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How to Lower Your Electric Bill: Start With the Biggest Costs

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By HollyHerman.com Editorial Team. Sources last checked October 3, 2026.

The short answer: in national figures, cooling, heating, and water heating are the biggest chunks of a home's electricity use, so start there before you spend money on small stuff or gadgets. But “usually” isn't your house. The fastest way to find out what matters in your home is a 15-minute worksheet that multiplies watts by hours by your rate. That worksheet is below, along with a sorted list of fixes from free to bigger investments.

This guide doesn't recommend or sell anything. You can finish every step without buying a single product.

What Usually Costs the Most on an Electric Bill

The U.S. Energy Information Administration (EIA) reports that the three largest categories of residential electricity use in 2020 were air conditioning at 19%, space heating at 12%, and water heating at 12%. EIA adds that lighting and refrigerators are used in nearly every home and are the next two largest uses. It also says the average U.S. household uses about 10,500 kilowatt-hours a year, and that use varies widely by region, housing type, and weather.

That variation is the honest limit of any “top ten” list, including this one. If you live somewhere mild, cooling and heating may matter less. If you have electric heat, a pool pump, or an electric vehicle, your top loads may look very different from the national picture. So use national figures as a hint about where to look, then confirm with your own numbers.

Step-by-Step Appliance Ranking Worksheet

This uses the formulas from the U.S. Department of Energy (DOE) for estimating appliance energy use. You'll need your latest electric bill and a pen or a spreadsheet.

Step 1: Find your rate

Look at your bill for the price per kilowatt-hour (kWh). Some bills show a single rate, and others split charges into fixed and usage-based parts, or use tiers or time-of-day pricing. If yours is split, only the usage-based part changes when you use less. Our guide to fixed versus usage charges on an electric bill explains how to tell them apart. For a rough worksheet, one simple approach (ours, not a utility rule) is to divide the usage-related charges by the kWh used for the month. Write that number down as your rate.

Step 2: List your likely big loads

Write down every device you think uses a lot: central or window air conditioner, electric heat or space heaters, electric water heater, dryer, oven or cooktop, refrigerator and freezer, dishwasher, washer, dehumidifier, pool or well pump, and anything that runs all day, such as desktop computers, TVs, and game consoles.

Step 3: Find the watts for each one

DOE lists three ways to find wattage:

  • Check the label. DOE says the wattage of most appliances is usually stamped on the bottom or back, or on the nameplate.
  • Calculate it from amps and volts. Multiply amperes by voltage. DOE notes that most U.S. appliances use 120 volts, while larger ones such as clothes dryers and electric cooktops use 240 volts.
  • Plug it into an electricity usage monitor (a plug-in watt meter). DOE says to plug the monitor into the outlet, then plug the device into the monitor, and it will display how many watts the device uses. DOE also notes these monitors work on 120-volt devices but can't measure 240-volt appliances.

Step 4: Estimate hours of use

Estimate how many hours per day each device actually runs. Be honest and, if you can, check for a week. For devices that cycle on and off, such as refrigerators, air conditioners, and heaters with thermostats, the label wattage overstates the average. A plug-in monitor left connected over several days, which DOE describes for measuring use over extended periods, gives a better number.

Step 5: Do the math

DOE's formulas are:

  • Daily kWh = (watts × hours used per day) ÷ 1,000
  • Annual kWh = daily kWh × number of days used per year
  • Annual cost = annual kWh × your rate per kWh

DOE's own worked example is an electric kettle: 1,500 watts used 1 hour a day is 1.5 kWh a day, or 547.5 kWh over 365 days, which costs $60.23 a year at $0.11 per kWh. As a second illustration with a made-up rate, a 1,000-watt space heater running 3 hours a day uses 3 kWh a day. Over 30 days that is 90 kWh, which would cost $13.50 a month at an assumed rate of $0.15 per kWh. These are arithmetic examples, not measurements of any real product, so plug in your own numbers.

Step 6: Rank them and check the total

Sort your list by annual (or monthly) cost, highest first. Add up the monthly kWh for your list and compare it with the kWh on your bill. If your list covers most of the bill, you've found the big loads. If it covers only half, something is missing: a device you forgot, a device that runs more than you think, or standby use (below). Aim your effort at the top three. A change to your number one load is worth more than any number of changes to your number ten.

