Why is my electric bill so high?

If you own a home, you’ve probably experienced the shock of opening your monthly electricity bill in the mail and seeing a dollar total that is higher than you expect. It’s a common part of home ownership, and one that you can hear homeowners lamenting as electricity rates increase – “Why is my electric bill so high? Why does it keep going up?”.

Luckily, there are steps you can take to find the source of high electricity bills and resolve them so that you can minimize the impact on your wallet. Here are some ideas to start the troubleshooting process, along with some suggestions on what to do about your high electric bill.

Top reasons why your utility bill is high

There are several main reasons why you might have a high electric bill:

1. You have old appliances
2. You’re using your appliances in an inefficient way
3. You’ve been moved to a new rate structure, like time-of-use
4. Your utility rates are increasing overall

Importantly, for most U.S. households, electric bills are generally higher in summer months, as that is the time of year when most air conditioners are running for the most hours. However, if you notice your utility bills are higher than usual for the time of year (or compared to the previous month), you can probably take action and reduce your electricity demand.

Cause: you have old electrical appliances in your house

Over time, the electronic appliances in your home degrade and lose efficiency. In addition, older appliances weren’t made at the efficiency standards that are required today. Even in their prime, they will draw more electricity to generate the same amount of power that a comparable ENERGY STAR appliance today. Both of these facts can lead to older appliances becoming relative “energy hogs” in your home.

Solution: replace old appliances with ENERGY STAR appliances

If your house is full of older appliances, you may want to consider upgrading to newer technology to reduce your utility bill. Keep an eye out for ENERGY STAR appliances in the shopping process. This is particularly true if they’re appliances like refrigerators, dryers, and dishwashers that use a lot of electricity to begin with. Upgrading to more efficient appliances in your home could lead to significant annual savings: ENERGY STAR reports that a typical household can save roughly $450 per year on energy bills by using products with their certification.

Cause: you’re using appliances inefficiently

Many homeowners have high electricity bills because of the appliances that are plugged into their outlets, even if they aren’t using them frequently. Many modern electronics continue to draw electricity from the grid even if they’re powered down or not in use. The easiest way to conceptually think about it is that these appliances are on “standby” until being turned on. These are sometimes referred to as “Vampire Appliances.” In your own home, this may include DVR systems, garage door openers, smart home devices like the Amazon Echo, or your microwave.

While appliances on standby don’t use as much electricity as when they’re in use, it can still add up, and it contributes to an overall higher electricity bill. Appliances on standby account for roughly three to 10 percent of energy usage in a home. You’ll notice that even if you spend a month away from home, you’re likely to still have a decent sized electricity bill because of some of these products.

Solution 1: clean your appliances and your fill dishwasher, washing machine, and dryer to capacity

If your appliances haven’t been cleaned in a while (especially your refrigerator and air conditioner), that might have an impact on your electricity bill. Cleaning the condenser coils at the back of your fridge (if your model has them) in particular is an easy way to keep it running at maximum efficiency. When it comes to air conditioners, just make sure you’ve been changing the filter on your unit at least once a month. The more build-up of debris in your AC filter, the less efficient your system will run.

In addition, you can save extra money on your utility bill by running power-hungry appliances like dishwashers and washing machines at capacity. Try to wait to run your dishwasher until it’s actually full, so you’re getting the most out of the wash cycle. The same goes for your clothes washer and dryer.

Solution 2: use smart power strips and turn lights and fans off when leaving room

Smart power strips, also known as advanced power strips, address the problem of phantom loads by shutting off the power completely to electronics when they are not in use. Smart power strips can be set to turn off at an assigned time, during a period of inactivity, through remote switches, or based on the status of a “master” device.

Although it might seem obvious, another way to squeeze out more electricity savings is by simply turning off devices like fans and lights when you leave a room. Especially for larger rooms, this can add up over time.

Cause: you’re on a new rate structure, like time-of-use

Have you recently opted into, or been forced by the utility to adopt a time-of-use (TOU) plan? If so, this could be one reason why your electricity bill is higher than it’s been in the past.

TOU plans charge different rates depending on the time of day you’re drawing electricity from the grid. “Peak hours,” or the hours when the utility charges the most, are in the evening as most people return from their place of work. If you’re on a TOU plan and running electrical appliances during these hours, it will increase your monthly bill.

Solution: install a battery and adjust your consumption habits

Many homeowners are considering installing energy storage for their home not only as a source of backup power during grid outages, but also to combat time-of-use electricity rates during peak hours. With a backup battery, you can charge your battery during off-peak hours when electricity rates are at their cheapest, and then use electricity that has been stored during peak hours. In addition to taking advantage of a lower TOU rate, you can also get access to incentives to make investing in energy storage for your home more affordable.

Even if you don’t currently use much electricity during off-peak hours, do you have the flexibility to change everyday habits and decrease your electricity use during peak hours? This might seem difficult for homeowners who leave the house everyday for work and return in the evening when electricity rates will be higher, but there are still steps you can take to save money using time-of-use and schedule your energy usage outside of a peak time. For example, many appliances – including dishwashers, washing machines, and dryers – have scheduling functions so that you can set the time for them to run ahead of time. If you own an electric car, you can plan to charge it at night during off-peak hours.

You can also simply wake up earlier to start household chores that require a good amount of electricity, wait to charge appliances until it’s late at night, and generally try to be more conscious of when you’re using electricity. All of these actions help to minimize your use during peak hours and cut down on energy use.

Cause: your utility rates are increasing

The price of electricity fluctuates across the country, and retail residential electricity rates do typically increase over time. In the last 10 years across the nation, average electricity rates have risen approximately 4% per year (although it varies depending on where you live). As the rate you pay for electricity continues to rise, it will mean higher electricity bills, even if you aren’t using more electricity.

Below is data from a few states, and what they’ve experienced in regards to electricity price increases.

National Grid, PG&E, Duke Energy and other top utility rate increases

Source: U.S. Energy Information Administration

This isn’t to say that homeowners in all states have experienced an increase in electricity rates each year (as shown above). Rates fluctuate, and some states over the past few years have actually seen a slight decrease in electricity costs due to the declining price of natural gas. Overall, the U.S. Energy Information Agency (EIA) predicts that electricity prices will increase in the next two years, and continue to increase out to 2040.

If you think that an increase in utility costs may be the cause for your high bill, it’s worth taking a look at their information online or searching local news to see if this may be the case.

Solution: offset your bill with solar!

One of the best ways to offset a high electric bill is to get a discount on electricity by subscribing to a community solar program. With community solar, you can get credit for electricity from a local solar farm, usually at a lower rate than your utility. Electricity bill savings differ from program to program, and also vary by month. On average, most community solar subscribers receive a discount between 5-10% off of traditional electricity costs over the course of a year.

If you don’t mind the upfront cost, installing rooftop solar panels can lead to thousands of dollars in electricity savings over the course of the 25-30 year lifetime of a solar panel system, because you’ll generate your own power instead of buying it all from your utility. If you have time-of-use rates with your current rate plan, the credits you get for sending excess solar electricity back to the grid will depend on the time of day.