The cost of electricity when purchased by a consumer is measured in units of currency (dollars, Euros, etc.) per kilowatt-hour.  A kilowatt hour is the amount of electricity that is used when an appliance that uses 1,000 watts (or one kilowatt) runs steadily for one hour.

When you receive your electric bill, your electricity consumption is measured in kilowatt-hours most likely, the rate in dollars (or whatever currency is in use where you live) per kilowatt-hour is given, and multiplying the one by the other should give you the amount of money the electric company is insisting you pay them.

So in practical terms, the real meaning of the question, “How much does electricity cost?” can be: 1) How much does electricity cost per kilowatt hour? or 2) How much does electricity cost a typical household per month? The second form of the question is of course a function of the first –– and the first is not a constant.

Kilowatts Versus Kilowatt Hours

What’s the difference between a kilowatt and a kilowatt hour? Many people are confused by this. Watts (and kilowatts) are a measure of how much power is being used or generated at any given moment.

It’s comparable to any other unit that measures a quantity at any given moment, compared to usage over time. For example, if the gas tank of your car holds twenty gallons, then that is how much gasoline is in it when it is full. It’s a measure of something at a particular moment rather than over time.

However, if your car gets twenty miles to the gallon, then one gallon of gasoline is how much it will burn every time you drive twenty miles. That’s a measure of use over time (or distance), rather than of a quantity at a particular moment.

Similarly, watts measure how much power your appliance or your home is using at any given moment. If you have a 100 watt light bulb, that is how much power it draws whenever it’s turned on.

That’s a measure of power use at a given moment. If you leave it on for one hour, it uses 100 watt-hours. That’s a measure of power use over time. The cost of electricity is normally measured in kilowatt hours, rather than in kilowatts.

How Much Does Electricity Cost Per Kilowatt Hour?

There is no one single answer to this question, as electricity rates, even from the same provider, vary widely. The average price for residential electricity in the United States was 12 cents per kilowatt hour as of the end of last year.

However, this average incorporates rates varying from 7.5 cents in Idaho (the lowest) to 36 cents in Hawaii (the highest), and even within a particular state the rates can vary a lot depending on what time of year it is and how much power you have used so far this month (typically, utilities charge less for power used up to a certain limit, more if your use is above that limit, and they may also charge more in the summer than in the winter).

Ways To Reduce Electricity Cost

The most obvious way to reduce the cost of electricity for your household is to use less electricity. Not only will this result in a lower bill simply by buying less, but you may also be able to keep your overall consumption down to the point where lower rates apply. You can do this by improving your home insulation and switching to more efficient appliances.

Another way to reduce the cost of electricity over the long term is to make your own to replace all or part of what the utility is providing. You can do this by installing domestic solar panels or wind turbines or both.

Most homeowners use a grid tie-in to “sell” energy to the utility for a credit which is then used to buy it back when they want to use power. (This is necessary because the peak times of power generation don’t usually match your own times of peak use.)

Installing a home  energy system carries an up-front cost which can be reduced if you install it yourself from a kit, or reduced even further if you make your own solar panels or wind turbines from bulk solar cells or a magnet motor.

The final word on how much electricity costs is that it costs too much, and the cost is likely to rise in the future. For that reason, anything that you can do to reduce the cost for your household is effort well spent.