AIC Ratings Explained: Breaker Ratings and Available Fault Current

A breaker marked 10 kAIC can interrupt up to 10,000 amperes of fault current under its specified voltage and test conditions; that marking is not its normal load-current rating. For a fully rated installation, the breaker’s interrupting rating must equal or exceed the available fault current at its line terminals. If the available fault current is 20.8 kA, a standalone 10 kAIC breaker is insufficient, while a 22 kAIC breaker clears the numerical comparison only after the voltage, fault-current assumptions, and equipment ratings are verified.

AIC Rating Comparison at 20.8 kA Available Fault Current

The table compares example interrupting-rating levels against an assumed 20.8 kA RMS symmetrical available fault current. These are rating levels found in manufacturer literature—not universal options for every breaker, panel, or voltage. Schneider Electric documents 10 and 22 kAIC QO variants, while its molded-case breaker literature includes additional rating levels.

Every “numerically sufficient” entry assumes the stated interrupting rating applies at the actual circuit voltage and that the breaker is suitable for the equipment. A higher breaker rating does not automatically increase the panelboard or other equipment’s short-circuit current rating.

What an AIC Rating Means

AIC commonly means ampere interrupting capacity. Manufacturer labels and technical documents also use “interrupting rating” or “AIR.” The rating describes the maximum short-circuit current the protective device can safely interrupt under specified test conditions. Low-voltage molded-case circuit breaker interrupting ratings are generally expressed in RMS symmetrical amperes.

Three quantities must remain separate:

Interrupting rating and equipment SCCR address different parts of the installation. The breaker must interrupt the fault, while the equipment and circuit components must have appropriate short-circuit protection. Passing one check does not automatically pass the other.

Available Fault Current Is a Site-Specific Value

Available fault current is the prospective short-circuit current at a particular location in the electrical system. Its value depends on the source and circuit impedances, including utility supply characteristics, transformer impedance, conductor impedance, and contributions from motors or other sources.

A service calculation cannot simply be copied to every downstream panel. Conductor impedance changes the fault current along the circuit, and additional sources can contribute current. Calculate or document the value at the location being evaluated rather than treating a typical transformer value as a local result.

Voltage and System Conditions Matter

An interrupting rating is not a voltage-independent number. Read the manufacturer’s rating for the exact breaker catalog number at the actual system voltage; do not carry a rating from one voltage column into another. AC and DC applications also require their respective ratings.

Voltage markings can impose additional system restrictions. For example, Schneider Electric states that its 120/240 Vac QO/QOB breakers cannot be applied where line-to-ground voltage exceeds 120 Vac, whereas specified straight-rated 240 Vac QO-H/QOB-H breakers can accommodate line-to-ground voltage up to 240 Vac. A sufficient kAIC number does not override that restriction.

The fault-current study must also evaluate applicable fault types. A three-phase bolted-fault calculation is useful, but it does not establish that every phase-to-ground or single-pole interruption condition is covered. Eaton specifically identifies the need to check applicable three-phase and phase-to-ground duties.

NEC 110.9 and 110.10: Separate Checks

NEC 110.9 — Interrupting Rating

NEC 110.9 addresses equipment intended to interrupt current at fault levels. The interrupting rating at the nominal circuit voltage must be sufficient for the available fault current at the equipment’s line terminals. For a fully rated system, each overcurrent protective device meets that requirement through its individual interrupting rating.

This is why a standalone 10 kAIC breaker is not acceptable where the applicable available fault current is 20.8 kA. Reducing the normal connected load does not establish a lower available fault current: the fault-current calculation concerns the electrical source and circuit, not merely the operating load.

NEC 110.10 — Circuit and Equipment Protection

NEC 110.10 addresses the relationship among protective devices, circuit impedance, equipment SCCR, and other circuit characteristics. The installation must permit protective devices to clear faults without extensive damage to the electrical equipment. Eaton distinguishes this component-protection requirement from the interrupting-rating requirement in 110.9.

Consequently, replacing a low-AIC breaker with a higher-AIC breaker is not a complete compliance assessment. The panelboard, disconnects, controllers, and other applicable equipment still need appropriate short-circuit ratings and protection.

Use the Locally Adopted Edition

As of October 11, 2026, NFPA identifies the 2026 NEC as its current edition. That does not mean every jurisdiction enforces it; NFPA’s enforcement information shows that multiple editions remain in use across the United States. Confirm the adopted edition, local amendments, and requirements of the authority having jurisdiction (AHJ).

The NEC explanations here are paraphrases, not substitutes for the adopted code text or manufacturer instructions.

Hand Calculation: Approximately 20.8 kA at Transformer Secondary Terminals

This hypothetical example demonstrates a simplified three-phase transformer-terminal calculation. It is not utility data, a typical national value, or an approved equipment selection.

Eaton’s published method calculates transformer full-load current, then multiplies it by (100/%Z) to obtain the simplified secondary short-circuit current. The underlying technical reference is dated 2005; it supports the calculation method, not the claim that its historical code references are the current adopted requirements.

Calculation Steps

1. Calculate transformer full-load current.

For a three-phase transformer:

[
I_{\text{FL}}=
\frac{S_{\text{kVA}}\times 1{,}000}
{\sqrt{3}\times V_{\text{LL}}}
]

Substituting the assumed inputs:

[
I_{\text{FL}}=
\frac{750\times 1{,}000}
{\sqrt{3}\times 480}
\approx 902.1\text{ A}
]

2. Convert percent impedance to per-unit impedance.

[
Z_{\text{pu}}=\frac{4.34}{100}=0.0434
]

3. Calculate the simplified three-phase fault current.

[
I_{\text{SC}}=
\frac{I_{\text{FL}}}{Z_{\text{pu}}}
\frac{902.1}{0.0434}
\approx 20{,}786\text{ A}
]

[
I_{\text{SC}}\approx 20.8\text{ kA RMS symmetrical}
]

4. Compare the result with ratings at the applicable voltage.

A 10 kAIC breaker fails the standalone numerical check. A 22 kAIC breaker exceeds this initial result, but that comparison is not final until the study’s maximum conditions and the equipment requirements are established.

Keep percent impedance and per-unit impedance distinct. Dividing by 4.34 instead of 0.0434 produces a result 100 times too low.

Sensitivity: A Lower Impedance Can Exceed 22 kA

Fault current increases as transformer impedance decreases. As a separate hypothetical sensitivity case, assume the applicable minimum impedance is 10% below the initial 4.34% value:

[
%Z_{\text{minimum}}=4.34\times 0.90=3.906%
]

[
I_{\text{SC}}=
\frac{902.1}{0.03906}
\approx 23{,}095\text{ A}
23.1\text{ kA}
]

Under that assumption, 22 kAIC is no longer sufficient for standalone application. The 10% reduction is an explicitly assumed sensitivity input here—not a tolerance to apply automatically to every transformer. Obtain the applicable impedance tolerance from the transformer manufacturer or utility. Eaton’s calculation reference explains why impedance tolerance, voltage variation, and motor contribution can change the result.

The infinite-source approximation neglects upstream impedance, but it does not compensate for omitted motors, other sources, or unexamined fault types. Likewise, a transformer-terminal result is not a downstream-panel result unless the intervening circuit has been evaluated.

Use the site’s Fault Current Calculator alongside the hand calculation, checking its supported inputs, fault location, and assumptions before comparing results. A calculator result is not NEC approval, AHJ acceptance, or a replacement for a complete short-circuit study.

When Available Fault Current Exceeds the Breaker Rating

The corrective approach depends on whether the shortfall concerns the breaker, the equipment assembly, or both.

Eaton describes both fully rated systems and series-rated applications, including engineering provisions for existing installations. Its series-rating reference is historical technical guidance; verify the requirements in the locally adopted NEC and current equipment documentation before applying any option.

Series Ratings Require an Exact Combination

A series rating belongs to a documented combination of devices and equipment—not to an arbitrary pair of breakers. A 65 kAIC main breaker does not automatically make every downstream 10 kAIC breaker suitable for 65 kA available fault current. The manufacturer’s documentation must identify the permitted combination and its conditions.

The evaluation also includes motor-contribution restrictions, required markings, and replacement-device identification. Series ratings do not establish selective coordination, and the need for upstream operation can affect continuity of service. Those consequences matter particularly where only the faulted circuit must be disconnected.

Common pitfall: Upstream current limitation is not permission to “subtract” current from a downstream breaker’s required rating. Use the documented series-rated combination or an applicable engineered evaluation; do not treat a high-AIC main breaker or a let-through curve alone as approval.

AIC Selection Checklist

Use this checklist to Verify the documentation before purchasing or approving equipment:

• Identify the actual system voltage, grounding configuration, and applicable fault types.
• Obtain utility source information and transformer data for the installation.
• Establish available fault current at the equipment’s actual location.
• Include applicable voltage variation, impedance tolerance, and source contributions.
• Check the exact breaker’s interrupting rating at the operating voltage.
• Check equipment SCCR and applicable short-circuit protection conditions separately.
• If using a series rating, confirm the exact permitted devices, assembly, markings, and restrictions.
• Evaluate selective-coordination requirements separately from interrupting capability.
• Confirm the locally adopted NEC edition and AHJ requirements.
• Reassess the study after relevant source, transformer, feeder, or equipment changes.

These checks connect the fault-current calculation to the manufacturer’s application conditions and equipment-protection requirements. They do not call for opening energized equipment; have qualified personnel obtain inaccessible nameplate or equipment information using appropriate safe-work procedures.

Official Resources

• NFPA 70: National Electrical Code — official code information and current-edition identification.
• NFPA NEC Enforcement Maps — adoption information; confirm project-specific requirements locally.
• Eaton: Short-Circuit Current Ratings — interrupting ratings, equipment SCCR, and NEC 110.9/110.10 context.
• Eaton: Short Circuit Current Calculations — transformer and point-to-point calculation methods; published in 2005.
• Schneider Electric: QO and QOB VH Interrupting Ratings — manufacturer confirmation of 22 kAIC VH versus standard 10 kAIC ratings.

Which Appliances Cost the Most to Run in 2026?

Electric space heating, electric water heating, and air conditioning are the first places to check for high running costs; clothes dryers and older refrigerators can also add substantial electricity use. Their position on your bill depends on operating hours, climate, household demand, and equipment efficiency—not just the wattage on the nameplate. Start by comparing annual kWh at your own electricity rate, then evaluate replacement savings separately from the cost of keeping the appliance running.

Appliance Running Costs: Compare Annual Use Before Replacing

The table below combines utility reference values with explicitly assumed usage schedules. All costs use a hypothetical U.S. residential electricity rate of USD 0.20/kWh—not a national average or a local utility quote. The examples identify appliances worth investigating; they do not establish a universal household ranking.

Reference energy values come from Silicon Valley Power’s appliance chart, last updated August 28, 2023. The operating schedules and USD 0.20/kWh rate are article assumptions. These utility estimates are starting points, not measurements of your appliances, and the chart’s older equipment examples should not be treated as 2026 product specifications.

A dryer’s annual cost overlaps the refrigerator example because load frequency matters. Similarly, a heater used occasionally may cost less annually than a refrigerator, while several resistance heaters used through a long winter may become the dominant expense. Compare the same time period and include all equipment serving the same purpose before deciding where to act.

Use Your Local Electricity Rate, Not a National Average

As of October 12, 2026, EIA’s latest published monthly electricity update covers July 2026, released September 24, 2026. It reports a U.S. residential average of 18.31 cents/kWh, equivalent to USD 0.1831/kWh. This is a monthly national revenue-per-kWh measure—not a full-year average, your utility tariff, or a forecast of your appliance’s future operating cost.

EIA calculates that measure from electricity sales revenues and sales volumes. It is useful for a preliminary comparison when a bill is unavailable, but your current utility rate schedule is the appropriate source for a local decision.

For time-of-use pricing, calculate the appliance’s kWh in each rate period separately. Moving a dryer cycle to a cheaper period can reduce cost without reducing kWh. Conversely, reducing consumption does not necessarily eliminate a fixed monthly customer charge.

