you think you should be paying.

What could cause a high electric bill?

What follows is a list of possible factors that could explain why your electric bill is so high with recommendations to address the problem included:

#1 Check if your energy supplier has put their prices up

When you receive your monthly electricity bill in the mail or online, do you actually examine it? Or do you just pay it and then forget about it?

If you finally take a closer look at your next electricity bill, you’ll find its chock full of fascinating facts about your electricity consumption and the rates you’ve been paying [1].

In charts, graphs and descriptions that contextualize the amount due, your energy consumption for the most recent and past months will be disclosed. You will also be able to see the rate you are paying by kilowatt-hour (kWh), and you will be able to find out if there have been any rate changes recently.

You should always save your electricity bills instead of deleting them or throwing them away. This way, you will always be able to tell if your bills have gone up because you are using more electricity, or because your utility company has increased their rates.

You could also consider switching to solar power as an alternative solution to your growing electricity bill. We have a useful guide ‘Solar Panels for Home: Will They Pay Off?‘ where we have summarized all the information a homeowner needs to learn more about this renewable energy option.

#2 You have fallen victim to the phantom menace of phantom power draw

Digital technology allows electrical devices and appliances to function far more efficiently than they did in the past. But one feature of these devices actually wastes electricity compared to earlier models, and that is standby power.

Also known as phantom power, this unrecognized menace to your electricity conservation efforts may be responsible for as much as 40 percent of the energy used by appliances that have standby mode capability [2].

Most appliances only draw in the neighborhood of 0.5 watts of power in standby mode. However, when you’ve got 10 to 20 appliances or devices that are all using standby power (a typical number in an American home in 2022), it could add an extra 5 to10 percent to your energy bills each year [3].

Standby power is a convenience but far from a necessity. You can eliminate the problem by plugging your appliances and devices into power strips with on/off switches, and then turning them off any time you leave the house or retire for the evening.

#3 You have old, outdated appliances

It’s a pretty reliable rule of thumb: the longer you have owned an appliance, the less energy-efficient it is likely to be.

This is especially true if we’re talking about an appliance that has a relatively long lifespan and that you’ve had for a decade or more (i.e., your air conditioner, furnace, dishwasher, water heater, etc.).

If you have older appliances, you could put a noticeable dent in your monthly electricity bills by investing in new appliances that carry the acclaimed ENERGY STAR label. ENERGY STAR certification is a designation granted to appliances by the U.S Department of Energy, signifying their impressive capacity to reduce energy consumption in comparison to older models.

To achieve ENERGY STAR status, a product must meet minimum federal energy-efficiency standards, which are set by the U.S. Environmental Protection Agency (EPA) [4]. But many new appliances exceed this by 10, 15, or even 20 to 25 percent, pushing your potential energy savings into the stratosphere when you purchase them [5].

When you replace an older refrigerator, furnace, dehumidifier, water heater, stove, washing machine, or any other appliance you can name with an ENERGY STAR model, it is guaranteed to reduce your electricity costs by an impressive amount.

#4 Your water heater’s temperature is set too high

Water heaters are one of the most overlooked energy-consuming appliances, in an ‘out of sight, out of mind’ way. But despite their unobtrusive nature they are prodigious users of electricity, and if you’re the normal American consumer they may account for as much as 17 percent of your annual energy costs [6].

Happily, you can reduce that percentage quite a bit with one simple adjustment, which involves turning your water heater’s temperature down by 10 to 20 degrees, let’s say from 140 to 120 degrees Fahrenheit (140 degrees is a standard factory setting). Unless you enjoy being scalded, you will find that water heated at this lower setting is still plenty hot enough for your shower, faucet or washing machine.

As for energy savings, the U.S. Department of Energy estimates that this simple adjustment can cut your electricity costs by between four and 22 percent annually, depending on the amount of hot water your family uses [7].

If it is the latter figure, this could save you as much as $400 on electricity over the course of a single year.

#5 You’ve been using appliances during pricey peak hours

While practices vary by utility company, there is a good chance your electric provider is charging more to distribute electricity during peak hours. If you choose to cook with an electric stove, wash your dishes or clothes, or take a hot shower during these times, you may be charged as much as 15 to 20 cents more per kilowatt-hour consumed [8].

Needless to say, peak hour costs can quickly add up, if you’re following the crowd and using more electricity during these times of high demand. While there may be some differences based on where you live, peak hour rates generally apply between 12 PM and 6 PM in the summer and from 6 AM to 9 AM and again from 5 PM to 9 PM during the winter, with fall and spring hours likely being of shorter duration [9].

You might want to find out from your power company if and when they charge peak hour rates, and then adjust your consumption patterns to get as much as possible done at other times.

