Are you overpaying for electricity?

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Nov 11, 2010 | Steve Graham

Your electric bill is probably increasing, even if you still turn off the lights whenever you leave the room. The Denver Post recently reported that the price of electricity for most residences here in Colorado jumped 15 percent in the past year. Both electric rates and additional fees on electric bills are going up around the nation. However, you can potentially minimize cost spikes by carefully reading your bill, checking your consumption and comparison shopping.

Check their Work

The convenience of automatic bill pay and online banking comes with a danger. We may be less diligent about reviewing utility bills, and may even miss a major spike or an erroneous charge. Even if you don't have to write a check, review the usage listed on your bill every month. Compare electric usage to previous months in kilowatt-hours, not dollar amounts. The actual bill may vary for the same amount of electricity depending on added fees or rate hikes, but more on that later.

The average home uses 920 kilowatt-hours (kWh) of electricity per month, according to the U.S. Energy Information Administration. It's fairly easy to use less than the average by switching out light bulbs, turning down the thermostat, turning off vampire appliances, etc. However, if your bill shows significantly higher consumption, either you or the electric company may have a problem.

• An unusually high bill may simply be an accounting error or a misread meter. You can double-check the electric company's work by looking at your meter. It should be slightly higher than the meter reading at the end of your last billing period.

• If the meter and the bill match, but the usage seems unusually high, make sure the meter is working correctly. It should stop spinning when you turn off every appliance, light and gadget (though it's easier and more foolproof to test the meter by shutting off all your breakers). If it still spins, it may either be broken or a neighbor's circuit is inappropriately wired onto your meter. You can also ask most utility companies to test the meter for accuracy.

Shop Around

If the meter is working and the usage is reasonable, but the bill is unreasonable, you may have more options than you think. Many states have recently opened their utility markets to new competitors. Texas has a particularly robust electricity market. I found more than 20 rate plans from at least six providers for a ZIP code in Dallas.

You may still effectively have a monopoly, but the company may offer various rates. Look for long-term contract savings and low-income discounts. Also opt out of any renewable-energy premiums if your only goal is a lower electric bill.

Know Your Usage

If you are getting the best possible rates and the meter is working, faulty wiring or a faulty appliance may have cause the spike in your bill. If you switch off all the breakers and the meter stops running, test each circuit and each appliance. Unplug everything, then individually turn on breakers and plug in each item.

If the meter starts to spin with a breaker on but nothing running on that circuit, you may have faulty wiring. More likely, the meter will really get going when you turn on the air conditioner or other electricity hog. Use a watt-hour meter, such as a Kill-A-Watt, between the outlet and the appliance to check the true energy usage of your devices and appliances.

If you think you are overpaying for electricity, check the electric company's numbers and meter, then check your wiring and appliances, and shop around if you can.

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