For replacement decisions, use the charges that would actually disappear from the bill. Dividing the entire bill by total kWh can provide a rough historical blended cost, but it may overstate savings if that bill includes fixed charges that remain after the upgrade.

Calculate Appliance Running Cost From Watts and Hours

For an appliance operating at approximately constant input power:

[\text{Annual energy (kWh)}
=
\frac{\text{Power (W)}\times\text{Hours/day}\times\text{Days/year}}{1{,}000}]

[\text{Annual electricity cost (USD)}
=
\text{Annual energy (kWh)}\times\text{Rate (USD/kWh)}]

This is the same basic watts-to-kWh method described by Virginia Cooperative Extension. Use 365 days only when the stated daily usage applies throughout the year; seasonal equipment needs its actual operating season.

Worked Example: One Winter of Portable Heater Use

Assume a U.S. household uses a 1,500 W electric heater at full power for six hours per day over 120 days. Electricity costs USD 0.20/kWh. These are illustrative inputs, not measured household data.

1. Convert watts to kilowatts:

[
1{,}500\div1{,}000=1.5\text{ kW}
]

2. Calculate daily electricity consumption:

[1.5\text{ kW}\times6\text{ hours}=9\text{ kWh/day}]

3. Calculate winter electricity consumption:

[9\text{ kWh/day}\times120\text{ days}=1{,}080\text{ kWh}]

4. Multiply by the assumed electricity rate:

[
1{,}080\text{ kWh}\times0.20\text{ USD/kWh}
=216\text{ USD}
]

The estimated winter running cost is USD 216. This result assumes the heater actually draws 1,500 W for all six counted hours each day. If those six hours describe how long it is switched on rather than how long its heating element operates, account for thermostat cycling before using the result.

You can repeat this calculation with your own inputs in the appliance cost calculator. The calculation estimates energy expense; it does not establish circuit suitability, NEC compliance, or approval by the local authority having jurisdiction.

Correct for Thermostat and Compressor Cycling

For a simplified appliance with a constant on-state power and negligible off-state consumption:

[\text{Annual energy}
=
\frac{W\times h\times d\times f}{1{,}000}]

Here, (f) is the duty-cycle fraction: the share of the counted time during which the appliance draws its assumed on-state power.

Using the heater example with an explicitly assumed 50% duty cycle:

[\frac{1{,}500\times6\times120\times0.50}{1{,}000}
=540\text{ kWh}]

[540\times0.20=108\text{ USD}]

That changes the estimate to USD 108, but 50% is only a scenario assumption. It is not a default for heaters, refrigerators, or air conditioners. Refrigerators cycle to maintain temperature, and their actual consumption depends on use and operating conditions.

For appliances with multiple operating modes, variable-speed compressors, defrost heaters, or meaningful standby consumption, measured kWh over a representative period is usually more informative than one nameplate wattage. Do not apply a second duty-cycle reduction to energy already measured by a meter.

A refrigerator being plugged in for 24 hours does not mean its compressor runs at nameplate power for 24 hours. Likewise, “switched on” hours and full-power operating hours are not interchangeable.

Common Appliance Wattages: Reference Values, Not Annual Costs

Wattage helps identify high-power equipment, but it cannot establish annual running cost without operating time. A high-power appliance used briefly may consume less annual energy than a lower-power appliance operating for long periods.

The following U.S. reference ranges come from Virginia Cooperative Extension’s publication dated February 26, 2020. They are examples of nameplate wattages—not a survey of current 2026 products.

Use your appliance’s documentation or measured energy in place of these ranges whenever possible. For refrigerators, model-specific annual kWh is more useful for shopping comparisons than a generic compressor wattage. ENERGY STAR’s refrigerator replacement calculator also provides an estimate based on the existing appliance, with an explicit warning that actual savings vary.

Measure plug-connected appliances only with an energy monitor rated for the appliance and used according to its instructions. Hardwired or high-current equipment requires an appropriate monitoring method and qualified assistance; this comparison does not require opening a panel or taking exposed live measurements.

Rank Running Costs First, Then Compare Replacement Payback

The appliance that costs the most to run is not automatically the appliance that pays back fastest when replaced. Running cost describes the existing expense; replacement savings describe the difference between the old and new equipment.

A useful evaluation sequence is:

1. Record each appliance’s model, operating schedule, and energy-use evidence.

1. Calculate annual kWh using measured energy, model-specific annual kWh, per-cycle energy, or a documented watts-and-hours estimate.
2. Apply the relevant local electricity prices.
3. Sort by annual running cost to identify the largest opportunities.
4. Compare reduced usage, appropriate maintenance, repair, and replacement.
5. Calculate replacement savings and payback using equivalent capacity and service.

Age and condition belong in that final decision, but “highest annual cost plus shortest remaining life” is not a sufficient replacement rule. A near-failure appliance may need replacement for reliability, while a costly upgrade to a functioning appliance may recover its purchase price slowly.

Worked Example: Refrigerator Replacement Payback

Assume the following hypothetical U.S. comparison:

Calculate annual savings:

[(900-450)\times0.20=90\text{ USD/year}]

Calculate simple payback:

[\frac{720\text{ USD}}{90\text{ USD/year}}=8\text{ years}]

The example produces an eight-year simple payback from electricity savings alone. It excludes financing, discounting, future electricity-price changes, and differences in repairs or maintenance. It is an estimate, not a savings guarantee.

If replacement is already necessary, compare the additional installed cost of the efficient model against a suitable baseline replacement—not necessarily against keeping the old appliance indefinitely. Also avoid retaining the old refrigerator as an extra unit if your savings calculation assumes it leaves service.

Include Standby and Other Continuous Loads

Standby loads deserve a separate calculation because small wattages accumulate over many hours. Virginia Cooperative Extension notes that some electronics continue drawing power when switched off.

For a hypothetical constant 10 W load operating all year:

[\frac{10\times24\times365}{1{,}000}
=87.6\text{ kWh/year}]

[87.6\times0.20=17.52\text{ USD/year}]

At the article’s assumed rate, that load costs USD 17.52 annually. Several such loads can add up, but a refrigerator, router, or other continuously powered device is not automatically an unnecessary standby load.

If you calculate active and standby energy separately, use standby hours that exclude active operation. Adding 8,760 standby hours to a full active-use estimate can double-count consumption.

Verify Official References and Local Rebates Before Buying

Use EIA’s electricity update for national context and your utility’s current tariff for the local cost calculation. The national reference cannot establish your household’s savings.

For refrigerator comparisons, the ENERGY STAR Flip Your Fridge calculator offers an official screening estimate. Its assumptions and stated limitations still matter; it does not replace measured use or a model-specific comparison.

Check the ENERGY STAR Rebate Finder by ZIP code, then confirm eligible models, application timing, installation requirements, and any recycling conditions with the program administrator. No single rebate amount applies to every U.S. household, so subtract only an incentive you have verified for the purchase being considered.

Appliance-Cost Decision Checklist

• I compared annual kWh, not wattage alone.
• I used my current utility tariff rather than treating a national average as local.
• I separated seasonal equipment from year-round loads.
• I accounted for cycling without inventing a universal duty cycle.
• I used comparable capacity, usage, and rating conditions for old and new appliances.
• I avoided double-counting standby energy or externally supplied hot-water energy.
• I distinguished the existing running cost from achievable replacement savings.
• I included applicable installation, delivery, disposal, and verified incentives.
• I considered usage changes and repair before assuming replacement is the best option.
• I treated the result as a cost estimate—not a substitute for manufacturer instructions, NEC requirements, local AHJ decisions, or professional site assessment.

Understanding US Electricity Rates: Rate Plans and Bill Costs in 2026

Understanding US electricity rates starts with identifying what your tariff charges for: energy used, time of use, peak demand, and fixed service fees. A lower price per kilowatt-hour does not necessarily produce a lower bill, especially when monthly fees or commercial demand charges apply. Use national and state averages only as reference points; use the rate schedule for your address, customer class, and billing period to calculate actual costs.

Electricity Rate Structures and Their Bill Impacts

These are billing components, not four mutually exclusive plans. A tariff can combine TOU energy prices with tiered allowances or demand charges. PG&E, for example, describes both a residential TOU plan with a baseline allowance and business TOU plans that include demand charges.

The most useful comparison is the total cost of serving the same usage profile under each eligible plan. For a household, that means matching monthly kWh and when electricity is used. For a business, it also means matching measured demand rather than assuming that equal monthly kWh produces equal bills.

Read the Tariff Before Using a Benchmark

A tariff is the rate schedule and the terms governing how it applies. It defines more than a price: the customer class, applicable charges, and billing conditions matter too. EIA’s electricity glossary distinguishes an electric rate schedule from a bill calculated by applying that schedule to consumption.

Use this sequence to identify the correct inputs:

1. Find the rate code on your bill. Match it to the utility’s official schedule rather than a similarly named marketing plan.
2. Match the effective dates. Use the schedule covering the service period, not automatically the schedule published today.
3. Confirm the customer class and eligibility. Residential, commercial, industrial, and separately metered EV service may have different schedules.
4. Record every applicable billing component. Separate energy, demand, fixed service, delivery, adjustments, taxes, and credits as shown in your bill and tariff.
5. Match the usage data to the pricing method. Monthly kWh supports a simple flat-rate calculation; TOU and demand calculations require the relevant time-period or interval data.

Effective dates are consequential. PG&E’s official rate archive, for example, lists separate residential and commercial schedules for January–February 2026 and March 2026 onward. A current price should not be applied retroactively to an earlier bill.

Where supply and delivery are billed separately, include both in the comparison. EIA’s annual electricity sales tables explicitly distinguish bundled service, unbundled service, and delivery-service revenue. Do not add a delivery charge again if it is already included in the price being used.

EIA Electricity Price Benchmarks: Period and Customer Class Matter

As of October 12, 2026, EIA’s latest published monthly end-use update covers July 2026 and was released September 24, 2026. The figures below are average retail revenues per kWh—not utility tariff quotes and not full-year 2026 averages.

EIA calculates these average prices from reported retail revenue and electricity sales. They describe what customers collectively paid per unit of electricity; they do not identify the marginal energy price or the fixed and demand charges on an individual account.

Texas and California: Compare the Same Sector and Year

For a reproducible historical state comparison, EIA’s Electric Power Annual Table 2.10 reports the following final 2024 residential averages:

These are explicitly 2024 historical benchmarks, not current 2026 offers. The original shorthand of “Texas around 13 cents” is not a suitable replacement for a dated, sector-specific figure. Likewise, California’s statewide average does not tell you the price of an additional off-peak or peak kWh under a particular tariff.

For state-level starting comparisons, the state-rate comparison calculator should be used with the source year and customer class clearly identified. Replace benchmark inputs with your applicable tariff when evaluating an actual bill.

Electricity prices differ because of generation and fuel costs, transmission and distribution costs, weather, and regulatory arrangements. Those factors help explain geographic differences, but a state average alone cannot explain the charges on a particular account.

kW and kWh Measure Different Things

A kilowatt, or kW, measures power: the rate at which electricity is used. A kilowatt-hour, or kWh, measures energy: one kW used for one hour equals one kWh.

For a constant load:

[
E_{\text{kWh}}=P_{\text{kW}}\times t_{\text{hours}}
]

Consider two hypothetical operating patterns:

Both use 10 kWh, so their energy charges are equal under the same flat energy rate. Their demand-charge effects may differ because the second pattern draws more power during operation.

For an interval-based demand measurement:

[
P_{\text{average, kW}}
=
\frac{E_{\text{interval, kWh}}}{t_{\text{interval, hours}}}
]

A hypothetical 5 kWh consumed during a 15-minute interval corresponds to:

[P=\frac{5}{15/60}=20\text{ kW}]

PG&E describes certain business demand charges using the highest-usage 15-minute interval in the billing month. That is a utility-specific example, not a universal U.S. billing rule. Use your own tariff’s interval and definition of billing demand.

