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Electric Usage FAQs

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What is a kilowatt or kilowatt-hour (kWh)?

Electricity is measured in watts. For normal residential billing, we use the term kilowatt, which is equal to 1000 watts. To change watts to kilowatts, divide wattage by 1000. An electric meter measures both the kilowatts and the time in hours the electricity is being used. The final billing unit is the product of the two measures and this is called a “kilowatt-hour” (kWh).

As an example, we can measure the electricity used for a 100-watt light bulb that is on for 10 hours:

100 watts ÷ 1000 = 0.10 kilowatts
.10 kilowatts x 10 hours = 1 kilowatt hour or 1 kWh

How much does a kWh cost?

In order to know how much it costs to run an electric appliance in your home, it is helpful to know your cost per kWh. Buying electricity is sometimes like buying sugar. A one-pound box of sugar is relatively expensive compared to the cost per pound of a 50 pound bag.  Like sugar, electricity may be offered at a lower rate as you buy more.

The amount of electricity you use in a billing period goes through “rate steps” and each step will have a different cost per kWh. Historically, residential electric rates have offered lower prices as you use more electricity in a billing period.  However, it is not unusual for some rates to change in the summer months and charge more per kWh as you increase usage. This practice reflects the high demand for electricity during the air conditioning season.

There are other rate adjustments that change frequently and therefore your cost per kWh will usually vary from one month to another. But it is easy to calculate your cost per kWh each month so you know how much you are paying. To determine your average cost per kWh, divide your total electric bill by the number of kilowatt-hours shown on your bill.

Here is an example of three electric bills from a fictitious utility. Notice how the average cost per kWh decreases in the table below.

Total kWhs on bill   Example bill amount  Average cost per kWh
  500 kWhs   $50.00  $50.00 ÷ 500 = 10.0 cents/kWh
1000 kWhs   $85.00  $85.00 ÷ 1000 = 8.5 cents/kWh
2000 kWhs   $140.00   $140.00 ÷ 2000 = 7.0 cents/kWh 

In addition to knowing your average cost per kWh, it is helpful to know the cost of your next kWh you purchase. You can do this if you have two of your past bills. Notice in the example table above that if 2000 kWhs are used, the last 1000 kWhs adds $55 to the previous bill of 1000 kWhs. The last rate step in this example electric rate costs only 5.5 cents per kWh.

Knowing the last rate step for your electric bill (or your cost for the next kWh used) is helpful when adding or removing an appliance to your home.  For example, if you had the 2000 kWh bill shown above and you buy a new freezer that uses 100 kWh per month, your next electric bill should increase 100 kWh at a cost of $.055 per kWh or $5.50.  Likewise, if you removed a similar freezer from your home, your savings would come from the same last rate step of $.055/kWh and you would save $5.50 per month.

Examining your electric bills in the ways described above is the easiest way to calculate your cost per kWh. You can also review Duke Energy Indiana's residential rate tariffs at this link:  Duke Energy Indiana rate tariffs. Be aware that you must consider many small rate components found on several different pages in order to determine your cost per kWh from most electric rate tariffs.

How do I read my electric meter?

The dials on your electric meter resemble small clocks, each with a single hand or pointer. The numbers on each dial range from zero to nine and the hand rotates around the dial. It is important to note that some hands run clockwise and others run counterclockwise. The hand follows the numbers from 0 to 1 to 2 etc. One full revolution of the hand on any dial is equal to one digit change (for example 3 to 4) on the next dial to the left. The hands only advance when electricity is being used.

Steps for reading your meter:

  • Stand directly in front of the meter (this will give you the best view of where the hand is pointing).
  • Read and record the number from each dial starting from the right and moving left.
  • When the hand has just passed a number or is between two numbers, record the smaller number. (Example, if the hand has just passed the 5 or is between the 5 and 6, record the number 5).
  • When the hand appears to be directly on a number, before deciding if it is the new larger number or the smaller number before it, check the next dial to the right to see if it has passed zero.

The correct reading for this example is 1 4 8 3 0.  Notice the 3 could have been a 2 or a 3, but since the dial to the right has passed zero, then the last two numbers are 3 and 0. As this home used electricity in the last few hours, these two dials were changing from 28 to 29 to 30.

