How to Lower Your Electric Bill

Start with your own bill

Every number in this guide is built the same way: kWh saved per year × your price per kWh. So first find those two numbers. Your bill shows the kWh you used this month; most utilities also show the last 12 months. Divide the total charge by the kWh to get your all-in price, taxes and fees included.

For reference, the EIA puts the average U.S. home at 863 kWh a month (2024 data), and the average residential price was 18.16 cents per kWh in August 2026. That makes the yardstick for this guide 10,356 kWh and about $1,881 a year. Your home may use half that or double it.

Next, find where the power goes. In the EIA's 2020 survey of U.S. homes, air conditioning was 19% of household electricity, space heating 12% and water heating 12%. Refrigerators and lighting came next. That is why the biggest savings below are about heating, cooling and hot water, and why tips about phone chargers barely move the bill.

The changes, ranked by dollars a year

Savings below are for a typical home at 18.16 cents per kWh. Where a change only applies to some homes (electric heat, an electric water heater), the line says so. Each one is explained further down with the math.

Free changes

Set the thermostat back

The Department of Energy's long-standing advice is to set the thermostat back 7 to 10°F for 8 hours a day, while you sleep or are at work, for savings of up to 10% a year on heating and cooling. The math: heating and cooling are 1,968 + 1,243 = 3,211 kWh in the average home. 10% is 321 kWh × $0.1816 = about $58 a year. In an all-electric home in a cold state, the same habit can be worth several times that. ENERGY STAR says homes with high heating and cooling bills, or that sit empty much of the day, can save about $100 a year with a certified smart thermostat, which does the setback for you.

One exception: with a heat pump, use smaller setbacks. A big recovery on a cold morning can trigger the backup electric strips, which cost three times as much to run.

Pull the plug on the second fridge

ENERGY STAR says a refrigerator over 15 years old can cost about $95 a year to run. If yours is a spare in the garage holding a few drinks, unplugging it saves the whole amount. Many utilities pick up old fridges free, and some pay you for it.

Air-dry some laundry

An electric dryer drawing about 3,000 watts for an hour, 12 loads a month, uses 432 kWh a year, or $78. Air-drying half the loads saves about $39. Clean the lint filter every load; a clogged filter makes every load take longer.

Turn the water heater down to 120°F

Many tanks ship at 140°F. Setting them to 120°F, the common recommendation, also lowers the scald risk. The saving comes from less heat leaking out of the tank, not from the hot water you use, so it is modest. The Department of Energy says a tank set at 140°F can waste $36 to $61 a year in standby heat loss; turning it down to 120°F cuts part of that. Our estimate for a 50-gallon electric tank is about 100 kWh, or $15 to $20 a year. Do not go lower than 120°F, and keep it higher if the dishwasher has no heater of its own and the manual asks for hotter water.

Time-of-use plans: free, but only if you can shift

On a time-of-use (TOU) plan, power costs more during peak hours, often late afternoon and early evening, and less at night. It is free to switch, but it only pays if you can move big loads out of the peak window. If you run the AC hard from 4 to 9 p.m. and can't change that, a TOU plan can raise your bill.

The math: savings = kWh moved × (peak price − off-peak price). As an example, if your utility's gap is 15 cents:

• Moving the dryer, dishwasher and pool pump, about 100 kWh a month, saves 100 × $0.15 × 12 = $180 a year.
• Charging an electric car at night, about 300 kWh a month, saves $540 a year. See your numbers in the EV charging cost calculator.

Look up the actual peak hours and prices on your utility's rate page, and compare 12 months of your usage under both plans. Many utilities have an online rate comparison tool that does it for you.

Cheap fixes under $100

Low-flow showerheads

Federal law caps showerheads at 2.5 gallons per minute; WaterSense models use 2.0 or less. For four people taking 8-minute showers, that cuts 16 gallons of shower water a day. About 70% of a 105°F shower comes from the water heater, so that is 11.2 gallons of hot water a day, or 2.3 million Btu a year. With an electric tank (UEF 0.92) that is 729 kWh, about $132 a year, plus the water bill. With a basic gas tank it is about $58 in gas.

LED bulbs

A 9-watt LED gives the same light as a 60-watt incandescent. Each bulb you swap saves 51 watts. At 3 hours a day that is 51 × 3 × 365 ÷ 1,000 = 56 kWh, about $10 a year per bulb, or $17 at 5 hours a day. Ten bulbs save about $100. Most homes have already switched the main lights, so count only the incandescent and halogen bulbs left, often in closets, lamps and outdoor fixtures.

Standby power

Lawrence Berkeley National Laboratory says always-on standby power adds up to 5 to 10% of home electricity use. In the average home that is 518 to 1,036 kWh, or $94 to $188 a year. Most modern devices draw under half a watt, so the savings come from a few big offenders: cable and satellite boxes, game consoles left in instant-on mode, old stereo gear, a spare TV, and anything that is warm to the touch when off. Put the TV corner on an advanced power strip and turn off instant-on modes. Cutting a third of the standby load saves about $31 to $63 a year, our estimate.

Seal the obvious air leaks

Caulk, foam and weatherstripping for gaps around windows, doors, plumbing holes and the attic hatch cost little. ENERGY STAR estimates that air sealing plus insulating attics, floors over crawl spaces and rim joists saves an average 15% on heating and cooling, or 11% of total energy costs, with more in the North and less in the South. Applied to the average home's 3,211 kWh of heating and cooling, 15% is 482 kWh, about $87 a year. With electric heat in a cold climate, it can be several hundred dollars.

