How to Calculate Electricity Cost

The short formula

Electricity cost starts with energy use. Convert watts to kilowatts, multiply by hours to get kilowatt-hours, and then multiply by the price per kilowatt-hour.

Step 1: Find the power draw

Look at the appliance nameplate, power adapter, owner’s manual, manufacturer specification, or a plug-in energy meter. The listed wattage may be a maximum rather than a typical draw.

If the label lists amps, multiplying volts by amps gives a rough upper-bound wattage for simple household estimates.

• Use measured watts for devices that change power.
• Use effective compressor or heating-element runtime for cycling equipment.
• Use the EnergyGuide annual kWh figure when it is available.

Step 2: Convert watts to kilowatts

Utilities bill for kilowatt-hours. Because one kilowatt equals 1,000 watts, divide the wattage by 1,000 before applying runtime.

Step 3: Estimate runtime

Runtime is often the largest source of uncertainty. A refrigerator is plugged in for 24 hours but its compressor does not run continuously. An air conditioner may be available for eight hours but cycle at full power for only part of that period.

Step 4: Use the right electricity price

For a historical all-in estimate, divide total electric charges by total kWh on the same bill. A state average is useful for comparison, but it is not the rate plan for every household.

Quick electricity cost examples

A 100-watt device used for 10 hours consumes 1 kWh. A 1,500-watt space heater used for four full-power hours consumes 6 kWh. A 500-watt gaming PC used for four hours consumes 2 kWh before monitors and idle time are added.

At 20 cents per kWh, those examples cost $0.20, $1.20, and $0.40 respectively. Replace the example price with the variable or all-in rate that matches your question.