Electricity Cost Formula

Electricity is billed in kilowatt-hours (kWh), where one kWh is 1,000 watts running for one hour. Calculating the cost of running an appliance is a two-step process: first convert watts and hours to kWh, then multiply by your utility rate. This page walks through the formula and shows how the three variables (wattage, duration, rate) each affect the total cost.

Formulas

Energy (kWh) = Watts × Hours ÷ 1000

Cost = kWh × Rate per kWh

Electricity is billed in kilowatt-hours (kWh). One kWh means 1,000 watts running for one hour. To find cost: multiply wattage by hours to get watt-hours, divide by 1,000 to get kWh, then multiply by your rate. The three variables (wattage, duration, rate) each affect cost linearly. Halving any one halves the cost.

Worked Examples

Example 1: 1500W heater for 8 hours at $0.17/kWh

kWh = 1500 × 8 ÷ 1000 = 12 kWh. Cost = 12 × $0.17 = $2.04/day

Example 2: 100W TV for 6 hours at $0.17/kWh

kWh = 100 × 6 ÷ 1000 = 0.6 kWh. Cost = 0.6 × $0.17 = $0.10/day

Example 3: Monthly cost of a 150W fridge (runs 24/7) at $0.17/kWh

kWh/day = 150 × 24 ÷ 1000 = 3.6. Monthly = 3.6 × 30 × $0.17 = $18.36

Common Mistakes

Confusing watts with kilowatts. Always divide by 1,000 before multiplying by rate.
Assuming appliances run at full rated wattage. A fridge cycles on and off, averaging much less than nameplate watts.
Ignoring time-of-use rates. Electricity can cost 2-3x more during peak hours.

Try the Calculator

Use the interactive Energy Cost Calculator for instant results with any values. Every result page shows the formula applied with your specific numbers.

All Formulas

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This is a formula reference page for educational use. Always consult a licensed electrician and verify compliance with the National Electrical Code (NEC) and local electrical codes before applying any of these formulas to real installations.

Data Sources & References

This page cites the following data sources for its rate and cost figures. Energy prices move with tariffs, fuel costs, and regulatory updates, so treat the cached values used on this site as point-in-time estimates and verify against the live source for the current figure.

EIA Electric Power Monthly. Monthly residential, commercial, and industrial electricity prices by US state. Source of the ~$0.17/kWh US national average residential figure used on this site (last reviewed April 2026). The EIA updates these figures monthly, so treat any cached value as a point-in-time estimate, not a live rate.
US Energy Information Administration. Reference →
Ofgem Energy Price Cap. UK retail energy price cap and typical domestic unit rates. Source of the ~£0.27/kWh UK average figure used on this site (last reviewed April 2026). Ofgem updates the cap quarterly; verify against the current cap for the exact figure.
Office of Gas and Electricity Markets (UK regulator). Reference →
Eurostat Electricity Prices. Biannual residential and industrial electricity prices across EU member states. Source of the EU country rates used in the country comparison table (last reviewed April 2026). Eurostat releases updated data twice a year.
European Commission / Eurostat. Reference →
IEA Electricity Statistics. International Energy Agency global electricity data, including residential end-use prices for OECD and non-OECD countries. Source for non-EU international rates (Japan, Singapore, Australia, etc.) used in the country comparison table (last reviewed April 2026).
International Energy Agency. Reference →

Disclaimer: The cost figures on this page are estimates based on cached rate data from the sources above. Actual costs depend on your utility tariff, time-of-use pricing, and local taxes. Check your bill or the source links for current values.