The mystery of life: understanding your electricity bill

John Cook
John Cook
Jan 14, 2019 · 6 min read

Life’s great mysteries, difficult to understand despite our greatest effort. Our complex ecosystem, how man came into existence… our electricity bill? For over 30 years, I treated my electricity bill as a mystery, something I never understood: kilowatts, tariffs, tiers, energy allowance, what? I just want to power my damn TV! Here’s my most recent electricity bill:

Do I live in a large estate? A 4 bedroom detached house? Negative. I live in a 2 bedroom apartment in the San Francisco Bay area, and when I received this month’s bill for
$224.22 with a note that says I use 173% more electricity than similar apartments in my area, I had a serious “WTF moment” and set out on a long journey to understand how electricity works, and why my bill was so damn high!

How do we use electricity?

The devices in our house: tv, air / heating, fridge, light bulbs, all consume electricity. This ‘consumption’ is measured in the form of watts. All of our devices have watt rating which describes how much power the device consumes in one hour. Here’s the watt usage for my TV. You can see the label “180W” which means that this TV uses 180 watts of energy in 1 hour.

I’ve cataloged the estimated power consumption (watts) of the common devices in my apartment as outlined below. It should be no surprise that central heating & air is the single largest factor power consumption. The table below says that 1-hour continuous operation of my central heating and air conditioning system will consume 3,500 watts. This is problematic (for me) because it represents a device in my house that is on most of the day. Although my dryer consumptions approximately 3,000 watts of power, I only use it 1 hour a week, compared to my bitcoin mining machines which consume only 1,350 watts of power but operate 24/7. Take a moment and perform this activity for yourself: walk through your apartment and figure out how many watts of power your common devices consume, you may be in for a surprise!

Understanding your bill

We can now apply our new found knowledge of electricity consumption and watts to decrypt my mysterious $224.22 electricity bill for the month of December. My bill indicates the devices in my apartment have consumed 816 kilowatts over a 26-day billing cycle. Kilowatt-hours (kWh) define the amount of energy used in one hour of time. A simple analogy is that speed is a metric that defines distance traveled over a period of time while energy is a metric that defines power used over a period of time. That means a 1,000-watts (1 kW) microwave for an hour would use up 1 kilowatt-hour (kWh) of energy.

Most people in California have a ‘tiered usage’ electricity bill. In my bill, I am charged .21 cents per kWh for usage up to 283 kWh, and .28 cents for each kWh thereafter. An analogy to the tiered electricity usage are the old school bills we had for our cell phones back in the day. Most people were allocated like 400 minutes for like 5 cents a minute, and every minute after we would be billed at a rate of 10 or 15 cents a minute. While the telephone industry has moved towards a more modern approach to billing, unfortunately, the utility companies remain stuck in the stone age with this dated approach.

To better understand how I consumed 816 kilowatts of electricity over a 26 day period, helps to list out your most commonly used devices and project your daily or weekly usage. When I calculate the anticipated cost of the common devices, it becomes clear why my electricity bill was $224. Running my central heating and air for 10 hours a day, 7 days a week produces a cost per week of over $50, yikes! My bitcoin mining rigs cost over $1 a day to operate, and without getting too far into the weeds, operate at a loss as a result of the decrease in bitcoin from $20,000 to $3,600. Fingers crossed for a revival?

When I take the projected utilization of my common devices, along with my tiered billing rates of .21 and .28 cents per kWh, we can see that my projected energy costs per day are anywhere between $3 and $12! You can see that during Christmas week (12/20 to 12/28) not only did I consume the highest amount of energy in my given billing period, but i was also charged the tier 2 pricing of .28 cents per kWh, a double whammy. Ouch

So what?

If you’re a math nerd, you may appreciate the breakdown of pricing per day per device, but for most sane people the next logical question is so what? My so what moment was the realization of 2 things: 1) I am using my central heating & air wayyyy too much and 2) My electricity costs are too high. The US Energy Information Administration, which tracks energy costs across the country, has measured the average energy cost in California to be .16 cents per kWh.

I acknowledge that my energy utilization is completely out of whack, but the price disparity as a result of the lack of competition (Pacific Gas & Electric is the single energy provider in the region) does not benefit anyone. But in the absence of another ‘Say no to PG&E’ ballot measure’, the only choice I have is to seriously curtail my electricity utilization. So starting with my next billing cycle I am going to conduct an experiment to see if I can actually within the Tier 1 threshold of 284 kWh. In my last billing cycle, you can see I depleted the entire allocation in just TEN days! Yikes. I’ll provide an update on my experiment at the close of the next billing cycle. Who knows, maybe i’ll actually become a believer low-energy believer!

For those wondering about the bitcoin mining rigs? For now, they stay but within the next 3 months, ill be moving the devices to an off-site solar panel location somewhere in central California.

This story is published in Educated & Broke — a publication dedicated to helping you fight student loan and consumer debt by providing real-life, practical advice.

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