A monthly kWh total cannot reveal the highest-demand interval. Dividing monthly kWh by monthly hours gives average power, not the peak billing demand needed for an interval-based demand charge.

Billing demand is also not a service-sizing calculation. Do not use a billed kW value by itself to select conductors, breakers, or service capacity.

How Flat, Tiered, TOU, and Demand Charges Change Decisions

Flat Rates: Simple Energy Math, but Not Necessarily a Fixed Bill

For a single applicable energy rate:

[
C_{\text{energy}}=E\times r
]

Here, (E) is energy in kWh and (r) is the rate in USD/kWh.

This structure makes energy-cost estimates straightforward because the timing of consumption does not change that energy rate. It does not eliminate fixed fees or other tariff components. Compare the complete bill rather than treating the energy subtotal as the amount due.

Tiered Rates: Separate the Usage Blocks

For a simple two-tier increasing-block example:

[
C_{\text{energy}}
=
\min(E,L)\times r_1
+
\max(E-L,0)\times r_2
]

Here, (L) is the first-tier allowance in kWh, and (r_1) and (r_2) are the tier prices in USD/kWh.

Suppose a hypothetical U.S. plan charges USD 0.15/kWh for the first 500 kWh and USD 0.22/kWh above that amount. At 800 kWh:

[
C_{\text{energy}}
=
500(0.15)+300(0.22)
=
\text{USD }141.00
]

This is an illustrative energy subtotal, not an official rate or complete bill.

Tier boundaries must come from the actual schedule. PG&E’s baseline allowance, for example, depends on location, heating source, and season. A threshold copied from another customer’s bill may therefore be inappropriate.

TOU Rates: Weight Prices by Your Actual Usage

For multiple time periods:

[
C_{\text{energy}}=\sum_i E_i r_i
]

A simple arithmetic average of peak and off-peak prices works only when equal amounts of energy are used in those periods. The relevant average is weighted by kWh.

PG&E’s E-TOU-C plan identifies 4–9 p.m. every day as peak hours, while E-TOU-D identifies 5–8 p.m. on weekdays. Even one utility can have different schedules, so “evening peak” is not a sufficient calculation input.

TOU can favor customers who can move substantial consumption into lower-priced periods. The amount saved depends on the energy actually shifted and the difference between applicable prices—not merely on enrolling in a plan with a low off-peak rate.

Demand Charges: Evaluate Coincident Loads and Billing Rules

For one demand component:

[
C_{\text{demand}}=D_{\text{billing}}\times r_D
]

Here, (D_{\text{billing}}) is billing demand in kW and (r_D) is the applicable charge in USD/kW per billing period.

Demand-charge analysis is especially relevant when several large loads operate together. Reducing monthly energy without reducing the highest billed interval may leave the demand charge unchanged. Conversely, spreading operation across time can reduce demand without reducing total kWh, depending on the tariff. PG&E’s business guidance describes this distinction for its interval-based demand charges.

Hand Calculation: Compare Flat and TOU Bills

This hypothetical U.S. residential example compares the same 800 kWh billing period under two illustrative plans. All prices are assumptions, not official utility rates or EIA benchmarks.

The example assumes no demand charges, tiers, separate delivery charges, taxes, riders, minimum bills, or credits. Energy prices represent all usage-based charges included in this simplified model. Both plans have a monthly—not daily—fixed fee.

Example Inputs

Blank cells indicate inputs not used by that plan.

Calculation Steps

1. Check the TOU allocation.

[200+600=800\text{ kWh}]

Both plans therefore use the same total energy.

2. Calculate the flat-plan bill.

[
C_{\text{flat}}
=
800(0.18)+12
=
\text{USD }156.00
]

3. Calculate the TOU energy charges.

[
C_{\text{peak}}=200(0.30)=\text{USD }60.00
]

[
C_{\text{off-peak}}=600(0.12)=\text{USD }72.00
]

4. Add the TOU fixed fee.

[
C_{\text{TOU}}
=
60+72+18
=
\text{USD }150.00
]

5. Compare the modeled totals.

[
C_{\text{flat}}-C_{\text{TOU}}
=
156-150
=
\text{USD }6.00
]

Under these assumptions, the TOU plan costs USD 6.00 less for the billing period. This is a reproducible estimate, not a utility quote or a savings guarantee.

Calculate the Peak-Usage Break-Even Point

Let (x) be peak-period kWh while total usage remains 800 kWh:

[
C_{\text{TOU}}
=
0.30x+0.12(800-x)+18
=
114+0.18x
]

Set that equal to the flat-plan bill:

[
114+0.18x=156
]

[x=\frac{42}{0.18}=233.33\text{ kWh}]

The break-even peak share is:

[\frac{233.33}{800}\times100\approx29.17%]

Below approximately 29.17% peak usage, the TOU plan is cheaper in this model. Above that share, the flat plan is cheaper. The calculation includes both fixed fees; ignoring them would produce a different threshold.

Fixed Fees Can Reverse the Winner at Low Usage

A plan with a lower energy rate can still cost more when its fixed fee is higher.

Consider two additional hypothetical U.S. plans with no other charges:

The break-even calculation is:

[
0.14E+25=0.18E+5
]

[E=\frac{25-5}{0.18-0.14}=500\text{ kWh}]

Below 500 kWh, Plan B costs less despite its higher energy rate. Above 500 kWh, Plan A costs less. This is why compare should mean calculating total charges at your usage—not selecting the smallest advertised price.

An effective billed price can help audit that comparison:

[
r_{\text{effective}}
=
\frac{\text{current-period electricity charges in USD}}
{\text{billed energy in kWh}}
]

Use consistent inclusions on both sides, and exclude prior balances or unrelated account items. This effective price describes the bill at that usage level; it is not necessarily the cost of the next kWh.

Official Data and Rate-Schedule Entrances

Use official sources for different purposes:

• For current national and state benchmarks, use EIA’s Electric Power Monthly and select the relevant sector and data period. The latest end-use update verified for this article covers July 2026.
• For historical annual state comparisons, use EIA’s Electric Power Annual Table 2.10. The table verified here contains final 2024 and 2023 figures.
• For the original annual sales, revenue, and price tables, use EIA’s Electric Sales, Revenue, and Average Price. That publication was discontinued after its 2024-data edition; EIA directs users to its EIA-861 data files for the underlying information.
• For an actual bill, use your utility’s official tariff and billing explanation. PG&E’s current and historical electric-rate archive is one example for customers in its California service territory, not a nationwide schedule.

A benchmark supports context. A tariff supports account-level billing. Neither a state comparison calculator nor this article replaces NEC requirements, local AHJ decisions, manufacturer instructions, or professional judgment for electrical design and installation.

Electricity Rate Comparison Checklist

Use this checklist before accepting a projected bill or switching plans. It keeps the comparison tied to the same account, usage profile, and billing period.

• The tariff matches the service address and customer class.
• The rate schedule covers the dates being calculated.
• Both plans use the same total kWh and billing period.
• TOU usage is allocated using the correct hours, seasons, and day types.
• Tier limits or baseline allowances come from the applicable schedule.
• Demand inputs use billing demand in kW, not monthly energy in kWh.
• Fixed fees are included on both sides.
• Supply and delivery charges are included without double-counting.
• Applicable adjustments, taxes, minimum-bill provisions, and credits have been checked.
• Benchmarks retain their actual data year, geography, and customer class.
• Hypothetical inputs remain separate from official rates.
• The result is treated as an estimate until reconciled with the utility’s billing rules.

HVAC and Lighting Efficiency That Pays: 2026 Guide

Start with thermostat schedules and unnecessary lighting hours before buying new equipment, but check whether the changes suit your HVAC system and building use. Compare paid upgrades using annual energy savings, installed cost, and your actual utility tariff—not a national average or a blanket savings percentage. Thermostat adjustments and LED replacements can both pay, but heat-pump recovery behavior, operating hours, and installation costs can change which measure deserves priority.

HVAC and Lighting Measures: What to Do First

Start with changes that eliminate unnecessary operation without compromising comfort or required building conditions. Maintenance belongs alongside this review: ENERGY STAR recommends checking thermostat settings, inspecting filters, and arranging annual preseason professional checkups. A new system should not become the default answer to a scheduling or maintenance problem.

Establish the Rate, Power, and Operating-Hour Inputs

Electricity savings depend on the energy you avoid buying and the price applicable when you would have used it. EIA’s national figures provide context, but they are average retail revenues divided by electricity sales—not the tariff for your address.

As of October 12, 2026, EIA’s latest monthly release covers July 2026 and was published September 24, 2026. Keep that data month attached to the figures rather than describing them as full-year 2026 averages.

Electricity and Equipment Parameters

For a simple flat-rate comparison, multiply avoided kWh by the applicable energy rate. For time-of-use pricing, calculate savings separately for each price period. Do not assume that dividing the entire bill by total kWh gives the price of the next kWh avoided: fixed charges and other tariff components may remain even when consumption falls.

Commercial accounts need an additional tariff check. Treat energy savings and any demand-charge savings as separate calculations; reduced annual kWh alone does not demonstrate a reduction in billed demand.

Thermostat Setback: Reduce Unnecessary Heating and Cooling

DOE’s guidance is “as much as 10%” annual heating-and-cooling savings from a 7–10°F adjustment for eight hours daily—not a guaranteed 7–10% reduction in the entire utility bill. Lower the heating setpoint during suitable unoccupied periods; raise the cooling setpoint rather than lowering it.

The schedule matters because maintaining occupied comfort conditions in an empty building can require unnecessary HVAC operation. Programmable controls automate those changes, while suitable smart controls can respond to occupancy or activity. The useful comparison is the existing schedule versus a workable revised schedule, not simply “manual thermostat versus smart thermostat.”

Heat Pumps Need a Different Heating Strategy

A heat pump’s heating recovery can trigger electric-resistance backup heat. DOE cautions against manually setting back the thermostat when doing so causes that backup heat to operate, and recommends controls with functions suitable for the heat pump. Follow the equipment and thermostat manufacturers’ instructions rather than applying a furnace-style setback automatically.

A thermostat savings percentage applies to the relevant heating-and-cooling energy, not automatically to lighting, water heating, or the whole utility bill. For heat-pump heating, check recovery behavior before treating a deep setback as a savings measure.

Test a schedule only within the building’s temperature and operating requirements. Record the settings, occupancy periods, and energy use so the result can be evaluated rather than inferred from the thermostat display.

HVAC Duty Cycle: Calculate Effective Hours, Not Clock Hours

For energy estimates, power and operating time must describe the same operating condition. The basic relationship is energy in kWh equals input power in kW multiplied by hours of operation; annual cost then follows from annual kWh and the applicable electricity rate.

For a simplified fixed-input HVAC load:

[
E=P\times H\times d
]

where:

• (E) = electricity consumption, kWh.
• (P) = electrical input while running, kW.
• (H) = hours in the observation or scheduling window.
• (d) = operating duty cycle, expressed as a decimal.

Equivalent full-input hours are:

[
H_{\text{effective}}=H\times d
]

A 12-hour daily operating window is not necessarily 12 hours at full electrical input. If a fixed-input load runs half the time, that window represents six equivalent full-input hours.

This shortcut requires approximately constant input while the modeled load operates. Variable-speed equipment, multiple stages, separately running fans, and resistance backup heat need a more detailed model:

[
E=\sum_i P_i\times h_i
]

Use measured energy where available. Do not treat cooling capacity in tons or BTU/h as electrical input, and do not use a circuit or protective-device rating as though it were measured running power. For a repeatable comparison, organize the inputs alongside the site’s HVAC cost calculator and retain the assumptions used.

LED Lighting: Compare Equal Light Output and Include Replacement Costs

LED savings depend on what the lamps replace. DOE’s 2021 lighting guide reports that LEDs can use up to 90% less energy and last up to 25 times longer than incandescent bulbs. Those are upper-range comparisons—not fixed savings or lifespan promises for every lamp, fixture, and operating environment.

Select replacement lighting by lumens and suitability, then compare watts. A watt measures electrical power; a lumen measures light output. Lower wattage is useful only when the replacement still provides the lighting the space needs.

