How to Lower Your Electric Bill: A Step-by-Step Plan

Step 1: Read your bill

Before you change anything, find two numbers on your last bill: the kWh you used and the price you pay for each one. If kW and kWh still blur together, the kW vs kWh guide explains both units with a bill in hand. This step is about something else: which parts of the bill you can shrink at all.

Utility regulators describe the same basic parts. The Public Utilities Commission of Ohio lists them like this:

Customer charge. A fixed monthly charge that partly covers billing, meter reading, service line maintenance and equipment. It stays the same whether you use 100 kWh or 2,000.
Generation or supply. The cost of producing the electricity, priced per kWh. In Ohio, for example, eligible customers can choose who supplies this part.
Distribution and transmission. Moving the power over high-voltage lines and then through local wires, transformers and substations to your home. Your bill shows whether these are charged per kWh or as a fixed amount.

The fixed part is what saving electricity cannot touch. Everything billed per kWh shrinks with every kWh you save. Add up the per-kWh rates, or divide the per-kWh charges by the kWh used, and you have your marginal price: what one more or one less kWh is worth to you. That number, not the total divided by kWh, is the one to use for every saving in this guide.

Marginal price

per-kWh charges ÷ kWh used

All-in average

total bill ÷ kWh used

Value of a saving

kWh saved × marginal price

An example. The US Energy Information Administration (EIA) says the average residential customer bought 899 kWh a month in 2022, and its Electric Power Monthly puts the average residential price at 18.19 cents per kWh for January to July 2026. Add an example customer charge of $15.00 (yours will differ) and the bill is $15.00 + 899 × $0.1819 = $178.53. The all-in average is 19.86 cents per kWh, but each kWh you save takes only 18.19 cents off. Cut use in half and the bill drops to $96.76, not to half of $178.53.

Prices are moving, so check your rate each time. The EIA's same table shows the US average at 17.01 cents for January to July 2025, so the 2026 price is 6.9% higher. A bill can rise while your kWh fall. Keep a simple log of kWh and dollars per month in the free bill tracker, or give electricity its own line in the monthly budget spreadsheet, so you can tell use and price apart. Compare a month with the same month a year earlier, because heating and cooling make neighbouring months hard to compare.

If you have a smart meter, look for your utility's online account too. The Department of Energy (DOE) notes that most utilities with smart meters offer a customer portal showing hourly use in nearly real time. An hourly chart shows at a glance whether your use peaks overnight, in the evening or on hot afternoons.

Step 2: Find the big users

Savings follow kWh, so start where the kWh are. The EIA's Residential Energy Consumption Survey gives the split for US homes. The three largest end uses of electricity in 2020 were:

End use	Share (2020)	kWh a year	Cost at 18.19¢
Air conditioning	19%	1,995	$362.89
Space heating	12%	1,260	$229.19
Water heating	12%	1,260	$229.19

The kWh column applies the shares to the EIA's figure of about 10,500 kWh a year for an average household, priced at the 2026 average. Together these three take 43% of home electricity. According to the EIA, lighting and refrigerators, used in nearly every home, are the next two largest uses, and the shares change from year to year with the weather.

These are averages over all US homes, many of which heat their rooms or their water with gas. Read them as a map of where to look, not as your own split. A home with electric baseboard heat in a cold state and a home with a gas furnace in a mild one have little in common. To see your own split, list your big appliances in the electricity cost calculator with their watts and hours, or measure them (Step 7).

One item the EIA singles out: refrigerators. Nearly every home has one, and 34% of US homes had two or more in 2020. The EIA puts the average running cost at about $87 a year for the main fridge, $66 for a second one and $74 for a separate freezer, at 2020 prices. A half-empty second fridge in the garage is one of the easiest kWh to give up.

Step 3: Heating and cooling, the thermostat first

The thermostat is the cheapest lever on the largest use. DOE's Energy Saver guide puts the saving like this: "You can save as much as 10% per year on heating and cooling by turning your thermostat down 7°–10°F for 8 hours a day in the fall and winter; turn it up in the spring and summer." It adds one condition: if you have a heat pump, don't do this without a smart or programmable thermostat designed for heat pumps.

Note what the 10% applies to. It is "as much as" 10% of the heating and cooling part, not of the whole bill. In the average-home picture above, air conditioning plus space heating is 3,255 kWh a year. Ten percent of that is 326 kWh, or $59.21 a year at 18.19 cents. If you heat with gas, the winter part of the saving shows up on the gas bill instead.

For a thermostat in Celsius: a setback of 7 to 10 °F is a change of 3.9 to 5.6 °C. A difference converts with the factor 5/9 alone; for an actual setting, use the temperature converter, which also subtracts the 32.

