How to find your true electricity rate (it’s not the number on the ad)
Updated June 30, 2026 · 6 min read · Independent, no sales pitch
Every solar estimate stands or falls on one number: what you actually pay per kilowatt-hour. Get it right and the payback figure is trustworthy. Get it wrong — and most people do, because the rate that matters isn’t the one on the marketing — and every downstream number is off. Here’s how to find your true, all-in rate from the bill in your drawer, and why the headline figure usually understates it.
The number you want
Your true rate is simple to compute and hard to argue with: take your total bill for a month — every line, taxes and fixed fees included — and divide it by the kilowatt-hours you used that month, both of which are printed on the statement. A $180 bill for 1,000 kWh is a true rate of 18¢/kWh. That all-in figure is what solar offsets, and it’s the one to put into any calculator. Do it for a few months across seasons and average them, because both usage and rates shift through the year.
Why it’s higher than the advertised rate
The “rate” utilities and retailers advertise is usually just the supply (generation) charge — the cost of the electricity itself. Your bill has more on it:
- Delivery / distribution charges. The cost of the poles, wires and transformers that bring power to your house — often as much as the supply charge, and sometimes more.
- Fixed monthly charges. A flat connection or service fee you pay regardless of usage. Spread across your kWh, it pushes your effective rate up — especially in a low-usage month.
- Taxes, riders and surcharges. State and local taxes plus assorted line-item fees that quietly add up.
Illustrative example — pull a real bill and divide total dollars by total kWh
Add them together and the true rate is commonly 30–50% above the advertised supply rate. That’s not a trick; it’s just that the headline number only ever describes one slice of the bill. The total-bill-divided-by-kWh method sidesteps all of it.
Tiers and time-of-use: when one rate isn’t enough
Two plan types complicate the single-number approach:
- Tiered rates. Price rises as you use more, in blocks. Solar shaves off your highest, most expensive tier first — so the rate solar offsets may be higher than your average rate, which makes the payback better than a flat average suggests.
- Time-of-use (TOU). Price depends on the hour. Midday solar offsets cheaper daytime power, while you may still buy expensive evening peak — relevant to whether a battery belongs in your plan. On TOU, note both your peak and off-peak rates, not just the average.
A note on state averages
The default rate on each of our state pages comes from the US Energy Information Administration — the average residential price for your state, which is total residential revenue divided by total kWh sold, so it already includes fixed charges and delivery. It’s a solid starting point, but it’s a state average: your utility, your plan, and (in deregulated states like Texas) your chosen retailer can all move it. That’s exactly why every calculator on this site lets you overwrite the default with your own number.
Put your real number in
Pull a recent bill, divide the total by the kWh, and type that into the calculator in place of the state default. It’s the single change that turns a ballpark into a figure you can actually plan around. Open the calculator and enter your true rate →