For lamps with the same operating schedule:

[\Delta E=
N\times\frac{W_{\text{old}}-W_{\text{new}}}{1000}
\times h_{\text{day}}\times D]

where (N) is lamp count, (W) is input watts, (h_{\text{day}}) is daily operating hours, and (D) is operating days per year.

Include labor when lamps require paid access or installation. Longer life can reduce future replacement work, but count those avoided costs only when the existing replacement frequency and labor expense are documented. For dimmed fixtures, verify that both the LED and dimmer are suitable for the combination; DOE notes that dimmer-compatible LEDs are available.

Do not automatically add a second HVAC savings allowance to the lighting result. Any heating or cooling interaction needs its own building-specific calculation.

Worked Example: Free Scheduling Versus a Paid LED Retrofit

The following is a hypothetical U.S. property example prepared for a 2026 evaluation. Every price, runtime, duty cycle, and equipment input below is an illustration—not a local quote, utility tariff, or official performance benchmark.

The example assumes a flat energy rate, constant HVAC input when running, unchanged lighting hours, and no demand-charge, fixed-charge, tax, or HVAC–lighting interaction savings.

Example Inputs

Calculation Steps

1. Calculate existing annual HVAC consumption:

[
E_{\text{before}}
=3.0\times12\times120\times0.50
=2{,}160\text{ kWh/year}
]

2. Calculate consumption with the assumed revised duty cycle:

[
E_{\text{after}}
=3.0\times12\times120\times0.45
=1{,}944\text{ kWh/year}
]

3. Convert avoided HVAC energy to cost savings:

[
\Delta E_{\text{HVAC}}
=2{,}160-1{,}944
=216\text{ kWh/year}
]

[
S_{\text{HVAC}}
=216\times0.18
=\text{USD }38.88/\text{year}
]

The assumed duty-cycle change produces a 10% reduction in this modeled load’s consumption. It is not evidence that a particular thermostat adjustment will deliver that reduction.

4. Calculate lighting energy savings:

[
\Delta E_{\text{lighting}}
=10\times\frac{60-9}{1000}\times4\times365
=744.6\text{ kWh/year}
]

[
S_{\text{lighting}}
=744.6\times0.18
=\text{USD }134.028/\text{year}
]

Rounded annual lighting savings are USD 134.03. The assumed wattage reduction is (51/60=85%), not a universal LED savings percentage.

5. Calculate the LED retrofit’s simple payback:

[
C_{\text{installed}}=40+20=\text{USD }60
]

[\text{Simple payback}
=\frac{60}{134.028}
\approx0.45\text{ year}]

That is approximately 5.4 months at the assumed year-round lighting schedule.

What the Example Supports

The schedule change costs nothing to implement in this example, but the LED retrofit saves more annually. That is why “free measures first” should guide the initial review without becoming a reason to postpone a well-supported, low-cost upgrade.

Keep payback tied to the measure being purchased. Crediting the free thermostat savings to the LED investment would make the LED retrofit appear to repay its cost faster than it actually does.

HVAC Replacement: Compare the Correct Investment

When existing equipment still works, an early-replacement comparison should account for the installed replacement cost and the energy savings relative to continued operation. When replacement is already necessary, compare the additional installed cost of the higher-efficiency option with its additional annual savings over a suitable baseline replacement.

For a simplified comparison:

[\text{Simple payback}
=\frac{\text{Relevant net investment}}
{\text{Annual net operating-cost savings}}]

Use a current installed quote, confirmed incentive amounts, and an energy estimate that reflects the location, equipment, and operating conditions. Include differences in recurring maintenance when supported by actual information. Simple payback does not account for financing, discount rates, future energy-price changes, or every lifecycle cost.

Review the current ENERGY STAR product listings when comparing equipment. Certification identifies products meeting EPA efficiency specifications; the project still needs a site-specific cost and suitability assessment.

Confirm Local Rebates Before Counting Them

Use the ENERGY STAR Rebate Finder to search by ZIP code for participating offers, then verify the current terms with the issuing utility or program administrator. An offer in another service territory is not a rebate for your project.

Before subtracting an incentive from installed cost:

1. Confirm that the service address and customer type qualify.

1. Check the exact model and installation requirements.
2. Establish whether approval is required before purchase or installation.
3. Verify application deadlines and required documentation.
4. Separate an expected rebate from an approved or received rebate.

Use only confirmed amounts in the primary payback calculation. If approval remains uncertain, calculate the project without the incentive and evaluate the incentive as a separate scenario.

Before Spending: HVAC and Lighting Checklist

• Verify the current utility tariff for the service address and relevant operating periods.
• Separate fixed charges and demand charges from energy charges.
• Record the existing thermostat schedule and actual occupancy.
• Check heat-pump recovery behavior and manufacturer control instructions.
• Review filters and professional maintenance needs before assuming replacement is necessary.
• Use electrical input in kW, not heating or cooling output capacity.
• Match lighting replacements by suitable lumens, application, and control compatibility.
• Count actual lighting hours and all applicable installation costs.
• Keep each purchased measure’s investment and savings together.
• Confirm rebate eligibility before deducting the amount.
• Compare measured results under reasonably comparable weather and occupancy conditions.

These calculations support budgeting and comparison. They do not establish equipment performance, constitute a formal quote, or replace the NEC, local AHJ requirements, manufacturer instructions, or qualified on-site judgment where installation work is involved.

How Solar Payback Really Works in 2026

Solar payback tells you how long your electricity savings take to recover the cost of a solar installation. Before signing a quote, separate the installed price, incentives you can actually receive, and the value your utility assigns to electricity used onsite versus exported to the grid. For a new U.S. residential installation completed in 2026, do not subtract the former 30% federal Residential Clean Energy Credit: IRS guidance says installations completed after December 31, 2025, do not qualify.

Solar Quote Inputs That Determine Payback

This guide uses U.S. residential solar as its main example. Commercial systems need their own tax treatment and tariff analysis; a residential calculation should not be carried over unchanged to a business.

Start With the Full Installed Cost

The initial investment is the cost of getting the quoted system installed and operational, less incentives you are eligible to receive. Compare quotes with the same scope: modules, inverter equipment, mounting, electrical work, permits, interconnection, and any required service or roof work.

When a quote gives a price per watt, calculate:

[
C_{\text{installed}}
=
P_{\text{DC,kW}}\times1{,}000\times p_{\text{USD/W}}
]

For an illustrative 8 kW system priced at USD 3.00/W:

[
8\times1{,}000\times3.00=\text{USD }24{,}000
]

That price is an assumption for the example, not a national benchmark or a local installation quote.

Then calculate:

[
C_{\text{net}}
=
C_{\text{installed}}
+
C_{\text{required extras}}
I_{\text{verified}}
]

Include required extras only if they are not already included in the installed price. Subtract a rebate only once, and distinguish a rebate already deducted by the installer from one you must claim later.

Apply the Correct Incentive Year

For new U.S. residential installations completed in 2026, the former Section 25D credit does not apply. Paying for equipment before the end of 2025 did not preserve eligibility if installation was completed after December 31, 2025.

A carryforward from an eligible earlier installation is a separate tax matter. The IRS’s 2025 Form 5695 instructions address carrying unused eligible credits into 2026; that does not create a credit for a new 2026 installation.

Use to locate programs in your state, then verify current terms directly with the program administrator. Eligibility, reservation requirements, and payment timing belong in the calculation—not just the advertised incentive amount.

If an incentive arrives after installation, show the initial cash outlay and the later payment separately in the cash-flow model.

Value Solar Electricity Honestly

The shortcut “annual generation × retail electricity rate” works only when every generated kilowatt-hour receives that value. That condition should be demonstrated from the applicable tariff, not assumed.

A more useful starting formula is:

[
B_1
=
E_{\text{self}}\times r_{\text{avoided}}
+
E_{\text{export}}\times r_{\text{export}}
]

Where:

• (B_1) is first-year gross bill benefit in USD.
• (E_{\text{self}}) is solar electricity used onsite in kWh.
• (r_{\text{avoided}}) is the utility energy charge avoided in USD/kWh.
• (E_{\text{export}}) is electricity sent to the grid in kWh.
• (r_{\text{export}}) is its applicable compensation in USD/kWh.

Net metering and other export arrangements differ. EIA explains that retail-rate net metering and lower export compensation produce different financial outcomes, even when the system generates the same amount of electricity.

Use the Tariff, Not a National Average

EIA reports a 2025 U.S. average residential electricity price of 17.30 cents/kWh, equivalent to USD 0.1730/kWh. That is a historical national reference point—not a 2026 local rate, an export rate, or a guaranteed avoided charge.

For a quote decision, obtain your utility’s current rate schedule and solar export tariff. Check:

• Energy charges that fall when grid purchases fall.
• Fixed customer charges that remain.
• Time-of-use prices and when solar production occurs.
• Export credit rates, expiration rules, and annual settlement terms.
• Minimum bills and solar-specific charges.

Under time-of-use rates, value generation and consumption by the applicable interval. An annual average can hide the difference between producing electricity at midday and buying it during expensive evening hours.

For a commercial account, calculate demand-charge savings separately. Annual solar kWh alone cannot establish how much the billed peak kW will decline.

A common payback error is valuing exported electricity at the full retail rate while also counting that same electricity as avoided onsite consumption. Allocate each kilowatt-hour once, and apply the compensation rules that actually govern the account.

Check the Production Estimate

Ask for the assumptions behind the installer’s first-year AC production estimate: location, system size, roof orientation, tilt, shading, inverter configuration, and losses. DOE recommends PVWatts as a location-specific production-estimation tool.

Use the estimate as a model, not a performance guarantee. Keep first-year modeled losses separate from future annual degradation so you do not subtract the same loss twice.

A Complete Hand Calculation

The following is a hypothetical U.S. residential cash purchase completed in 2026. None of its installation prices, utility rates, or production figures represents a specific utility territory.

Example Inputs

Calculation Steps

1. Calculate net initial cost.

[
C_{\text{net}}=24{,}000-0-0=\text{USD }24{,}000
]

2. Split annual generation between onsite use and exports.

[
E_{\text{self}}=12{,}000\times0.60=7{,}200\text{ kWh}
]

[
E_{\text{export}}=12{,}000\times0.40=4{,}800\text{ kWh}
]

3. Calculate the value of each portion.

[
B_{\text{self}}=7{,}200\times0.20=\text{USD }1{,}440
]

[
B_{\text{export}}=4{,}800\times0.06=\text{USD }288
]

4. Subtract recurring costs.

[
S_1=1{,}440+288-120=\text{USD }1{,}608/\text{year}
]

5. Calculate simple payback.

[
T_{\text{simple}}
=
\frac{24{,}000}{1{,}608}
=
14.93\text{ years}
]

The simple payback is approximately 14.9 years. This is a screening result: it holds first-year net benefit constant and excludes financing, degradation, future replacements, and the time value of money.

If you incorrectly valued all 12,000 kWh at USD 0.20/kWh, the same calculation would show about 10.5 years after recurring costs. That shorter result comes from a different compensation assumption, not better solar performance.

You can enter your own inputs in the solar payback calculator, then compare its assumptions and results with these hand calculations.

Extend the Calculation Across 25 Years

Simple payback does not show how annual benefits change or when a major expense occurs. A year-by-year model makes those effects visible.

For a simplified flat-rate model:

[
E_t=E_1(1-d)^{t-1}
]

[
B_t
=
E_t\left[f,r_{\text{self},t}+(1-f),r_{\text{export},t}\right]
]

[
S_t=B_t-O_t-R_t
]

Where (d) is annual degradation, (f) is the onsite consumption share, (O_t) is recurring cost, and (R_t) is a replacement expense in year (t).

Undiscounted cumulative recovery occurs when:

[
-C_{\text{net}}+\sum_{t=1}^{n}S_t\geq0
]

This approach assumes the onsite share stays constant. Changes in occupancy, EV charging, export restrictions, or battery operation require a revised model.