To measure the amount of electricity you use over a certain period of time you need to read your meter at the beginning and at the end of the time period. Then subtract the first reading (smaller number) from the second reading (larger number). This subtraction shows you the total kWhs used for all the electric items that ran during this time period.

Why does my energy bill vary from month to month?

In most families, energy usage will vary from month to month. Sometimes when a bill increases you may wonder if something is wrong with your meter or if your appliances are working properly. The information below will help you to understand why your energy costs might change from month to month.

  • Your billing period can vary from 27 to 34 days, depending on when we read your meter. If your energy usage is different from the previous month, check to see if the two bills are for the same number of days.
  • Weather plays a major role in your energy usage. Every change in the winter and summer weather will affect your home’s heating and cooling system. These weather changes are not only temperature related but wind, sun, clouds, snow cover and many other variables will change from day to day and month to month.  Your heating and cooling costs will also fluctuate from conditions inside your home such as temperature settings, door traffic, use of curtains and even extra appliance usage when the family is inside for longer periods in the winter.
  • Fireplace usage can affect your bill in the winter. Although you might think burning a fire on a cold winter’s day would help lower heating bills, the opposite is more likely to occur. An open fireplace flue allows your home’s heat to escape and especially a flue left open for several days will increase your home’s heat loss and raise bills.
  • Summer humidity plays a role in higher energy use. When the weather is humid, your air conditioner runs longer to remove moisture from the air. Fans, refrigerators and freezers also run more during hot weather. 
  • Many customers expect savings when they go on vacation for several days or weeks. Unfortunately, many appliances like refrigerators, freezers and water heaters continue to run on a regular cycle while you are away. You may even use more energy before or after your vacation with additional laundry.
  • Changes in a family’s lifestyle or living habits can result in higher energy use. For example, during holidays and school vacations there may be more people in your house increasing electric usage. 
  • When electric appliances malfunction they can cause noticeable changes to your bill and possibly create a safety hazard. While some appliances may stop working when there is a problem, other appliances struggle on for years wasting energy without suspicion because they seem to be functioning properly. If you notice unusual noises coming from an appliance or it feels hot or has a burning odor when operating, unplug the appliance immediately. Have it checked by a qualified repair person or replace the appliance to avoid potential safety hazards and unnecessary increases in energy usage.
  • If your current bill seems unusually high and the weather has been relatively normal, consider having your heating and cooling system checked by a certified heating technician. Something as simple as an air duct in the attic coming apart could cause a significant increase in your energy bill.

How much am I paying to run this appliance?

As you may have learned in our What is a kWh? section, when we measure electricity usage with an electric meter, we measure both the amount of electricity being used as well as the length of time it is used.

Let's look at another example. What would it cost to run a hair dryer, used on the high setting (1500 watts) by two people, for five minutes every day for a month?

1500 watts / 1000 = 1.5 kilowatts
2 people x 5 min/day used = 10 min/day
10 min/day x 30 days/month = 300 minutes or 5 hours/month
1.5 kWh x 5 hours/month = 7.5 kWh/month

If a kWh costs 8 cents then your total operating cost for this appliance would be calculated as follows:

7.5 kWh/month x $.08/kWh = $.60 cents/month

You could use this calculation for every appliance in your home, but it would take too much time.

To see an estimate on how much your appliances may cost to operate, see our Appliances: Cost of Operation page. A link on this page will allow you to create a quick, customized list for the common appliances in your home by using our Appliance Calculator tool.

If you're in interested in the operating costs for a specific small appliance, see our  containing estimates for more than 150 appliances.

How much does it cost to heat and cool my home?

Many of the above examples that help you estimate the energy costs for an electric appliance will not help you in estimating the cost to heat and cool your home. Since there are many variables associated with home heating and cooling, we have dedicated two other pages on this website to help you with this question.

Visit our How Does Your Home Use Energy page for an estimate on your heating and cooling costs, based on your custom input for your home and heating system. This quick, interactive tool will also estimate your energy savings if you upgrade your heating system, air conditioner, home insulation or make other energy improvements.

Visit Heating Costs & Comparisons to learn how to compare the most common heating fuels, get an update on the current cost of each fuel and estimate the energy costs for your home using many heating system alternatives.

Where can I find tips on saving energy?

Return to our menu page, Save Energy & Money for a link to all our residential energy information or go directly to Easy Ways to Lower Your Bill.