The Ripon Forum

Volume 0, No. 0

Nov - Dec 2008 Issue

What People Pay for Power

By on December 1, 2015

What we pay for power


As a student (a drop-out student) I took a tour of Europe in 1977. Done on $10 per day, the tour introduced me to coin-operated water heaters. They were not limited to cheap hotels, but were also found in some rental units of people I visited. I remember taking shorter and colder showers. Though I am very much against it, I wonder what our day would be like if all energy-consumption were on a coin-operated basis?

Before we wake up, we need some definitions. A watt is a measure of power. A watt-hour is a measure of energy. We are interested in energy — that’s how we pay for electricity. The standard measure is kilowatt-hour (kWh), and the average cost per kWh in the U.S. this past July was $0.115, eleven and one-half cents. Running the hair dryer on medium (1,000 watts) would cost you $0.115 for an hour.

5Begin the day by turning off the alarm on the clock-radio. The radio is one of the best electricity deals in the house — it consumes one watt. That is just 24 watt-hours or 0.024 kWh per day. You’re on the hook for 2 cents per week for the radio.

Now for that shower. A 10-minute shower will use 25 gallons if you have a flow restrictor shower head. Some of that is cold water. The 15 gallons of hot water will cost you $0.41. If you take a 12-minute shower, it will cost 50 cents, and we can use quarters in the coin slot.

I still eat eggs for breakfast. For this thought experiment, you will too. A stove eye turned to up half way uses about 750 watts. Take six minutes to heat the pan and cook the eggs, and it costs about a penny. Two pieces of toast use 0.045 kWh and will cost another half-penny. Coffee? We’re still in the penny range. The electricity cost for one breakfast is about five cents. This is just for one person. And we didn’t price the cost of keeping the OJ and eggs in the refrigerator.

How often would you need to feed coins into your refrigerator? Let’s put a 24-hour meter on it so you don’t need to make change so often. A five to 10-year-old refrigerator will use about $85 worth of electricity per year. That’s about a quarter per day.

Driving to work will cost you. The average commute is 16 miles each way. Gas mileage isn’t so good during rush hour, so it’s about two gallons per day round trip. Last July that cost over $8 per day. Now it is less than $6. We don’t want you to be distracted by having to put coins in the box while you drive, so we’ll charge you once per week. Okay, that’s pretty much how it is done already.

The boss pays for energy at work. The meters start up again when you get home.

Turn on the lights when you come home. A 100-watt incandescent bulb runs 1.15 cents per hour. The light-vending machines will take pennies. The problem is, there are a bunch of them, and they run a lot. If you have the equivalent of 10 100-watt bulbs running for eight hours, your light bill is almost a dollar per day or $365 per year.

Want to watch TV? Conventional TVs use about 130 watts, but a 42-inch plasma version will run at 350 watts. That’s about a nickel per hour. The average American watches four hours per day. That’s twenty cents per day. Keep a bowl of nickels next to the bowl of potato chips. While we are talking about potatoes, the big problem is we can’t put the coin machine on the remote. You’ll have to get up. Is more than one TV going during those four hours? If “yes,” then multiply.

It’s time to check your email. Computers use about 350 watts. If you leave one on all day, it will cost you a buck. Two computers will run you $60 per month just for electricity. You might want to think about turning them off.

From October through May the average household spends about $5/day on heating. So you will need to keep several rolls of quarters near the thermostat.

No go back to bed.

Oops! We forgot about dinner, and driving to the grocery store and going to Grandma’s, and the coin machine the airlines will need to install with the seats (let’s hope the other passengers remember to bring change), air-conditioning, laundry and myriad other things. All of it together will add up to about $5,000 per household per year (and that’s not counting the jet fuel). It seems to be getting more expensive.

As energy prices rise, consumers do two things: They spend more and consume less.

As gasoline prices rose over the past year, people drove less, purchased fewer gas hogs, and got poorer.

As energy prices rise, consumers do two things: They spend more and consume less.

This is very much what will happen with severe restrictions on CO2 emissions. Right now 85 percent of our energy use comes from fossil fuels. The renewable-fuel supply cannot grow fast enough over the next couple of decades to substitute for the cuts in CO2 outlined in congressional legislation. The EPA estimated that electricity costs will rise by nearly 80 percent by 2030 compared to the costs without CO2 restrictions.

In response, consumers will, to some extent, go “green.” A new refrigerator will use about 30 percent less electricity then that 10-year-old one. Since you will probably buy a new one in the next 20 years anyway, switching refrigerators isn’t much of a problem. But the increased efficiency isn’t enough to completely offset the higher electricity prices. So, poorer is still part of the equation.

Consumers also may switch to more efficient washers, dryers and dishwashers. But the high-efficiency models, here, cost up to twice as much. This leaves less money for everything else, and you still pay more in total for the electricity.

Similarly, switching to more efficient cars will involve both paying more and switching to something smaller. For some, going smaller may not matter much, but for families with car seats and soccer teams to move, it may matter a lot.

TVs and computers may get “smart” about turning themselves off or down. But they won’t get smart for free. Smaller houses cost less to heat and cool. High energy costs will, again in part, be met by moves to smaller houses and apartments.

These adjustments and many more are exactly what we see when energy costs go up for whatever reason. We observe the changes over time when our energy costs rise, and we observe the different consumption patterns among countries with different energy costs.

So we know what will happen when energy becomes scarcer and more costly. Whether the scarcity is driven by growing worldwide demand or whether it’s driven by legislation, we will adapt, but we will get less and pay more.


David W. Kreutzer, Ph.D., is a Senior Policy Analyst in Energy Economics and Climate Change at The Heritage Foundation.

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