Degradation, Rate Growth, and Replacement Sensitivity

Extend the hand example using these additional hypothetical assumptions:

• 0.5% annual production degradation after year one.
• A 25-year evaluation period.
• USD 120/year in recurring costs, held constant.
• A USD 2,000 replacement expense in year 12.
• Either 0% or 2% annual growth in both avoided and export rates.
• No financing, resale proceeds, or additional incentives.

The USD 2,000 expense is a modeling assumption, not an inverter replacement quote or a verified market price range.

Under the 2% rate-growth scenario:

[
B_t=1{,}728(0.995\times1.02)^{t-1}
=1{,}728(1.0149)^{t-1}
]

Subtract USD 120 each year and the additional USD 2,000 in year 12.

These results show why a positive lifetime dollar total does not necessarily mean an attractive investment. Net present value discounts future benefits:

[
NPV=-C_{\text{net}}+\sum_{t=1}^{25}\frac{S_t}{(1+i)^t}
]

Here, (i=0.05) is an assumed comparison rate, not an official required return. The 2% electricity-price increase is also a sensitivity assumption, not a forecast.

Price Replacement Work for the Actual Equipment

Replacement allowances should match the quoted inverter architecture and warranty. Ask the installer to identify the equipment model, warranty coverage, labor coverage, access requirements, and installed replacement scope.

Do not treat a module performance warranty as coverage for all inverter equipment, labor, or lost generation. Also avoid counting a replacement reserve in annual costs and then charging the same expense again in the replacement year.

Cash Purchases and Loans Are Different Accounts

Cash-purchase payback compares the initial investment with operating benefits. Loan affordability compares operating benefits with debt payments and any upfront contribution.

CFPB’s 2024 solar-financing report identified financed-price markups and payment structures that can raise monthly payments unless borrowers make a substantial early principal payment. Those findings make the cash price, financed price, and complete payment schedule essential comparison inputs.

Loan Calculation Using the Same Example

Assume the entire USD 24,000 cash price is financed through a fixed-payment, fully amortizing loan at a 7% annual interest rate for 15 years, with no fees or required early prepayment.

[M=L\frac{j}{1-(1+j)^{-n}}]

With (L=24{,}000), (j=0.07/12), and (n=180):

[
M
=
24{,}000
\frac{0.07/12}{1-(1+0.07/12)^{-180}}
\approx\text{USD }215.72/\text{month}
]

Using the unrounded payment, total loan payments are approximately USD 38,829.38, including USD 14,829.38 in interest.

The financed system has negative first-year cash flow even though the cash-purchase calculation shows eventual recovery. Seasonal production also means the average monthly operating benefit—USD 134 in this example—will not arrive evenly throughout the year.

Display each year of the financing period, not just the first month. Check the contract for introductory payments, re-amortization, balloon payments, and prepayment requirements. Do not assume a former 30% residential credit will fund a required prepayment for a new 2026 installation.

When modeling the loan, count any down payment upfront and principal-and-interest payments as they occur. Do not also subtract the full financed purchase price upfront; that would double-count principal.

Check the Quote Before Signing

A useful quote makes its assumptions inspectable and lets you compare a conservative case with the sales projection.

• Confirm that the cash price includes all required work.
• Obtain the financed price separately and reconcile any difference.
• Verify incentive eligibility, deadlines, and payment timing.
• Check that a new 2026 installation does not include the expired Section 25D credit.
• Obtain a site-specific AC production estimate and its loss assumptions.
• Use the current utility tariff for avoided charges and exports.
• Check credit expiration, settlement rules, fixed charges, and minimum bills.
• Allocate generation between onsite use and exports without double counting.
• Review equipment warranties and obtain replacement-cost information.
• Show negative cash-flow years, including replacement and financing costs.
• Run a lower-production case and a no-rate-growth case.
• Compare cumulative recovery with how long you expect to own the property.

For perspective, reducing generation by 15% in the hand example—while holding the allocation, rates, and USD 120 recurring cost constant—extends simple payback from 14.9 to approximately 17.8 years. That is a sensitivity test, not a prediction.

A payback calculation evaluates financial assumptions. It does not establish NEC compliance, local AHJ approval, utility permission to operate, roof suitability, or guaranteed energy production. Those requirements remain separate from whether the quoted investment makes financial sense.

What EV Charging Really Costs (2026)

EV charging costs depend on how much electricity you buy, where you charge, and which fees apply—not simply on battery size. In the hypothetical U.S. comparison below, charging costs USD 0.054 per mile at home, USD 0.144 per mile on public charging, or USD 0.072 per mile with an 80% home/20% public energy mix. That mixed scenario saves USD 48 per 1,000 miles against a gasoline vehicle getting 30 mpg at USD 3.60 per gallon, before maintenance savings or additional charging fees.

Home, Public, and Mixed Charging Costs Compared

These are illustrative U.S. scenarios, not surveyed prices or official averages. Each EV scenario assumes 30 billed kWh per 100 miles at its charging location; the gasoline comparison assumes 30 miles per U.S. gallon.

The comparison changes when your vehicle efficiency, charging mix, or local prices change. Under these assumptions, the energy-only break-even electricity price is USD 0.40/kWh: below that rate, the EV costs less to fuel; above it, the gasoline vehicle costs less. Additional charging fees lower the electricity-price threshold.

Build a Blended Rate From the Electricity You Actually Buy

A blended rate combines the prices paid at home, work, and public stations. Weight each price by its share of billed kWh:

[
r_{\text{blended}}=\sum_i s_i r_i
]

Where:

• (r_i) is the electricity price at location or time period (i), in USD/kWh.
• (s_i) is that category’s share of total billed charging energy.
• All shares must add to 1, or 100%.

For the opening example:

[
r_{\text{blended}}
=(0.80\times0.18)+(0.20\times0.48)
=0.24\text{ USD/kWh}
]

The weighting must be energy-weighted, not based on how often you plug in. Eight small home sessions and two large public sessions do not necessarily mean that 80% of your electricity came from home.

When you have charging records, calculate the rate directly:

[
r_{\text{blended}}
=
\frac{\text{Total energy charges, USD}}
{\text{Total billed charging energy, kWh}}
]

Keep subscriptions and other non-energy fees separate until the final cost calculation. This makes it easier to compare pay-as-you-go charging with a membership plan without hiding the subscription inside an apparently low electricity rate.

Use Local Prices Before National Averages

As of October 12, 2026, EIA’s latest monthly electricity release covers July 2026. It reports a U.S. residential average of 18.31 cents/kWh, or USD 0.1831/kWh, released September 24, 2026. That figure is a national starting reference—not your local EV charging rate. EIA calculates it from electricity sales revenue divided by electricity sales volume rather than collecting each customer’s tariff directly.

For home charging, identify the incremental cost of the electricity added by the EV. Include applicable supply, delivery, riders, and usage-based taxes. Dividing your entire household bill by kWh can be misleading when the bill contains fixed charges that would exist without the vehicle.

Time-of-use plans also require separate prices for separate charging periods. For example, PG&E’s current EV2-A information for its California service territory lists off-peak hours as midnight to 3 p.m. every day, and the plan applies to both home and vehicle electricity use. Those hours are specific to that plan, not a nationwide rule; evaluate the whole household bill before switching rates.

Charging-Cost Parameters and Reference Sources

Blank reference cells are intentionally left without a generic price. These inputs depend on the vehicle, tariff, location, or charging behavior.

Keep Charging Losses and Vehicle Efficiency on the Same Basis

Charging cost follows the electricity billed, which may differ from the energy reported as entering or leaving the battery. EPA explains that its EV efficiency ratings account for Level 2 AC charging losses through the charging cable and onboard charger, moving the measurement boundary to the wall outlet.

Use one of the following methods consistently.

Method 1: Start With EPA Electricity Consumption

When using the vehicle’s EPA electricity-consumption figure in kWh/100 miles:

[
E_{\text{estimated}}
=
D\times\frac{q}{100}
]

Where (D) is distance in miles and (q) is electricity consumption in kWh/100 miles.

Do not automatically add another charging-loss percentage to an EPA wall-based figure. That would count losses twice. EPA ratings are a comparison reference, however, not a guarantee of your consumption under different weather, speeds, or charging conditions.

Method 2: Start With Battery-Side Consumption

If your consumption figure explicitly measures battery-side energy, account for charging efficiency separately:

[
E_{\text{billed}}
=
\frac{E_{\text{battery}}}{\eta}
]

Here, (\eta) is charging efficiency expressed as a decimal.

For a hypothetical 27 kWh battery-energy requirement and 90% charging efficiency:

[
E_{\text{billed}}
=
\frac{27}{0.90}
=
30\text{ kWh}
]

A 10% loss of input energy means dividing by 0.90—not multiplying battery energy by 1.10. Confirm the measurement basis of your vehicle display before using it.

Vehicle-Specific Efficiency References

The following selected U.S. configurations illustrate why vehicle efficiency belongs in the calculation. They use model-year 2025 EPA/DOE guide values, not 2026 model ratings. The consumption column is calculated from the published combined MPGe using EPA’s 33.7 kWh-per-gallon-equivalent conversion:

[q=\frac{3{,}370}{\text{MPGe}}]

Published MPGe values come from the 2025 EPA/DOE Fuel Economy Guide; calculated consumption is rounded to one decimal place. These derived figures may differ slightly from separately rounded label consumption values.

Use the exact model year, drivetrain, and wheel configuration for your vehicle. For an existing vehicle, measured charging energy divided by miles traveled over a representative period is more directly useful for budgeting than another model’s rating. EPA’s standardized tests support vehicle comparisons, but individual driving conditions can produce different results.

Adding a blanket “10% charging loss” to an EPA wall-based efficiency figure overstates energy use. Conversely, treating a battery-side display as billed electricity can understate it. Home meter readings, public charging receipts, and vehicle displays may describe different energy boundaries.

Calculate EV and Gasoline Costs Per Mile

Cost per mile puts vehicles with different battery sizes and driving ranges on a comparable basis.

For a single electricity price:

[
c_{\text{EV,energy}}
=
\frac{q}{100}\times r
]

For multiple charging categories:

[
c_{\text{EV,energy}}
=
\frac{\sum_i E_i r_i}{D}
]

The second formula is preferable when home and public records provide actual billed kWh. It avoids assuming that every charging method purchases exactly the same amount of energy per mile.

Include additional charging costs separately:

[
c_{\text{EV,total}}
=
\frac{\sum_i E_i r_i+F}{D}
]

Where (F) is the total additional charging-related cost for the same period.

For gasoline:

[
c_{\text{gas}}
=
\frac{p_{\text{gas}}}{\text{mpg}}
]

Then:

[
S_{\text{fuel}}
=
D\left(c_{\text{gas}}-c_{\text{EV,total}}\right)
]

A positive result means the EV saves money on charging versus gasoline for the stated period. It does not establish that the EV has a lower total ownership cost.

A Complete Hand Calculation: 1,000 Miles Per Month

This is a hypothetical U.S. household example. None of the rates, efficiency assumptions, or maintenance allowances below represents a local quote or official 2026 benchmark.

Inputs and Assumptions

The assumed billed consumption already accounts for charging losses. Both charging categories use the same billed-consumption assumption for this simplified example.

1. Calculate monthly charging energy.

[
E=1{,}000\times\frac{30}{100}=300\text{ kWh}
]

2. Allocate billed energy by charging location.

[
E_{\text{home}}=300\times0.80=240\text{ kWh}
]

[
E_{\text{public}}=300\times0.20=60\text{ kWh}
]

3. Calculate each charging cost.

[
C_{\text{home}}=240\times0.18=\text{USD }43.20
]

[
C_{\text{public}}=60\times0.48=\text{USD }28.80
]

[
C_{\text{EV}}=43.20+28.80=\text{USD }72.00
]

4. Check the blended rate and cost per mile.

[
r_{\text{blended}}=\frac{72}{300}=0.24\text{ USD/kWh}
]

[
c_{\text{EV}}=\frac{72}{1{,}000}=0.072\text{ USD/mile}
]

5. Calculate gasoline cost without rounding gallons prematurely.

[
C_{\text{gas}}
=
\frac{1{,}000}{30}\times3.60
=
\text{USD }120.00
]

6. Calculate fuel savings.

[
S_{\text{fuel}}=120-72=\text{USD }48.00/month
]

[\text{Fuel-cost reduction}=\frac{48}{120}\times100=40%]

7. Add the optional, separately assumed maintenance allowance.

[
S_{\text{operating}}=48+25=\text{USD }73.00/month
]

The result is USD 48 in monthly fuel savings, or USD 73 when the hypothetical USD 25 maintenance allowance is included. Actual charging fees would reduce those savings dollar for dollar.

