Your Hydro Bill Explained – Part 2

The path to deep understanding is a long one, with many difficult challenges along the way.  To undertake to follow this path is a beautiful and a noble pursuit, for with a deep understanding of a thing comes the ability to use it for great benefit.  And so the ‘thing’ we are referring to in this instance is your hydro bill.  And it is our belief that with deep understanding of your hydro bill, you will no longer have fear of it, and what is more, you will become the architect of your own future…a future where a high cost for electricity will be the reality.  So further down the path we go!

In our last discussion we presented the time of use (TOU) rates for electricity in Ontario, which provides some clarity on the impact of using electricity during certain times of the day, and as discussed, is only part of the story.  As I pondered how to pick up that discussion for this post, it occurred to me that it might make sense to talk a little about the unit of measure we use for electricity usage, the kilowatt-hour (kWh), which I will refer to often when discussing our true cost of electricity.  So without getting too technical, let’s give this a try.

If you haven’t thought about electricity since Grade 11 science class, no worries, this stuff is pretty straightforward.  For the purposes of calculating your hydro bill, energy is measured in watts (W), and electricity usage is measured in watt-hours (actually kilowatt-hours, but we’ll get to that).  The formula for energy in watts is:

Watts = Voltage x Current

The standard voltage (V) in our homes for most electronics and appliances is 120V.  Some appliances require 240V, such as your electric stove, dryer, and heating and cooling systems.  Those are the circuits with the larger breakers in your circuit panel, they consume the most electricity, and therefore, cost you the most on your hydro bill.  In fact, as a quick aside, typical heating and cooling costs usually account for greater than 40% of your hydro bill.

Each item in the home that consumes electricity generally operates at a fixed current, which is measured in amps (A).  A typical clothes dryer for instance operates at a continuous 20A throughout the duration of a normal cycle.  To calculate the total energy requirements to operate a typical dryer to dry a load of laundry, we then have the following:

Voltage (240V) x Current (20A) = 4,800W

In the immortal words of Austin Powers, “Whoop-de-doo! What does it all mean, Basil?”  Here’s where we come back to watt-hours, and more importantly, kilowatt-hours.  The number we calculated above – 4,800W – is the instantaneous power consumption of the dryer, which is to say, the amount of energy required to operate the dryer at any single point in time.  We now need to understand how this translates into the amount we are billed for.  To do so, we need to know how long the item operates for.  That is to say we need the duration, in hours, of time that the item is “on”.  Let’s say the dryer runs for 1 hour for a typical cycle.  Then we simply multiply the energy consumption of an item by the duration of its operation, and in this instance we get:

Energy (4,800W) x Time (1hr) = 4,800 Wh (watt-hours)

Now to bring it back to your hydro bill, we need to convert watt-hours (Wh) to kilowatt-hours (kWh).  This is actually the easiest part.  There are 1,000 W in a kW, therefore, we divide the watt-hour number by 1,000 et voila.

4,800 Wh = 4.8 kWh

Going back to Part 1 of this series, using the current TOU rates, we can then calculate the cost of operating the dryer for 1 hour as follows:

Peak Period = $0.773;    Mid-Peak Period = $0.586;    Off-Peak Period: $0.384

Once again, you can see that putting a load of laundry through the dryer during peak hours, will cost you double what it will during off-peak hours.  But remember, there are a host of additional charges we have yet to review, all of which add more on top of the amounts you see above.  And these we will definitely start to dissect in the next post.  If you are wondering how to determine the operating current of appliances and electronics, there is usually a label indicating this located near the label with the item’s serial number.  You will find additional resources online here from Natural Resources Canada listing the most common items in your home that draw electricity and their power rating in kWh/year.  This will give you a good indication of what appliances and systems in your home are costing you the most money on a yearly basis, based on their total energy consumption – of course, the time of day you are using electricity will greatly influence the amount you spend.