How to save on your Gas and Electricity Bill

We all hate opening those bills each month, but it can be even more frustrating when we do not even understand what we’re looking at. One such bill is the electric and gas bill, which often uses vague, foreign vocabulary to tell you some sum that you are expected to pay. How are these figures calculated, and just what exactly are you paying for? 

We’re going to lay out some of the ins and outs of your monthly energy bill. Understanding your gas and electricity bill just takes a little bit of knowledge, and can help you feel more secure that you fully appreciate what you are actually paying for. 

Understanding The Difference In Kilowatts and Kilowatt Hours

Kilowatts and kilowatt hours are two things that come heavily into play when trying to understand your energy bill. These are two terms that people sometimes use interchangeably, but they are two very different, very distinct things. A kilowatt is a unit of measure for energy that means 1,000 watts. In simple terms, a kilowatt tells you how much electricity there is. A kilowatt hour in turn tells you how many of those kilowatts a particular electric item would need to stay powered on for an hour. A kilowatt hour is like a measure of time. Using these two measurements, energy companies can determine how much energy you need and how much energy you use [1]. 

How Energy Costs Are Really Calculated

When reading your electric bill, you want to look for a line item that displays the total cost of energy for your home that month. To get this figure, the electric company multiplies the rate they charge you per kilowatt hour by how many kilowatt hours of energy you used that period in your home. It  is a simple formula that will go a long way to helping you understand why you are paying the amount you are paying. If you are unclear just how much your electric company is charging you per kilowatt hour, and if it is not clearly stated on the bill, then it might be worth a phone call to ask some questions. Knowing this figure is a big part of understanding your bill.

What You Are Actually Paying For

You may not realize this, but what you are paying a month on your electric bill actually has more to it than just what the electric company is charging you for actual electricity. There are a number of other factors that come into play on your bill. The total sum you pay each month will reflect the cost of energy, of course, but also things like costs for electricity delivery—covering the cost of things like power line maintenance—as well as capacity cost, which makes sure the company can cover all of the power needed to supply electricity to customers in your area. Again, if any of these items is not clearly listed in your bill, and you are still having confusion over why your bill is what it is, it is always worthwhile to call customer support and inquire within. 

Exactly How Does Gas Come Into Play?

If gas is a part of your energy bill, you will likely want a bit more understanding. The rate you pay for natural gas is going to depend on where you live and who your supplier is, but there is one key thing to keep in mind: fixed rates and variable rates. These are two different types of gas contracts that one might find themselves in, and will affect how and how much you are paying. Fixed rate gas billing is fairly simple, it means you pay one fixed price every month, regardless of your usage. Variable rate means you are likely to pay a different price each month, depending on how much gas you have used, how much it has needed to be refilled, and how much your supplier is paying. There are pros and cons to each. Fixed rate might be good if you use a lot of gas and want one simple, regular payment. Variable might be good if you don’t use much gas at all, and do not want to pay a fixed rate when you don’t think you’re going to use as much gas as you might be charged for on a fixed rate. 

Lowering Your Electric Bill

If you are reading this article, there is a fair chance you are interested in actually getting that monthly electric and gas bill down. There are a number of easy, effective ways to do this. Some of the methods involve household maintenance, like cleaning your vents and ducts regularly. Some have to do with little tweaks to your habits, like opening the curtains and shades on sunny days in lieu of turning on lamps, lowering the thermostat, taking a bath instead of a shower, or using a cold rinse on your washing machine. And others you might not have thought of, like looking out for so-called “vampire volt” electronics, meaning electronics that draw energy if they are plugged in but turned off [2]. Sitting down with the members of your household and drawing up a plan to conserve energy can be a great step in reducing that monthly energy bill.

If you have ever looked at your monthly gas and electricity bill and shaken your head in confusion, we hope we’ve helped erase some of the mystery. Understanding how you are billed and what goes into the calculation is a big part of the process, but again, if you still feel unsure, verify with your utilities company. A consumer should always know what they are getting into and just what exactly they are paying for. Energy costs are a big part of budgeting for a household, and it definitely pays to do your homework. 


  1. Understanding Your Electricity & Gas Bill Charges | Constellation | Constellation
  2. Tips & Tools for Lowering Your Energy Bill | Con Edison