You can repeat the estimate with the EV charging calculator, checking that its consumption and loss inputs match the measurement basis you are using.

Find the Electricity Price Where the Fuel Advantage Disappears

Ignoring additional fees, the break-even electricity price is:

[
r_{\text{break-even}}
=
\frac{p_{\text{gas}}/\text{mpg}}{q/100}
]

For the example:

[
r_{\text{break-even}}
=
\frac{3.60/30}{30/100}
=
0.40\text{ USD/kWh}
]

This explains the opening comparison: USD 0.18/kWh home charging is below the threshold, while USD 0.48/kWh public charging is above it.

With a monthly additional-fee total (F):

[
r_{\text{break-even}}
=
\frac{p_{\text{gas}}/\text{mpg}-F/D}{q/100}
]

This is a fuel-cost threshold only. Maintenance differences, charger installation, insurance, depreciation, and financing belong in separate operating-cost or ownership comparisons.

Sample the Public Chargers You Will Actually Use

Public charging is not a single national tariff. Electrify America states that its DC charging prices depend on station location, plan, and energy delivered; select stations also use time-of-use pricing. The operator directs drivers to its app or charger screen for current prices and applicable idle fees.

For a local budget, sample the stations that fit your commute, destination parking, and regular trips:

1. Record the station, operator, and date checked.

1. Record guest and member energy prices separately.
2. Note time-of-use periods and whether billing is per kWh, per minute, or per session.
3. Record subscriptions, taxes, session fees, parking charges, and idle-fee conditions.
4. Replace sampled prices with receipt totals once you have actual charging history.

For time-based billing, calculate the effective energy price after the session:

[
r_{\text{effective}}
=
\frac{\text{Charging payment, USD}}{\text{Billed energy, kWh}}
]

Public charging can use energy-, time-, session-, or subscription-based pricing, so a posted per-kWh price may not describe the entire payment.

A membership is financially useful only when its energy savings exceed its subscription cost. For a hypothetical USD 7 monthly subscription that reduces the energy price by USD 0.10/kWh:

[
E_{\text{membership break-even}}
=
\frac{7}{0.10}
=
70\text{ kWh/month}
]

Use the operator’s actual fee and discount before making that comparison.

Include Maintenance Savings Without Turning Them Into a Guarantee

Battery-electric vehicles typically need less scheduled maintenance because they have fewer moving parts, do not require engine-oil changes, and use regenerative braking to reduce friction-brake wear. Plug-in hybrids still have combustion-engine maintenance requirements, so do not apply the same assumptions to them automatically.

DOE’s June 2021 light-duty analysis estimated scheduled maintenance at USD 0.061/mile for battery-electric vehicles and USD 0.101/mile for conventional gasoline vehicles—a difference of USD 0.04/mile. Those are historical modeled estimates, not current local service prices or a promise of savings for a particular vehicle.

For your budget, compare maintenance schedules over the same period and mileage. Include tires, inspections, fluids, and other services that remain applicable. Do not treat reduced scheduled maintenance as eliminating repairs or out-of-warranty battery expenses; AFDC notes that battery replacement outside warranty can be a significant expense.

Keep Driver Payments Separate From Charging-Site Costs

A driver paying a public charging operator should count the receipt total—not add the operator’s utility demand charge again.

A facility manager operating chargers must evaluate the underlying utility bill. Relevant costs can include energy, demand or capacity-based charges, networking, and charger maintenance. AFDC notes that DC fast charging is more likely than Level 1 or Level 2 charging to trigger demand charges.

The tariff determines the calculation. For example, PG&E’s California business EV plans combine time-of-use energy charges with a kW subscription that replaces traditional demand charges; they are not simply residential energy rates applied to larger chargers.

Keep the units distinct: kW measures power, while kWh measures energy. A charger’s nameplate kW does not tell you the monthly energy purchased or the complete bill.

Charging-Cost Self-Check

• I used my local utility tariff and actual public station prices.
• I recorded the applicable region, rate plan, and date.
• I weighted charging shares by billed kWh, not session count.
• I confirmed whether consumption is wall-based or battery-side.
• I did not add charging losses twice.
• I included applicable subscriptions, taxes, session, parking, and idle fees.
• I compared gasoline using the correct fuel grade and realistic mpg.
• I kept maintenance savings separate from charging savings.
• I evaluated whole-house bill changes before switching utility plans.
• I separated recurring charging costs from charger installation and vehicle ownership costs.

If the decision includes installing home charging, add equipment, installation, and any required electrical work separately. A running-cost calculation is not an installation quote, a performance guarantee, or a substitute for NEC requirements, local AHJ approval, manufacturer instructions, or qualified on-site judgment.

Commercial Demand Charges Explained: Peak kW, Billing Rules, and Costs in 2026

Commercial demand charges bill your business for electrical capacity used during a defined measurement interval, not just the total energy consumed. Reducing monthly kWh does not necessarily reduce this charge: savings depend on lowering the demand your tariff actually bills. Before buying equipment, separate energy, demand, and fixed charges, then check the demand interval, time-of-use rules, and any historical-demand floor.

Commercial Bill Components and the First Cost to Investigate

These distinctions appear in utility billing rules: PG&E explains demand using the highest 15-minute interval, while Dominion Energy South Carolina publishes tariffs with kW-based demand, kVA-based demand, additional fees, and historical-demand floors. They are examples of different structures, not interchangeable national rules.

Start with the largest controllable cost, rather than assuming demand is always the best target. Calculate demand’s share of current electric-service charges, then estimate how much billed demand can actually fall. A large demand charge deserves investigation, but a binding ratchet or contract minimum can make an energy-efficiency measure more valuable in the near term.

How Demand Charges Differ From Energy Charges

A kilowatt, or kW, measures power. A kilowatt-hour, or kWh, measures energy accumulated over time. Running a 40 kW load continuously for one hour consumes 40 kWh; running it for 15 minutes consumes 10 kWh.

For an interval-energy record:

[\text{Average interval demand (kW)}
=
\frac{\text{Interval energy (kWh)}}{\text{Interval duration (hours)}}]

For a 15-minute interval:

[\text{Average demand}
=
\frac{10\text{ kWh}}{0.25\text{ h}}
=
40\text{ kW}]

The relevant peak is generally an interval average, not a momentary reading. PG&E’s business explanation uses the highest 15-minute interval in the billing month. Dominion’s Rate 23 also uses integrated 15-minute demand and allows a rolling interval, so a simple spreadsheet of fixed quarter-hour blocks may not reproduce every meter’s peak exactly.

The central distinction is billing demand: the quantity to which the demand rate applies. It can differ from the current measured peak because of historical ratchets, contract demand, minimum demand, or power-factor adjustments.

For a simple tariff:

[\text{Demand charge}
=
\text{Billing demand (kW)}
\times
\text{Demand rate (USD/kW)}]

For a tariff with multiple demand components:

[\text{Total demand charges}
=
\sum_j
\left(
\text{Billing demand}_j
\times
\text{Demand rate}_j
\right)]

Calculate each component separately. Dominion’s Rate 21, for example, has distinct on-peak and off-peak billing-demand rules and charges demand in kVA rather than kW.

Parameters to Verify Against Your Local Tariff

The following official examples were checked on October 12, 2026. They illustrate what to extract from a tariff; they are not rates to apply outside the named utility service territory.

The rates, effective dates, and conditions above come from the respective official schedules. Both schedules also provide for applicable taxes and other conditions; Rate 23 includes a qualifying high-voltage discount and a power-factor adjustment. The table is therefore not a complete bill quote.

Open the official Rate 23 tariff or official Rate 21 tariff only when the account is in that utility’s South Carolina territory. For PG&E customers in California, use the official tariff directory and match the exact schedule shown on the bill.

National electricity averages cannot supply these missing tariff details. EIA calculates average retail revenue per kWh as a proxy for prices; that statistic is not an account-specific energy rate or demand rate. Use national averages only as a starting reference, never as a substitute for local billing terms.

Calculate Load Factor Without Treating It as a Waste Score

Load factor compares average demand with peak demand over the same period. DOE describes the general relationship as average demand divided by peak demand.

For a monthly, whole-site measured-demand calculation:

[\text{Load factor}
=
\frac{\text{Monthly energy (kWh)}}
{\text{Measured monthly peak (kW)}\times\text{Billing-period hours}}
\times100%]

Use the actual billing-period duration, not automatically 30 days. For this diagnostic, use the measured peak rather than a ratcheted billing-demand floor, and state which peak definition you used.

A low result means average use is small relative to peak use. It does not, by itself, establish waste: limited operating hours, seasonal activity, and legitimate intermittent processes can create that relationship.

Do not treat “demand exceeds one-third of the bill” or “load factor is below 30%” as universal utility thresholds. Use the bill share to prioritize investigation and interval data to determine whether peaks are avoidable. A tariff’s eligibility load-factor calculation may also differ from this whole-month diagnostic; Rate 23 explicitly bases its eligibility test on on-peak CP demand.

Hand Calculation: Lower Peak Demand With the Same Monthly kWh

This hypothetical U.S. commercial-account example uses assumed USD rates for teaching. It is not a utility tariff, national benchmark, or projected bill for a particular location.

Inputs and Assumptions

Calculation Steps

1. Convert the original peak interval into demand.

[
P_{\text{before}}
=
\frac{20\text{ kWh}}{0.25\text{ h}}
=
80\text{ kW}
]

2. Calculate the energy charge.

[
C_E
=
12{,}000\text{ kWh}\times0.10\text{ USD/kWh}
=
\text{USD }1{,}200
]

3. Calculate the original demand charge and modeled bill.

[
C_{D,\text{before}}
=
80\text{ kW}\times20.00\text{ USD/kW}
=
\text{USD }1{,}600
]

[
C_{\text{before}}
=
1{,}200+1{,}600+100
=
\text{USD }2{,}900
]

4. Calculate demand’s share and the original load factor.

[\text{Demand share}
=
\frac{1{,}600}{2{,}900}\times100%
=
55.2%]

[\text{Load factor}
=
\frac{12{,}000}{80\times720}\times100%
=
20.8%]

5. Calculate the proposed peak and revised bill.

[
P_{\text{after}}
=
\frac{15\text{ kWh}}{0.25\text{ h}}
=
60\text{ kW}
]

[
C_{\text{after}}
=
1{,}200+(60\times20)+100
=
\text{USD }2{,}500
]

6. Calculate the modeled savings.

[
\Delta C
=
2{,}900-2{,}500
=
\text{USD }400
]

The modeled reduction is USD 400 for this billing period, or 13.8% of the original modeled bill. Energy use stays at 12,000 kWh; the savings come entirely from reducing billed demand by 20 kW.

This result requires every applicable demand interval to remain at or below 60 kW. Lowering the original peak is insufficient if another interval becomes the new 80 kW maximum. A ratchet, additional demand component, or changed energy rate would require recalculation.

Use the commercial electric bill calculator to check the arithmetic with your own inputs, while applying any tariff provisions separately if the tool does not model them.

How Demand Ratchets Limit Immediate Savings

A demand ratchet sets a billing floor using a previous peak. Reducing current measured demand only saves money to the extent that the billable quantity also falls.

Under Dominion Energy South Carolina Rate 23, billing demand is the greatest of:

• Current-month integrated 15-minute demand.
• 80% of the highest May–September demand within the preceding 11 months.
• 60% of the highest October–April demand within the preceding 11 months.
• Contract demand.
• 1,000 kW.