Investments that pay back

A heat pump water heater

If you have an electric tank, this is usually the biggest single saving for its cost. On the federal test pattern of 55 gallons a day, a standard electric tank (UEF 0.92) uses about 3,570 kWh a year, or $649. An ENERGY STAR heat pump water heater (UEF 3.30) uses about 1,000 kWh, or $181. That is about $470 a year, and more for big families. Installed cost runs $2,000 to $4,600 against $600 to $3,100 for a standard tank, so when the old tank fails, the extra cost often pays back in about 2 to 4 years. It needs a space between 40°F and 90°F with room around it. The tankless vs. tank guide covers the details.

Replace electric resistance heat with a heat pump

Baseboard heaters and electric furnaces turn 1 kWh into 1 kWh of heat. A heat pump with a seasonal COP of 2.5 turns 1 kWh into 2.5. Example: a home that uses 6,000 kWh a year for baseboard heat would use 6,000 ÷ 2.5 = 2,400 kWh with a heat pump, saving 3,600 kWh, or about $650 a year, and it gains efficient air conditioning too. A single-zone ductless mini-split starts around $5,400 installed. Read heat pump vs. furnace for the full cost math by fuel and climate.

Appliances, when they die

Replacing a working appliance just to save power rarely pays. Replace it with an efficient one when it fails. ENERGY STAR certified refrigerators use about 9% less energy than the federal minimum. A heat pump clothes dryer uses about 70% less energy than a conventional one, which on the 432 kWh a year above is about $55.

Solar panels

Solar does not lower how much power you use, but it can lower what you buy. It works best after the cheaper fixes above, so you don't pay for panels to run waste. Check your state's payoff with the solar payback calculator.

What doesn't save much

• Unplugging phone chargers. A modern charger with nothing attached draws a fraction of a watt: pennies a year.
• Plug-in "power saver" boxes that claim to cut your bill by correcting power factor. Homes are billed for real energy, and these devices do not reduce it.
• Ceiling fans in empty rooms. Fans cool people, not rooms. A fan left running in an empty room only adds to the bill. With people in the room, a fan lets you raise the AC setting a few degrees.
• Closing vents in unused rooms on a central system. It can raise duct pressure and leakage instead of saving energy.
• Turning the AC off and on all day in a hot, humid climate, then cranking it down when you get home. A moderate setback works better than off.

Common mistakes

• Judging a change by one month's bill. Weather swings the bill more than most fixes. Compare the same month a year apart, in kWh, not dollars.
• Missing the big load. If your bill is far above average, look for electric heat, a well pump, a pool pump, a hot tub, a second fridge or a water heater you thought was gas.
• Upgrading equipment before sealing the house. Fix air leaks and insulation first; a tighter house needs a smaller, cheaper heat pump.
• Signing up for TOU without checking your usage. If most of your use falls in the peak window, the plan can cost more.

When to call a pro

Most free and cheap changes are DIY. Call a pro for: a home energy audit with a blower-door test, which finds hidden leaks that caulk can't reach; attic insulation if there is knob-and-tube wiring, vermiculite (which may contain asbestos) or no safe way to walk the attic; any new 240-volt circuit or panel work, which belongs to a licensed electrician; and heat pump or heat pump water heater installs, which need permits and, for the heat pump, an EPA 608-certified technician to handle refrigerant. Many utilities offer free or low-cost audits; ask yours first.

If you are sizing a window or central AC as part of an upgrade, start with the AC size calculator. An oversized unit costs more and dehumidifies worse.

Common questions

Sources

Prices and figures were checked in October 2026. Fuel and electricity prices change monthly; use your own bills for a decision.

• EIA, Electric Power Monthly, Table 5.6.A, U.S. residential average 18.16¢ per kWh, August 2026
• EIA, Electric Sales, Revenue, and Average Price, 2024 average use of 863 kWh a month per home
• EIA, Electricity use in homes, end-use shares from the 2020 Residential Energy Consumption Survey
• ENERGY STAR, Seal and Insulate savings methodology, 15% of heating and cooling, 11% of total, by climate zone
• ENERGY STAR, Heating and Cooling, about $100 a year with a certified smart thermostat in high-use homes
• ENERGY STAR, Refrigerators, fridges over 15 years old about $95 a year to run; certified models about 9% better than the federal minimum
• ENERGY STAR, Clothes Dryers, heat pump dryers use about 70% less energy
• ENERGY STAR, Heat Pump Water Heaters, installation space and temperature range
• ENERGY STAR, Residential Water Heaters criteria, heat pump water heaters UEF 3.30 or more
• DOE Energy Saver, Lower Water Heating Temperature (archived January 2, 2025; the page is no longer on energy.gov), $36 to $61 a year of standby loss at 140°F
• Lawrence Berkeley National Laboratory, Standby Power, 5 to 10% of residential electricity use
• EPA WaterSense, Showerheads, 2.5 GPM standard vs. 2.0 GPM WaterSense
• HomeGuide, water heater installation cost, updated January 2026
• Rewiring America, heat pump costs, single-zone ductless $5,400 to $8,500
• Thermostat setback: U.S. Department of Energy, Energy Saver, "Programmable Thermostats" (up to 10% a year on heating and cooling). DOE's Energy Saver pages were offline when we checked in October 2026.
• Water heater temperature, standby power and time-of-use figures marked as estimates or examples are our own arithmetic; check your utility's rate page for real peak prices.