More steps from the same DOE guide, roughly in order of effort:

Summer settings. Set the thermostat as high as is comfortable when you are home and awake, and raise it when you sleep or are away. DOE says a ceiling fan lets you raise the thermostat about 4 °F with no loss of comfort. The fan cools by a wind chill effect, so turn it off when you leave the room.
Fan switch on Auto. Leave the thermostat's fan setting on Auto unless a professional has set the system to run continuously for air quality reasons.
Filters. Clean or replace air conditioner filters once a month or as recommended.
Air sealing. Caulking, sealing and weatherstripping leaks to the outside can save 10% to 20% on heating and cooling bills, according to DOE.
Equipment. DOE calls heat pumps the most efficient form of electric heating and says they can cut the electricity used for heating by about 50% compared with electric furnaces or baseboard heaters. For an air conditioner, the size matters: the BTU calculator explains why a bigger unit is not better.

Step 4: Water heating

Water heating took 12% of home electricity in the EIA's 2020 figures. DOE names four ways to cut it: use less hot water, turn down the water heater's thermostat, insulate the tank and pipes, or buy a more efficient model. The first three cost little:

Set the water heater to 120 °F (48.9 °C), which DOE describes as a temperature considered safe for most people. If your dishwasher has its own heating element to boost water temperature, 120 °F is generally fine for it too; DOE suggests checking the dishwasher manual.
Insulate a warm tank. If the tank is warm to the touch, DOE says insulating it can save 7% to 16% a year on water heating, following the manufacturer's instructions.
Insulate the pipes. DOE puts this at another 3% to 4% a year, and for an electric water heater, insulating underneath the tank could save another 4% to 9%.

In numbers: 12% of 10,500 kWh is 1,260 kWh, about $229.19 a year at the 2026 average. A 7% to 16% cut from tank insulation is 88 to 202 kWh, or $16.04 to $36.67 a year, if your water heater is electric. When the old one has to be replaced, DOE notes that heat pump water heaters can be two to three times more energy efficient than conventional electric water heaters.

Step 5: Lighting

DOE calls switching to efficient lighting one of the fastest ways to cut energy bills. It says the average US household has about 70 light bulbs, and that an ENERGY STAR certified LED bulb uses up to 90% less energy than an old incandescent and lasts 15 to 25 times longer.

Shop by lumens, not watts. The lumens vs watts guide has the lumen equivalents of the old wattages and reads the Lighting Facts label line by line, so here is just the bill side. The FTC says a 60 W incandescent gives about 800 lumens and an LED gives the same light from about 9 W. Replace 10 such bulbs that each burn 3 hours a day and you save 10 × 51 W × 3 h × 365 ÷ 1,000 = 558 kWh a year, or $101.58 at 18.19 cents per kWh.

Start with the lights that are on longest: porch and security lights, kitchen and living room. A bulb that is on ten minutes a day saves almost nothing, whatever its watts. DOE also points to timers and motion sensors for lights that are often left on in empty rooms.

Step 6: Standby and always-on power

Devices that look switched off often still draw a little power. The "Standby power adds up" section of the electricity cost calculator lists the usual suspects and the quick fixes. What helps when you decide where to start is a yardstick:

One watt, all year

1 W × 8,760 h ÷ 1,000 = 8.76 kWh ≈ $1.59 at 18.19¢

So a device that draws 5 W around the clock costs about five times that. Lawrence Berkeley National Laboratory (LBNL), a DOE national laboratory with a research site on standby power, says nobody knows the exact total, but it is typically 5% to 10% of residential electricity in most developed countries. For the average home that would be 525 to 1,050 kWh a year. DOE's Energy Saver guide gives a similar range: electronics that keep drawing power when switched off could add 5% to 10% to the monthly bill.

Two things LBNL adds that the quick fixes do not cover. Limited research suggests that an informed and aggressive approach can cut standby use by about 20%, so this is a step for after the thermostat and the water heater, not instead of them. And the efficient way to do it is to measure first, then switch off only the devices that turn out to draw the most. DOE suggests advanced power strips with timers, activity sensors or remotes for groups such as a TV corner or a desk.

Step 7: Measure with a plug-in meter

Label watts and example tables only go so far. A plug-in electricity meter shows what one device really uses. LBNL describes the simplest kind: you plug the meter into the outlet and the device into the meter. According to LBNL, such meters cost less than $50 online and some libraries lend them.

How to get useful readings:

Read kWh over time, not just watts. The live watts tell you what the device draws at that moment. The kWh counter tells you what it used while you were away, which is what you pay for.
Give cycling appliances a full day. A refrigerator switches on and off to hold its temperature. The Virginia Cooperative Extension suggests dividing the time a fridge is plugged in by three to estimate how long it runs at full power. A 24-hour reading on a meter replaces that guess.
Stay within the meter's limits. LBNL warns that most consumer-grade meters cannot safely measure more than about 1,300 W, so leave space heaters, induction cooktops and other large heating devices off the meter. Large appliances that run on 240 V, such as the clothes dryers and electric cooktops the Virginia Cooperative Extension names, do not fit a standard outlet at all.
Be careful with tiny readings. LBNL notes that the errors grow relatively larger below about 1 W.