Consider a hypothetical account using these published rules. Assume a qualifying historical summer peak of 1,500 kW, a current peak of 1,100 kW, a 1,000 kW contract demand, and no higher winter-derived floor or applicable adjustment.

[\text{Summer ratchet floor}
=
1{,}500\times0.80
=
1{,}200\text{ kW}]

[\text{Billing demand}
=
\max(1{,}100,\ 1{,}200,\ 1{,}000,\ 1{,}000)
=
1{,}200\text{ kW}]

At the published USD 18.42/kW rate:

[
C_D
=
1{,}200\times18.42
=
\text{USD }22{,}104
]

Reducing the current peak from 1,100 to 1,000 kW produces no immediate reduction in this demand charge because the 1,200 kW floor still controls. However, avoiding a new historical peak can matter for later billing periods. Track when the controlling peak leaves the tariff’s look-back window rather than assuming the floor resets next month.

A tariff rate expressed in USD/kVA is not interchangeable with USD/kW. Likewise, an off-peak energy price does not guarantee that shifting equipment operation will reduce every demand charge. Check the units and each billing-demand rule before calculating savings.

Get Interval Data Before Selecting a Solution

Equipment nameplates do not establish the whole-site peak. Actual operating load, overlap between equipment, and timing determine the measured result; DOE’s demand-analysis guidance distinguishes nameplate capacity, operating demand, diversity, and coincidence.

1. Obtain the account’s tariff and sufficient billing history to cover its ratchet look-back period.
2. Request interval data at the billing-demand resolution—15 minutes where that is the applicable interval.
3. Confirm whether the export contains interval kWh, average kW, or kVA, and document timestamps, time zone, and missing records.
4. Reproduce the current measured peak and compare it with billed demand.
5. Review the largest intervals alongside operating schedules to identify overlapping loads.
6. Model the proposed change across all relevant intervals and billing components, then verify performance after implementation.

Interval records reveal the load pattern at a finer resolution than monthly totals. They help distinguish a short scheduling overlap from a long operating plateau—two cases that may need different solutions.

Compare Peak-Reduction Options Against the Billing Rule

Use these as screening options, not guaranteed savings measures. Their value depends on interval timing, the billing-demand calculation, and the applicable rate structure. PG&E encourages avoiding simultaneous equipment use and comparing available rate plans; Dominion’s published schedules demonstrate why demand units and power-factor rules also matter.

Start with an operational trial when timing flexibility allows it, then compare measured billed-demand reductions against implementation costs. For equipment-based projects, include installation, maintenance, operating effects, and all applicable tariff constraints before committing capital.

Commercial Demand Charge Review Checklist

• Match the bill’s schedule code to the official tariff and effective date.
• Separate energy, demand, fixed charges, riders, taxes, and credits.
• Confirm whether demand is measured and billed in kW or kVA.
• Identify the demand interval, rolling-window rules, and billed time periods.
• Reconcile measured peak demand with billing demand.
• Check historical ratchets, contract demand, minimums, and power-factor provisions.
• Calculate load factor using a clearly stated peak definition and billing duration.
• Verify that a proposed change lowers the controlling billed quantity.
• Check for a replacement peak or an increase in another charge.
• Confirm savings with subsequent interval records and bills.

These checks follow the differences documented in the utility schedules, rather than assuming that all commercial accounts use one monthly kW peak.

Bill analysis estimates financial effects; it does not establish electrical capacity, code compliance, permit approval, or equipment suitability. Any controls or electrical modifications require appropriate professional review and must preserve protection, required operating conditions, and manufacturer instructions.

How to Read Your Electric Bill: Check Usage, Rates, and Charges (2026)

The amount due tells you what to pay, but the current electric charges tell you what this billing period’s electricity service cost. To understand that cost, match your billed kilowatt-hours to the correct rate schedule, then account for fixed charges, applicable demand charges, taxes, and credits. Keep previous balances and payments separate: they affect the amount due without necessarily changing this period’s electricity cost.

Electric Bill Numbers and What They Tell You

Names and layout vary by utility. PG&E’s official bill guide, for example, distinguishes the account summary from “Details of Electric Charges,” identifies the rate plan and billing dates, and explains customer charges, demand charges, taxes, and credits. Its terminology is specific to its California service territory—not a nationwide billing standard.

Find Your Billing Period and kWh First

Look in the electric-service detail section for “Electricity Usage,” “Energy Used,” “Consumption,” or a similar label. Record the billing start date, end date, number of days, and total kWh together. PG&E places this information alongside the rate plan and meter details in its electric-charge section.

A kilowatt-hour measures energy; a kilowatt measures power. On an electric bill, kWh supports energy charges, while billed kW supports a demand charge when your rate includes one. Do not enter a demand value into a calculator field asking for monthly energy consumption.

When your bill shows cumulative meter readings and a meter constant, the basic check is:

[\text{Energy used (kWh)}
=
(\text{ending reading}-\text{starting reading})
\times \text{meter constant}]

PG&E defines its electric meter constant as the factor that converts the difference between meter readings into kWh. Use the constant shown for your meter rather than assuming every meter uses the same factor.

Compare 12 Months Without Confusing Usage and Price

Use your usage history to distinguish seasonal changes from continuing consumption. Weather can increase cooling or heating loads, while rate changes can increase charges even when consumption stays similar. PG&E’s bill guide includes billing-history and usage information and identifies weather and rate changes as reasons bills can change.

For your own comparison worksheet:

1. Record each billing period’s kWh and number of days.

1. Calculate average daily consumption:

   [\text{kWh/day}=\frac{\text{billing-period kWh}}{\text{billing days}}]

3. Compare the same season across years, not just adjacent months.

1. Note changes in occupancy, operating hours, heating, cooling, or EV charging.
2. Compare electric charges separately to see whether usage, pricing, or both changed.

For a hypothetical comparison, 900 kWh over 30 days and 990 kWh over 33 days both equal 30 kWh/day. The second period uses more total energy, but its daily consumption is unchanged.

Lower-use months can help identify a starting estimate of continuing consumption. They do not isolate a measured electrical base load: equipment schedules and weather may still differ.

Match the Bill to the Correct Rate Schedule

Find the rate-plan name or code printed on your bill, then open the utility’s official tariff or rate schedule. Copy the rates and conditions that applied during the billed service dates—not simply the rates displayed today.

PG&E provides both official tariffs and current and historical electric-rate information. These are California-specific examples of the documents to locate for your own utility. Historical schedules matter when checking a bill issued before a rate change.

Record:

• Energy rates and their units.
• Tier thresholds or baseline allowances.
• Peak, partial-peak, and off-peak definitions.
• Seasonal dates and applicable day types.
• Fixed charges, riders, and tax rules.
• Demand-charge provisions, if your schedule includes them.

Do not copy a remembered price or a promotional headline into the calculation. Your billed schedule and its effective dates determine which inputs apply.

Flat, Tiered, and Time-of-Use Billing

PG&E distinguishes tiered plans based on how much electricity you use from TOU plans based on when you use it. Some plans combine time-based pricing with other provisions, so these categories are not always mutually exclusive.

For a hypothetical tiered calculation, assume 800 kWh, a first tier of 500 kWh at USD 0.12/kWh, and remaining consumption at USD 0.18/kWh:

[
C_{\text{energy}}
=
(500\times0.12)+(300\times0.18)
=
\text{USD }114.00
]

Only the 300 kWh above the assumed threshold receives the higher rate. This example assumes an incremental tier structure; check the actual tariff before applying that method.

For a hypothetical TOU calculation, assume 600 off-peak kWh at USD 0.12/kWh and 200 peak kWh at USD 0.24/kWh:

[
C_{\text{energy}}
=
(600\times0.12)+(200\times0.24)
=
\text{USD }120.00
]

Under those assumptions, moving 100 kWh from peak to off-peak reduces energy charges by:

[100\times(0.24-0.12)=\text{USD }12.00]

That is an energy-charge comparison, not a guaranteed reduction in the complete bill. Fixed charges and other tariff provisions still need to be included.

Check Commercial Demand Charges Separately

If the statement includes a demand charge, record billed demand in kW and the applicable USD/kW rate. PG&E describes demand charges as common in nonresidential schedules and defines measured demand using a specified interval within the billing cycle. Its guide cites 15-minute and, in some cases, 5-minute intervals; your utility’s tariff controls the actual measurement.

A simple demand-charge calculation is:

[
C_{\text{demand}}
=
D_{\text{billed}}\times r_{\text{demand}}
]

For a hypothetical billed demand of 20 kW at USD 15.00/kW:

[20\times15.00=\text{USD }300.00]

Use the tariff-defined billed demand, not monthly kWh or the sum of equipment nameplate ratings. If the schedule contains additional demand provisions, reproduce those rules before treating the calculation as a bill reconciliation.

Separate Supply, Delivery, Fixed Charges, and Adjustments

An electric bill can show generation or supply separately from delivery. Generation pays for electricity production or procurement; delivery covers the infrastructure and service needed to bring electricity to the customer. PG&E also identifies fixed customer charges and several taxes, fees, and credits.

Read each charge according to its billing basis:

• A USD/kWh charge changes with the applicable energy quantity.
• A USD/kW charge changes with billed demand.
• A daily charge changes with billing days.
• A monthly fixed charge follows the schedule’s monthly or proration rules.
• A percentage charge requires the correct taxable or chargeable base.

Before adding supply and delivery rates, confirm that both are separate, applicable charges. Do not add a component rate to an all-inclusive rate that already contains that component.

A separate supplier line does not automatically mean duplicate generation billing. For customers served by MCE in California, MCE explains that its generation charge replaces PG&E’s generation charge, while PG&E continues charging for delivery. Read the associated credits and adjustments before adding every displayed line as a new cost.

Budget billing creates another distinction between service cost and payment amount. Duke Energy describes budget billing as a payment arrangement that makes monthly payments more predictable; its business plans show how payments can differ from actual usage costs and later require adjustments or settlement. Read the plan’s balance and reconciliation information rather than treating the scheduled payment as the month’s measured electricity cost.

Recalculate One Billing Period by Hand

The following is a hypothetical U.S. residential example in USD. It is not an actual customer bill, utility tariff, or national benchmark.

Assume a 30-day billing period with flat energy pricing. Supply and delivery are separate charges, the customer charge applies once, and there is no demand charge, minimum-bill adjustment, solar settlement, or budget-billing arrangement. The assumed tax applies to the subtotal before the credit.

Example Inputs and Billing Conditions

Calculation Steps

1. Calculate supply charges:

[C_s=E\times r_s=800\times0.1400=\text{USD }112.00]

2. Calculate delivery charges:

[C_d=E\times r_d=800\times0.0300=\text{USD }24.00]

3. Calculate the rider:

[C_a=E\times r_a=800\times0.0025=\text{USD }2.00]

4. Add the fixed customer charge:

[
C_{\text{pretax}}
=
112.00+24.00+2.00+12.00
=
\text{USD }150.00
]

5. Calculate tax using the assumed tax base:

[T=150.00\times0.04=\text{USD }6.00]

6. Subtract the current-period credit:

[
C_{\text{current}}
=
150.00+6.00-5.00
=
\text{USD }151.00
]

7. Reconcile the account balance:

[
A_{\text{due}}
=
C_{\text{current}}+B-P
=
151.00+40.00-25.00
=
\text{USD }166.00
]

The current electric-service cost is USD 151.00, while the amount due is USD 166.00. The USD 15.00 difference comes from the remaining previous balance, not additional electricity consumed this period.

For a calculator cross-check, use the Electricity Bill Calculator with the applicable inputs. Any tariff component the calculator does not represent must remain in your separate worksheet. A calculation is not a replacement for the utility’s billing rules or an official billing determination.

