How it works
A kilowatt-hour (kWh) is the unit your electricity is billed in: 1,000 watts used for one hour. Your bill multiplies the kWh your meter recorded by your price per kWh, then adds any fixed charge (a daily standing charge in the UK, a monthly customer or supply charge in the US, Canada and Australia) and tax.
Dividing the total by the kWh used gives your effective price: what each kWh really cost once the fixed charge is spread across it. In a month when you use little electricity, the fixed charge makes the effective price much higher.
The formula
energy cost = kWh × price per kWh fixed charge = daily charge × days total = (energy cost + fixed charge) × (1 + tax rate) effective price = total ÷ kWh
Worked example
1,000 kWh over 30 days on the UK price cap: 26.32p per kWh and a standing charge of 54.83p a day (VAT on household electricity is 0% from 1 October 2026 to 31 March 2027).
| Step | Working | Result |
|---|---|---|
| Energy | 1,000 kWh × £0.2632 | £263.20 |
| Standing charge | 30 days × £0.5483 | £16.45 |
| Total | £263.20 + £16.45 | £279.65 |
| Effective price | £279.65 ÷ 1,000 | 27.96p |
In the US, the average home's 865 kWh a month at 18.2¢ costs about $157.43 before any fixed customer charge.
Frequently asked questions
How much does 1 kWh cost?
About 18.2¢ on average in the US in 2026, 26.32p under the UK price cap (October to December 2026), roughly 14¢ in Canada (8.5¢ in Quebec to over 18¢ in Alberta) and around 32¢ in Australia. Your bill shows your own rate.
How much does 1,000 kWh cost?
About $182 at the US average price, or £279.65 in the UK for a 30-day month including the standing charge.
How do I convert watts to kWh?
Multiply the watts by the hours used and divide by 1,000. A 2,000 W heater for 3 hours uses 2,000 × 3 ÷ 1,000 = 6 kWh. To cost a single appliance, use the electricity cost calculator.
Why is my effective price higher than my unit rate?
Because the fixed daily or monthly charge is paid whatever you use. Spread over fewer kWh, it adds more to each one.
Is tax included in my rate?
UK household electricity carries no VAT from 1 October 2026 to 31 March 2027 (normally 5%), so the capped prices already match what you pay. In the US, Canada and Australia, taxes and levies vary by utility and are often shown separately; add them as a percentage if they are.
Sources
- Prices: US average residential price, EIA 2026 forecast (checked Oct 2026); Ofgem price cap unit rate, 1 Oct – 31 Dec 2026, Direct Debit (VAT on electricity is 0% until 31 Mar 2027); Rough national figure; provinces range from about 8.5¢ (Quebec) to 18.7¢ (Alberta), CER 2026; Typical 30–35¢ per kWh depending on state and retailer, 2026.
- Standing charge: Ofgem price cap standing charge, Oct–Dec 2026 (varies by region).
- Average use: The average US home used about 865 kWh a month in 2024 (EIA).
Related guides
Estimates are for planning only and are not financial advice. Get written quotes before you buy.