Summer Rates: Why One Third of Your Power Bill Costs Twice as Much

RTAblog_2015_0806_ElectricityMeterYour air conditioner may not be the only reason your power bills are higher in the summer. Does your power company have seasonal rates for electricity?

If you just look at the dollar amount of your power bill each month, you probably won’t notice if the rate per kWh has changed. In case you’re wondering what “kWh” means, it stands for kilowatt-hour. A kilowatt-hour is the unit of measurement the power company uses to sell its energy.

Summer rates (June through September) allow power companies to account for greater demand and higher production costs in the summer. We’re more active|productive in the summer while we enjoy longer days and we’re using active systems like air conditioning that consume electricity – compared with heating systems that may use electricity, natural gas, propane, etc. Many power companies charge a higher, seasonal rate for summer months.

Are You Average?
The Energy Information Agency (EIA), a U.S. federal agency, tracks energy production and consumption. It collects and publishes data on “residential energy consumption”, or “RECs”, so interested parties like power companies, regulators, building code officials, construction industry professionals and manufacturers can work to improve our energy efficiency.

The last batch of RECs data shows, “In 2013, the average annual electricity consumption for a U.S. residential utility customer was 10,908 kilowatthours (kWh), an average of 909 kWh per month.” That averages all houses and their consumption through an entire year so 909 kWh per month is a round number. Still, it gives us a number we can use to understand the issue of seasonal electricity rates.

Seasonal Residential Rate Plans
Summer rates for electricity are typically higher to account for our increased demand for power, much of which comes from using air conditioning to keep cool and control humidity in our buildings. (Houses are buildings.)

For example, here’s the residential rate schedule from Georgia Power:

Winter: October – May             Summer: June – September

Up to 650 kWh: 5.5747¢/kWh     Up to 650 kWh: 5.5747¢/kWh

650-1000 kWh: 4.7817¢/kWh      650-1000 kWh: 9.2614¢/kWh

Over 1000 kWh: 4.6941¢/kWh    Over 1000 kWh: 9.5712¢/kWh

In the chart above, you may notice that the first pricing tier goes up to 650 kWh. Since the average house uses more than 650 kWh per month, the home owner pays both the first and second tier rates. That’s helpful in the winter months when the second tier pricing is lower than the first tier. In the summer months, the second-tier rate just about doubles.

Math Done for You
The cost of the average house’s 909 kWh consumption per month should be $48.62 in the winter and $60.22 in the summer – for the same amount of electricity. Those prices don’t include regulatory fees, taxes, etc. Georgia has some of the lowest electricity rates in the country so these numbers don’t address the higher cost of power in other states. Still, the cost of the electricity for the average house (using Georgia costs) is about 20% higher in the summer just because of the rate change.

For our average house, the rate change results in a cost increase of about $11.60 per month. That adds up to $46.40 each year or $1,392 across a 30-year mortgage. That last number assumes the electricity rates stay the same rather than rising over 30 years – if the electricity rates rise, that number grows.

What’s Your Plan?
The peak period is often what’s most important in your relationship with your electricity provider. For Georgia Power customers, that period is 2:00 PM to 7:00 PM during the months from June to September. That’s when rates for the second tier pricing of the standard plan double.

If you’re in the standard plan from your electricity provider, there may be a free plan that will reduce your bills. The “Nights and Weekends” plan from Georgia Power is similar to off-peak plans from other providers. Some providers offer a calculator to help you figure out if one of the off-peak plans will help you reduce your bills before you sign up for the plan.

In Conclusion
If you choose to use an off-peak electricity plan to reduce your bills, don’t forget to look for a delay function on your appliances. Many recently-manufactured appliances have timers that delay their start so you can wash dishes and do laundry during off-peak hours. A programmable thermostat should give you greater control over cooling during peak periods – it can be like having a delay function (without turning it completely off) for your air conditioner.

The delay function on appliances is doubly helpful in homes because you can take advantage of off-peak pricing AND reduce your cooling load during the summer. Appliances like dish washers, washers and dryers release heat into our homes. Using those appliances overnight when the outdoor temperatures are the lowest of the day means you reduce the load on your air conditioner.

You get even more benefit from using heat-producing appliances during off-peak hours if you have a variable-speed air conditioner because variable-speed air conditioners are more efficient at lower speeds. Those air conditioners may be able to run at a lower, more efficient speed if they’re not dealing with heat gain from high exterior temperatures AND heat gain from indoor appliances.

If you’re paying attention and you’re willing to change your behavior a bit, you can really maximize your efficiency and take control of your electricity bills.

As always, if you’ve got a comment or question, please share it below. Thanks!

Related Posts:

 Are You Paying To Cool Absolutely Nothing?

Life Cycle Assessment: Getting to the “Why” of Making Sustainable Decisions

Does It Cost More to Build a Sustainable Home?

How an ERV|HRV Works: The Magic, Energy-Saving, Ventilating Box

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