Distinguish the Effective Price From the Energy Rate

For this example, the current-period effective price is:

[
r_{\text{effective}}
=
\frac{C_{\text{current}}}{E}
=
\frac{151.00}{800}
=
\text{USD }0.18875/\text{kWh}
]

That equals 18.875 cents/kWh and includes the example’s fixed charge, rider, tax, and credit. It is not the supply rate of USD 0.14/kWh, and it is not automatically the price of the next kWh.

Do not use USD 166.00 as the numerator when measuring this period’s electricity cost: it includes money owed from an earlier period.

Use EIA Averages as Context, Not as Your Tariff

As of October 12, 2026, EIA’s latest Electric Power Monthly release covers July 2026 and was published September 24, 2026. These are monthly observations, not a full-year 2026 average.

EIA reports these sector averages in its July 2026 electricity update. They are reference starting points, not the actual prices available at a particular address.

For state comparisons, use EIA Electric Power Monthly Table 5.6.A, and read the month and year printed in the table before copying a figure. Compare the matching residential or commercial sector.

EIA calculates average retail prices from electricity-sales revenue divided by electricity sold. It explicitly states that these published prices are not utility rates and include delivered-electricity costs such as generation, transmission, distribution, taxes, and fees. Do not substitute an EIA average for your tariff’s energy rate and then add delivery and fees again.

Reconcile the Bill and Investigate Unexplained Differences

Use the utility’s official bill guide as a visual reference when locating statement sections. PG&E’s annotated bill explanation, for example, maps the account summary, electric-charge details, meter information, and usage history. Other utilities may arrange those items differently.

Reconcile each applicable line rather than accepting an unexplained difference of “a few dollars.” In the worked example, USD 151.00 and USD 166.00 are both correct, but they answer different questions.

Bill-Checking Checklist

• Confirm the service address, electric meter, and rate-plan code.
• Record the billing dates and number of days.
• Match total kWh to the electric-service detail section.
• Check that tier or TOU quantities add up to the billed total.
• Copy rates from the schedule effective during the service period.
• Convert cents/kWh to USD/kWh before calculating.
• Include each applicable fixed charge, rider, and demand charge once.
• Apply taxes to the correct base and credits in the correct place.
• Separate current electric charges from prior balances and payments.
• Check payment-plan or solar-settlement provisions if they apply.
• Record any remaining difference and identify the specific line causing it.

For a mismatch, work backward through quantities, units, dates, and charge bases. Preserve the statement and the applicable tariff, then ask the utility to explain the disputed line if your calculation still does not reconcile. The purpose is to identify what changed and reproduce the charge—not to treat an approximate estimate as proof that the bill is correct.

Time-of-Use Rates Without the Confusion: A 2026 Guide

Time-of-use rates can make electricity cheaper—or make your bill higher—depending on when you use energy and what the plan charges during each period. The useful comparison is your total bill under each available plan, not the lowest advertised off-peak price. Start with your utility’s exact schedule and your metered usage, then calculate whether realistic load shifting changes the result. Utility plans can differ by season, weekday, baseline allowance, and switching restrictions.

Time-of-Use Plan Comparison: What Determines Whether You Save

There is no universal rule that a household should reject TOU whenever peak usage exceeds 50%. The break-even share depends on the actual rate spread, other time periods, and differences in charges. A narrower peak window also does not automatically mean a cheaper plan: the rate inside that window may be higher.

Copy the Exact Time Windows Before Comparing Prices

“Peak,” “shoulder,” “partial-peak,” and “mid-peak” are tariff labels, not standardized national time periods. Use the utility’s names and boundaries rather than forcing every plan into the same three buckets. PG&E and Southern California Edison illustrate why even neighboring California service territories require separate schedules.

Official Schedule and Rate References Checked October 12, 2026

The following are California utility examples, not nationwide defaults. SCE prices are the rounded USD equivalents of prices displayed on its residential plan page when checked; they are not presented as a separately verified tariff effective-date record. SCE states that these displayed prices cover customers receiving both generation and delivery from SCE. Customers with another generation provider must use their applicable charges.

Schedule sources: PG&E’s residential TOU page and SCE’s residential TOU page. Rate and charge source: SCE’s residential TOU page, checked October 12, 2026.

These differences matter in practice. A Saturday evening is still peak on PG&E E-TOU-C, while SCE TOU-D-4-9PM assigns summer weekend evenings to mid-peak. SCE’s winter schedule also makes daytime hours cheaper than overnight hours on that plan, so “always run it after midnight” is not a reliable instruction.

Use the PG&E TOU plan page or SCE TOU plan page as an entry point, then check the applicable tariff and account details. For SCE, the official tariff book states that tariffs prevail if explanatory material differs from them.

National averages and typical rates are only starting references. They do not establish your local TOU prices, baseline allocation, or account charges.

Estimate Usage Shares From Energy, Not Hours

A five-hour peak window occupies about 21% of a day, but that does not mean it contains 21% of your electricity use. Evening cooking, cooling, and charging can concentrate substantial energy inside that window.

For each period:

[s_i=\frac{E_i}{E_{\text{total}}}]

Here, (E_i) is metered energy in that period, in kWh, and (s_i) is its fraction of total energy. For a three-period plan:

[
s_{\text{peak}}+s_{\text{shoulder}}+s_{\text{off}}=1
]

Therefore:

[
s_{\text{off}}=1-s_{\text{peak}}-s_{\text{shoulder}}
]

Peak plus shoulder cannot exceed 100%, and every interval must appear exactly once. If the tariff has a fourth period, add it rather than combining differently priced periods without calculating their weighted rate.

Build a Reproducible Comparison

1. Identify the current and proposed rate-plan codes, applicable prices, seasonal boundaries, and billing dates.
2. Download available interval usage from your utility account, preferably covering a full year.
3. Match the meter’s timestamp convention to the tariff’s time boundaries and holiday rules.
4. Total the kWh assigned to each period and verify that the totals match the billing-period energy.
5. Price the same usage under both plans, including tiers, credits, fixed charges, and applicable demand charges.
6. Recalculate a second scenario using only load shifts you can realistically maintain.

A full-year comparison captures both seasonal prices and seasonal usage. SCE’s comparison tool uses historical usage to estimate alternative-plan costs, but a future EV purchase or changed work schedule can make that history less representative. Model those changes separately instead of assuming the historical estimate already includes them.

Calculate the Bill Before Changing Plans

For a simplified TOU plan with constant prices within each period:

[
B_{\text{TOU}}=\sum_i E_i r_i+F_{\text{TOU}}+D_{\text{TOU}}+A_{\text{TOU}}-C_{\text{TOU}}
]

Where:

• (E_i): energy in period (i), kWh.
• (r_i): applicable energy price, USD/kWh.
• (F): fixed charges, USD.
• (D): demand charges, USD, if applicable.
• (A): other applicable charges and taxes, USD.
• (C): credits, USD.

If prices change by season, tier, or effective date, calculate those portions separately. If the current plan is tiered, price each tier instead of multiplying all usage by one advertised rate.

Avoid double-counting: when an energy price already includes delivery and generation, do not add those components again. SCE’s displayed residential TOU prices explicitly describe their generation-and-delivery scope.

Worked Example: Switching Is More Expensive Until Usage Moves

This is a hypothetical U.S. residential example in USD, not a utility quote or an official benchmark. It assumes one monthly rate schedule, unchanged total energy, no demand charges, and no taxes or credits. Both plans have the same fixed charge.

1. Calculate the current flat-plan bill:

[
B_{\text{flat}}=(900\times0.20)+15
=\text{USD }195.00
]

2. Convert the initial TOU shares into energy:

[
E_{\text{peak}}=900\times0.30=270\text{ kWh}
]

[
E_{\text{shoulder}}=900\times0.20=180\text{ kWh}
]

[
E_{\text{off}}=900\times0.50=450\text{ kWh}
]

3. Calculate the TOU bill without changing behavior:

[
B_{\text{TOU}}=(270\times0.40)+(180\times0.22)
+(450\times0.12)+15
]

[
B_{\text{TOU}}=108+39.60+54+15
=\text{USD }216.60
]

Switching alone increases the monthly bill by USD 21.60.

4. Move 90 kWh from peak to off-peak and calculate again:

Peak becomes 180 kWh, shoulder remains 180 kWh, and off-peak becomes 540 kWh.

[
B_{\text{shifted}}=(180\times0.40)+(180\times0.22)
+(540\times0.12)+15
=\text{USD }191.40
]

The shift saves USD 25.20 relative to unchanged TOU behavior, but only USD 3.60 relative to the existing flat plan. That small margin is the decision-relevant result; it depends on maintaining the assumed schedule.

Calculate the Peak-Usage Threshold

For a three-period plan, with shoulder share (q), peak share (p), equal fixed charges, and no other bill differences:

[
r_{\text{flat}}
=p r_{\text{peak}}+q r_{\text{shoulder}}
+(1-p-q)r_{\text{off}}
]

Solving for the peak share:

[
p_{\text{break-even}}
=\frac{r_{\text{flat}}-r_{\text{off}}
-q(r_{\text{shoulder}}-r_{\text{off}})}
{r_{\text{peak}}-r_{\text{off}}}
]

For this example, holding shoulder usage at 20%:

[
p_{\text{break-even}}
=\frac{0.20-0.12-0.20(0.22-0.12)}{0.40-0.12}
=\frac{0.06}{0.28}
\approx21.43%
]

TOU becomes cheaper below about 21.43% peak usage under these assumptions—not below an arbitrary 50% threshold. Different prices or bill components change that threshold.

Shift Realistic Loads Before Committing

Start with discretionary loads whose timing can change without disrupting essential service: EV charging, dishwasher cycles, or laundry scheduled according to appliance instructions. PG&E and SCE both identify moving usage outside expensive periods as a way to reduce TOU energy costs.

For unchanged metered energy moved between two periods:

[\text{Energy-charge saving}
=E_{\text{shifted}}(r_{\text{old}}-r_{\text{new}})]

In the example:

[90(0.40-0.12)=\text{USD }25.20]

This calculation assumes the shift does not increase consumption. For EV charging, use meter-side kWh rather than only energy added to the battery. If a schedule change alters energy use, compare the actual before-and-after quantities instead.

The TOU comparison calculator can support this comparison; keep the tariff, inputs, and hand calculation alongside the result.

A 12-month commitment is not a 12-month price lock. SCE says switching can involve a 12-month commitment, with some plan-specific exceptions. Confirm both the switching restriction and any separate price-guarantee terms before enrollment.

Include Demand Charges on Commercial Accounts

Commercial customers must distinguish energy from demand. Energy charges use kWh; demand charges use kW and may apply to both the billing-period maximum and the maximum within a specified TOU period. SCE lists these as separate bill components.

Moving equipment operation to off-peak can reduce energy charges without reducing the overall maximum demand. Starting several large loads together can also create a new demand peak. Evaluate simultaneous operation and the tariff’s measurement rules, not just the monthly percentage of off-peak kWh.

For each applicable demand component:

[
D_j=P_{\text{billed},j}d_j
]

Here, (P_{\text{billed},j}) is billed demand in kW and (d_j) is its rate in USD/kW. Use the tariff’s definition of billed demand; do not derive it from monthly kWh alone.

Verify the Plan Before Enrollment

Use your utility’s account-specific comparison and current tariff to check the estimate. SCE’s rate-plan comparison tool estimates alternatives from past usage and identifies applicable commitment periods.

• Confirm the exact plan code, service territory, and eligibility.
• Record the tariff effective date and applicable billing period.
• Check weekday, weekend, holiday, and seasonal time windows.
• Verify that period shares total 100% and period kWh match metered usage.
• Include fixed charges, baseline credits, tiers, and applicable taxes.
• Confirm whether prices include both generation and delivery.
• Include demand charges wherever the account tariff requires them.
• Compare unchanged behavior with a realistic load-shifting scenario.
• Test seasonal results rather than annualizing one favorable month.
• Confirm switching restrictions separately from any price guarantee.

Treat the result as a bill estimate, not a guaranteed saving or an electrical installation approval. Changing operating schedules does not authorize equipment modifications or replace applicable NEC requirements, local AHJ rules, manufacturer instructions, or professional site assessment.