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How electricity rates work

The rate printed in marketing may not match the cost of the next kilowatt-hour in your home.

Flat and tiered rates

A flat tariff applies one energy price, while tiers charge different prices after usage thresholds. Use the tier likely to apply to additional consumption.

Supply and delivery

Some bills separate generation or supply from delivery. Both may vary with kWh, so include both when estimating incremental appliance cost.

Use a scenario range

When a rate is uncertain, calculate low and high cases. A range is more honest than treating a national average as a local fact.

Use the numbers

Apply this guide with one of WattMeasure’s free calculators. Results are planning estimates and should be verified for consequential decisions.

Last reviewed August 6, 2026