Fixes Sorted by Cost: No-Cost, Low-Cost, and Bigger Investments

We've grouped these as lists rather than a table so they read well on a phone. Where a source gave a number, we say who gave it. Where it didn't, we've kept the advice general, because savings depend on your home, climate, and rate.

No-cost changes

  • Adjust your thermostat. Angi's guide, which credits DOE, suggests about 78°F for summer cooling and about 68°F for winter heating, and says reasonable settings can save up to 10% on electricity bills yearly. Treat that as a ceiling, not a promise, and see the safety note below before you push temperatures to extremes.
  • Cut standby power. DOE says standby power accounts for 5 to 10 percent of residential energy use and could cost the average U.S. household as much as $100 per year. Unplug things you rarely use, such as a spare toaster oven.
  • Shift heavy use to off-peak hours if your plan has them. Make My House Green suggests this. It only helps if your utility prices electricity by time of day, so check your rate plan first.
  • Turn off lights and unused electronics. Small each time, but free.

Low-cost changes

  • Switch to LED bulbs. DOE's lighting guidance says LEDs use much less energy and last far longer than traditional incandescent bulbs. Start with the fixtures you use the most hours, and use the worksheet to see how much lighting matters in your home.
  • Use a switched power strip for clusters of electronics (TV, console, streaming box), which lets you fully disconnect them at once. DOE lists this as an option for standby power.
  • Seal drafts around doors and windows with caulk and weatherstripping. Make My House Green recommends this (Angi also lists sealing and upgrading windows), and it matters most when heating or cooling is one of your top loads.
  • Buy a plug-in watt meter if you want real numbers for the worksheet instead of estimates.

Bigger investments

  • Upgrading old appliances, especially heating, cooling, and water heating equipment. Angi and Make My House Green both point to ENERGY STAR certified models. Because these are your biggest categories nationally, they're the upgrades with the most potential, but also the longest payback. Get quotes and estimate the payback using your own worksheet numbers before committing.
  • More insulation and better windows. Angi lists both. A professional assessment can tell you whether your home would benefit.
  • A whole-home energy monitor. Make My House Green mentions smart home energy monitors for tracking. Useful if you'll actually use the data, a waste if you won't.

A Word on “Bill-Cutting” Gadgets

If a plug-in “energy saver” has caught your eye, run the worksheet first. Heating, cooling, and water heating are the largest categories in EIA's national figures, so any gadget claim should be checked against your own ranked list. Our guide to separating a savings claim from a real test shows how to compare two billing periods fairly. For a specific example, our Power Pro Genius review notes that the seller's offer page does not establish whether the device saves money on your electric bill, and that other factors like usage patterns, appliance efficiency, or seasonal variations could explain differences in a bill. The same caution applies to any gadget.

Limits and When to Get Professional Help

  • Estimates are estimates. Wattage labels show maximum draw, and many devices cycle. Your real numbers will differ.
  • Weather changes everything. EIA notes that end-use shares can change from year to year based on the weather, so compare bills from similar seasons.
  • Call a licensed electrician before doing anything involving wiring, your panel, or 240-volt appliances. Plug-in monitors don't measure 240-volt devices, and that work isn't a do-it-yourself job.
  • Call an HVAC or insulation professional for quotes before replacing major equipment. Ask your utility whether it offers an energy assessment or rebate programs.
  • Don't cut heating or cooling to unsafe levels to save money. If anyone in your home is very young, older, or relies on powered medical equipment, or if you're dealing with extreme heat or cold, talk with a healthcare professional about safe temperatures. If you're struggling to pay a bill, contact your utility early to ask about payment plans or assistance programs.

What to Do Next

  1. Pull your latest bill and write down your rate and total kWh.
  2. Fill out the worksheet for your five likely biggest loads.
  3. Do the free changes on your top load first.
  4. Check your next bill against a bill from the same season last year, not against last month.
  5. Only then price out low-cost and bigger fixes, starting with whichever one targets your number one load.

Sources

Filed Under: DIY

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