Turning a reading into a yearly cost: say the meter shows 1.2 kWh after 24 hours on your fridge (an example value). That is 36 kWh in 30 days and 438 kWh a year, or $6.55 a month and $79.67 a year at the 2026 average price. Enter your own reading as watts and hours in the electricity cost calculator, or divide the kWh by the hours measured to get the average watts.

A smart meter can also show the whole house's standby. LBNL points out that during a period when no major appliance runs, for example around 3 a.m. while the fridge compressor is off, the household reading is roughly your always-on load. It tends to come out too high, because a light or a small pump is easy to overlook.

Step 8: Check your rate plan, including time-of-use

Many utilities offer plans that price electricity by the time of day. DOE describes them as programs that charge more during times of peak demand and less during off-peak hours, and that can save you money if you are able to shift use to off-peak times. Smart meters make these rates practical, because they record when you use power, not just how much.

The arithmetic is simple. With made-up prices of $0.30 per kWh peak and $0.12 off-peak, every kWh you move from peak to off-peak saves $0.18. Moving 100 kWh a month saves $18.00 a month. The same plan also costs more for any use you cannot move, so add up both sides with your own hours and your utility's real prices before you switch.

The easiest loads to move are the ones that can wait. DOE's own examples are deferring the dishwasher to off-peak hours and charging an electric car: it notes that time-based rates are very attractive to plug-in car owners, because cars are typically recharged at night. The EV charging cost calculator works out the cost per charge and per mile at the rate you enter, so you can compare the off-peak price with your flat rate.

Ask your utility which plans exist where you live. Names, hours and prices differ a lot between utilities, and some states let you choose your supplier for the generation part of the bill, as the Ohio commission explains.

Putting it together

Here are the worked examples from this guide side by side, for the average-home picture at 18.19 cents per kWh. Your figures depend on your home, your equipment and your marginal price.

Step	kWh a year	Per year
Thermostat setback, electric heating and cooling	up to 326	up to $59.21
Insulate a warm electric water heater tank	88 to 202	$16.04 to $36.67
Swap 10 bulbs of 60 W for 9 W LEDs	558	$101.58
Each watt of always-on power you remove	8.76	$1.59

A sensible order for the first month:

Find your marginal price per kWh and note this month's kWh and dollars in a bill tracker.
List your large appliances in the electricity cost calculator to see where the kWh likely go.
Set a thermostat schedule with a setback for nights and absences, and the water heater to 120 °F.
Replace the incandescent bulbs that burn longest with LEDs.
Borrow or buy a plug-in meter, measure the second fridge, the entertainment corner and anything that runs all day.
Look at your utility's rate plans once you know when you use power.

Then compare the next bills with the same months a year earlier, in kWh. If the kWh went down but the dollars did not, the price changed, not your effort.

Frequently asked questions

What uses the most electricity in a home?

Air conditioning, according to the US Energy Information Administration. In 2020 it took 19% of the electricity used in US homes, followed by space heating and water heating at 12% each. Lighting and refrigerators come next. The shares change from year to year with the weather, and your own home can look very different, especially if it heats with gas.

How much does turning down the thermostat save?

The Department of Energy says you can save as much as 10% a year on heating and cooling by turning your thermostat down 7 to 10 °F for 8 hours a day in the fall and winter, and up in the spring and summer. That is an upper bound for the heating and cooling part of the bill, not for the whole bill. With a heat pump, DOE advises doing this only with a thermostat designed for heat pumps.

Does unplugging things really save money?

A little per device, more in total. One watt drawn all year is 8.76 kWh, about $1.59 at the 2026 average US price. Lawrence Berkeley National Laboratory puts standby at typically 5% to 10% of household electricity, so it is worth finding the few devices that draw the most with a plug-in meter rather than unplugging everything.

Is a time-of-use rate cheaper?

Only if you can move a real share of your use into the cheaper hours. Time-based rates charge more at times of peak demand and less off-peak. Electric car charging and the dishwasher are the examples DOE gives of loads that can wait. If most of your use falls in the peak hours and cannot move, a flat rate can come out cheaper. Your utility lists the plans it offers.

Why did my bill go up when I used less electricity?

Usually the price per kWh rose, the billing period had more days, or the weather changed. The average US residential price was about 7% higher from January to July 2026 than in the same months of 2025, according to the EIA. Compare kWh, not dollars, and compare with the same month a year earlier.

Sources

Written by Tobias. Updated October 21, 2026.