How is Your Electricity Measured?

Have you ever wondered why your electricity bill is so high one month and then lowers another? Have you asked yourself how, exactly, is energy measured?

You’re not alone.

Utility companies measure and monitor electricity usage with meters in units of power called Watts. Named after James Watt, the inventor of the steam engine, a Watt is a unit of electrical power used to power a device like a lightbulb or a battery. Electricity generation capacity is often measured in multiples of kilowatts, such as megawatts (MW) and gigawatts (GW). One MW is 1,000 kW, and one GW is 1,000 MW.

Okay, so what are Watthours?

A Watthour is equal to the energy of one Watt steadily applied to, or taken from, an electric circuit for an hour. The amount of electricity that a power plant generates or an electric utility customer uses over a period of time is typically measured in kilwatthours (kWh), or the number of kWs generated or consumed in an hour.

How do companies monitor my electricity usage?

Simply put, they do so through meters. These meters are usually located on the outside of your home or business where the power line enters the property. Previously, all electricity meters had to be read manually, but now they’re automated and periodically report electricity use to the utility company.

This total consumption is what is used to calculate the pricing of an energy bill, which is delivered to customers quarterly or every three months.

Then why is my electric bill so high?

Several key factors influence the price of electricity:

  1. Fuels: Fuel costs can vary, depending on the per-unit cost of the fuel, such as dollars per ton for coal or thousand cubic feet for natural gas. Power plants generally use electricity generators with relatively high fuel costs during periods of high demand.
  2. Power plants: Each power plant has construction, maintenance and operating costs.
  3. Transmission and distribution system: The electricity transmission and distribution systems that deliver electricity have maintenance costs, which include repairing damage to the systems from accidents or extreme weather conditions.
  4. Weather conditions: Rain and snow provide water for low-cost hydropower generation. Wind can provide low-cost electricity generation from wind turbines when wind speeds are favorable. However, extreme temperatures can increase the demand for electricity, especially for cooling, and demand can drive prices up.
  5. Regulations: In some states, Public Service/Utility Commissions fully regulate prices, while other states have a combination of unregulated prices (for generators) and regulated prices (for transmission and distribution).

Did you know?

The cost to supply electricity actually varies minute by minute.

During the course of a single day, the wholesale price of electricity on the electric power grid reflects the real-time cost for supplying electricity. Electricity demand is usually highest in the afternoon and early evening (peak hours), and as a result, costs to provide electricity are usually higher at these times.