Overpaying for electricity by 27.6 billion

Millions of American households could immediately reduce their electric bill by simply switching to a better rate plan. Roughly 60% of U.S. utilities offer one or more alternative "time-of-use" rate plans to their residential customers. Under a time-of-use rate plan, the utility charges a higher "peak" rate during the heavy-load times (think of rush-hour traffic) and a discounted "off-peak" rate during other times. While the utility would like you to use less energy during their heavy-load times (the peak rate window), you might see hefty savings even without changing how you use energy.

Many, if not most, Americans aren't aware of this unique opportunity to instantly cut household expenses. The new website Cut My Bill will change that. Cut My Bill features an online calculator where any website visitor can 1) select her utility, and 2) enter the amount of her most recent electric bill — the website then shows her utility's available rate plans, along with electric bill estimates (with the lowest-cost rate plan highlighted).

Cut My Bill just released aggregate data — the conclusion is shocking

The results from the first 5,000 electricity consumers to use this website are shocking. Cut My Bill has so far shown, on average, online-calculator users would save a whopping $17.80 per month simply by switching rate plans. That's $213.60 per year in pure savings or $2,136 over 10 years without changing a single thing about how they use electricity or by getting solar panels. It'd be as simple to get this savings as it would be to get a latte at Starbucks (i.e. give the utility a call and ask to switch plans).

Most households are currently on the default rate plan (which isn't time of use). On a national scale...if all households that could save on a time-of-use rate plan switched over, the total U.S. household electric bill savings could be upwards of $2.3 billion per month (133 million households times $17.80 per household per month) or a whopping $27.6 billion per year. Electric ratepayers unite!

Should I expect to save $17.80 or more on my monthly electric bill?

Potential savings varies quite a bit across states and utilities. Time-of-use plans are more commonly available in urban areas with more grid congestion and higher electric rates. And some time-of-use rate plans have very low "spread" between the discounted off-peak rate and the more expensive peak rate (e.g. a 15¢ off-peak rate and a 17¢ peak rate), while some time-of-use plans have a very high spread (e.g. a 10¢ off-peak rate and a 30¢ peak rate) — the latter offers greater savings potential.

Across the 13 states included in Cut My Bill aggregate data, Colorado showed the highest average savings at $60. Maryland showed the lowest savings at, well, $0. California was in the middle at $24. To see projected savings for your state and utility, try out the calculator.

The beauty of the CutMyBill electric rates calculator is how easy it is to use to get a highly accurate estimate of the consumers cheapest rate plan. It works by using government energy use profiling data produced by the Energy Information Administration for each of the more than 3,000 weather stations around the country, and a few simple questions about the homeowners' house (that anyone will know off the top of their heads). It then estimates the daily and monthly usage pattern and calculates how much this electricity use would cost on each rate plan offered by the consumers' utility.

There is a different calculator for each utility and the site currently covers 96 of the top 100 utilities in America. Here is a link to the top ten:

Arizona
Reduce your APS payment by swapping to their cheapest electric rates

Colorado
Reduce your Xcel Energy payment by swapping to their cheapest electric rates

California
Reduce your PG&E payment by swapping to their cheapest electric rates
Reduce your SCE payment by swapping to their cheapest electric rates
Reduce your SDG&E payment by swapping to their cheapest electric rates
Reduce your LADWP payment by swapping to their cheapest electric rates

Florida
Reduce your FPL electric payment by installing solar panels (no cheaper plans)
Reduce your Duke Energy Florida payment by swapping to their cheapest electric rates
Reduce your Tampa Electric payment by swapping to their cheapest electric rate plan

South Carolina
Reduce your South Carolina Electric and Gas payment on their cheapest electric rates

Texas
Reduce your CPS payment by swapping to their cheapest electric rates

Massachusetts
Reduce your Eversource payment by swapping to their cheapest electric rates
Reduce your NationalGrid (MA) payment by swapping to the cheapest electric rate plan

Are Cut My Bill savings projections accurate?

Yes and no. Cut My Bill's online calculator is very easy to use. It doesn't require you to geek out by modeling your energy patterns or collecting your historical hour-by-hour energy data from the utility. As far as easy-to-use calculators go, it offers the best savings projections in the world. On the backend, it's using detailed up-to-date rate plan information and "typical utility customer" regional hour-by-hour energy profiles. Calculations account for electric-bill nuances such as billing seasons, tiers, variable rates, riders, and charge types. If you think your energy use is fairly normal, the calculator's results should closely match your reality. On the other hand, take its projections with a grain of salt if you run a welding business out of the garage (for example).

Try out the Cut My Bill online calculator

It's free and easy, and will give you a good sense of your potential electric bill savings under a time-of-use rate plan. The calculator is available here.

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