#6 Your light bulbs are not energy efficient

The explosion in the availability of LED (light-emitting diode) lights is good news for those looking for ways to slash their electricity consumption. High-efficiency LED bulbs are 80 percent more energy-efficient than traditional incandescent bulbs, and they convert 95 percent of the energy they use into light (incandescent bulbs give off heat, which can actually add to cooling bills in the summertime) [10].

To quantify the difference, let’s compare a 60-watt incandescent bulb used three hours a day for one year to its equivalent LED replacement, which would require only eight watts of electricity to function. The traditional incandescent light would add $7 to your yearly utility bills, while the LED replacement would increase your annual electricity costs by just $1 [11].

Assuming you have 15 to 25 functioning light bulbs in your home, your total savings from going all-LED could reduce your electricity consumption substantially.

#7 The air conditioner or furnace is on while the windows are open

When people open their windows while using their heating and cooling equipment at the same time, there are usually one of two things going on. One is that they feel like their home gets too stuffy when everything is all buttoned up, so they want a steady supply fresh air coming in at all times. The second is that their air conditioner or furnace is making it too hot or too cold in their home, and they’re opening the windows to compensate.

In the first instance, you can improve your indoor air quality with mechanical ventilators, dehumidifiers, and air purifiers [12]. These appliances will rid your home of unpleasant odors, filter dust particles from the air, remove excess humidity and just in general keep the air circulating all around you.

In the second instance, you can invest in a smart thermostat that will regulate the performance of your HVAC system to ensure customized temperature maintenance [13].

#8 Your windows are letting too much heat in and/or cooled air out

The U.S. Department of Energy reports that energy-inefficient windows can be responsible for 25 to 30 percent of a home’s heating and cooling loads [14]. These windows can’t keep the heat out in summer or keep the heat trapped in winter, and sadly most homeowners have no idea how leaky and penetrable their windows really are.

If air is leaking in or out around a window’s edges, weatherstripping and caulking can take care of that problem. If your windows are old and simply not effective at preventing heat exchange, you can improve their performance by adding interior or exterior attachments to provide them with insulating or protective cover [15].

Your options here are many, and they include:

• Blinds
• Drapes
• Shades
• Awnings
• Solar screens
• Window film
• Shutters
• Storm windows

Your best solution might be to replace your old windows with energy-efficient types, of which many are currently available. The most energy-efficient windows are likely to be ENERGY STAR-certified, and they will also be rated highly on a scale established by the National Fenestration Rating Council (NFRC) [16].

#9 Your house is not properly insulated

There is a special synergy between heating and cooling equipment and insulation. Without an adequate supply of the latter, the former will be unable to function at anywhere close to peak efficiency.

Unfortunately, the North American Insulation Manufacturers Association (NAIMA) reports that up to 90 percent of single-family homes in the United States lack adequate levels of insulation [17]. With HVAC systems responsible for 53 percent of the average home’s energy expenditures, this is a consequential failure and a guarantee of significant energy waste, which can send your electricity bills soaring if you’re using electric-powered appliances of any type to deal with excessive cold or heat [18].

The U.S. Environmental Protection Agency (EPA) estimates that the average homeowner can reduce heating and cooling costs by as much as 15 percent by adding insulation to their attics, basements, walls, and crawl spaces [19].

To assess your insulation needs accurately, you should contact a home energy assessment professional to perform an energy audit in your residence. They can identify insulation deficits, while offering a ton of other good advice on how to cut your energy bills as well [20].

#10 You’ve had more people than normal staying in your house

It might not be the type of thing that would occur to you, but if you’ve had a lot of people visiting or staying with you lately this could be the reason why your electricity bills are higher. This is something that happens quite frequently during the holiday season, when the days are getting shorter and the lights are on more often, and you and your house guests are also spending more time indoors in general.

The only real way to address this situation is to speak to your visitors about the importance of energy conservation. The good news is that your loved ones will have to go home eventually, and while you might miss their company you won’t miss their impact on your electricity bills.

Counteracting inflation with electricity consumption deflation

For American homeowners, the need to lower their electricity costs has never been more urgent. The U.S. Energy Information Administration estimates that residential electricity prices in the United States will increase to an average of 15.24 cents per kWh in 2023, and if they are accurate it means electricity costs will have risen by 16 percent since just 2019 [21].

Inflation in the energy sector is a heavy burden for most American families at present, and there is no guarantee that prices for electricity won’t continue to rise in the years ahead.

The best way you have to counteract rising electricity prices is to reduce your electricity consumption, preferably by enough to at least offset ongoing inflationary increases. If you decide to turn your quest for lower electricity costs into a personal crusade, you should be able to do much better than this, since the vast majority of American homes (likely including yours) waste a lot of electricity and therefore have considerable room for improvement in their energy-using habits.

An added bonus to your efforts to lower electricity consumption is that you’ll be helping to fight climate change by reducing the size of your carbon footprint. This shows that virtuous behavior can be good for your bank account and good for the planet at the same time.