Tennessee Valley Authority

The Power of Energy Efficiency

You can lower your power bills by using energy more efficiently.

Consumers can gain more control over their power bills and help keep future prices lower by using energy more efficiently, and TVA and your local power company can help.

A major driver of electricity cost is the growth of “peak demand.” Peak demand is when the greatest amount of electricity is used during the day, especially hot summer afternoons and cold winter mornings. When everyone uses a lot of electricity at the same time, it costs more to produce.

To make enough electricity for peak times, utilities must use more power plants — including special “peak” plants that are more expensive to operate — and buy extra fuel, which greatly increases the cost.

Reducing peak demand lets utilities make electricity at less cost and pass the savings on to customers.

Pie chart of a quarter. Kitchen 21%. Heating/cooling 38%. Water heating 20%. Laundry 6%. Outlets 9%. Lighting 4%. Other 2%.
The chart above shows an annual breakdown for a typical, all-electric household. Percentages will vary based on the local climate, the weatherization of your home, and your energy-use habits.
  • Heating and cooling are typically among the largest electricity costs in the home. To reduce air-conditioning costs, set the thermostat to 78 in the summer. Anything lower will increase cost by approximately 5 percent for every degree below 78. Setting the thermostat higher when nobody is home can save more.
  • In the winter, set the temperature at 68. Heating cost will increase 3 percent for each degree above that level.
  • To reduce water-heating costs – another major home energy user – reduce hot water use by taking shorter showers and using cold water to rinse clothes in the washer. Some newer water heaters can be programmed to use less power during peak times — while still keeping water hot.
  • Replacing standard light bulbs with compact fluorescent bulbs is another way to save money. The bulbs produce the same amount of light, last longer and use less energy. A compact fluorescent bulb can save $40 in electricity costs over its lifetime.
  • Using major appliances during off-peak hours, such as washing clothes at night instead of late afternoon or early morning, can help reduce peak demand.
  • Although heating and cooling systems and water heaters typically make up the majority of a home’s energy consumption, other common household appliances can also draw significant amounts of electricity.
  • Minor adjustments by consumers, such as unplugging unused appliances, can also help.
  • An energy evaluation can help homeowners identify inefficiencies and reduce their electric bills. In-home evaluations can save consumers 20 percent on their total utility bill; and a self-evaluation, available online, can also help save money.

Typical Use and Monthly Cost of Appliances

  • Clothes Dryer — 4 loads per week — $3.12
  • Clothes Washer — 4 loads per week — $2.85
  • Dishwasher — 5 loads per week — $4.74
  • Computer — 4 hours per day — $1.62
  • LCD TV — 4 hours per day — $2.01
  • Freezer — 24 hours per day — $3.27
  • Refrigerator — 24 hours per day — $5.28
  • Range — 1 hour per day — $2.37
  • Oven — 1 hour per day — $5.43
  • Microwave — 15 minutes per day — $0.90
  • Toaster — 6 minutes per day — $0.27
  • Coffee Maker — 15 minutes per day — $0.90
  • Hair Dryer — 10 minutes per day — $0.27
  • Space Heater — 3 hours per day — $10.65

Cost estimates are based on an average price per kilowatt-hour of electricity in the TVA service territory. Energy consumption and use are examples.

More information about the evaluations and other energy-saving tips is available on the TVA Energy Right website. The site also includes information on incentives available for purchasing energy-efficient products.

Greater energy efficiency will reduce peak electricity demand and help keep prices low.

Electricity: A Powerful Bargain

Electricity powers modern life and is one of the most economical, reliable, and important products we use. Modern society depends on electricity to power virtually every aspect of our lives – from household appliances that keep us comfortable, to electronics that entertain us, to our offices, schools, factories, and hospitals.

Electricity is solidly reliable – it’s there when you need it, and it’s a good value. For more than 50 years, the price of the basic unit of electricity has stayed relatively low, although much more electricity is being used each year. A kilowatt-hour of electricity cost about 2 cents in 1946. Today, a kilowatt-hour of electricity in the Tennessee Valley region is only about 9 cents, well below the national average. Meanwhile, the cost of other basic items, such as a gallon of gasoline, pound of cheese, or loaf of bread, has increased dramatically. For example, a gallon of gasoline that cost 16 cents in 1946 is more than $3.00 in 2011.

Retail prices from 1946 to present in 10-year increments graph. KWh of electricity in the TVA, 0.02-0.09. Loaf of white bread, 0.10-1.37. Gallon of fuel oil, 0.02-2.93. Gallon of gasoline, 0.16-2.91. Pound of American cheese, 0.64-2.60.

The amount of electricity used is a big reason for higher electric bills. On average, a home in the region today uses about eight times more electricity for a month than in 1946. Overall, more people are using more electricity to power more items. From big-screen televisions, to computers, to electronic picture frames, to larger heating and cooling systems, homes are using more electricity in ways they never did before.

The average amount of electricity used in a home in the Tennessee Valley region in a month increased from 150 kilowatt-hours in 1946 to 1,321 kilowatt-hours in 2010 graph.

In recent years electricity use has increased most during certain times of the day, such as early morning and late afternoon. When demand peaks, utilities must add more expensive energy sources, which forces costs to go up.

To help slow the growth of peak demand, prices must more accurately reflect the actual cost of production, with higher prices when demand is greater and lower prices when demand is less.

Consumers get the most value from their electricity dollar by managing their use of electricity. That helps lower monthly bills, reduces peak demand, and keeps future prices lower for everybody.

The Price of Power

Not every kilowatt-hour of electricity is created equally. Some kilowatt-hours cost more to make than others. There are reasons for that, including the kind of fuel that generates the electricity. But a big factor is when people use it.

Did you know it costs much more to make electricity in the middle of a heatwave than on a mild spring day? Most people don’t because every kilowatt-hour has cost consumers the same, no matter when it was made or used. There are reasons for that, including the kind of fuel that generates the electricity. But a big factor is when people use it.

As more electricity is used, the cost of producing it also rises. Providers also may have to buy more expensive power from other companies to supplement their supply. TVA and local power companies are beginning a gradual transition to pricing that reflects the changing cost of electricity during different seasons and, eventually, during different times of the day. Many utilities across the nation also have begun this process.

The chart below shows the mix of generation sources needed to supply power across the Tennessee Valley region on a hot summer day. The quick-start natural gas plants, which are typically used during peak demand times, are by far the most expensive to operate.

Utilities must turn to more expensive sources of energy to meet rising electricity demands.

Bigger demand=higher cost graph. From bottom to top: Nuclear, coal, hydro and pumped storage, interchange utilities, independent power producers, natural gas plants including quick start plants. As demand rises in the PM hours, the cost increases.

Over time, peak demand has been growing faster than the growth of everyday power requirements. That means more generators designed to meet peak demand must be built.

Peak demand occurs at predictable times of the day and year – like summer afternoons when many people return home from work and turn on the lights and air conditioning, or on winter mornings when the heat is turned up while people get ready for work or school.

Electricity demand is highest during certain months and certain hours. And as demand rises, energy becomes more expensive. The peak demand hours on the TVA power system occur in the afternoons and evenings of summer (June-September), noon to 8 PM Central, 1 PM to 9 PM Eastern, and early to mid-mornings of winter (December-March), 4 AM to 10 AM Central, 5 AM to 11 AM Eastern. Peak is Monday through Friday, Weekends and federal holidays are off-peak. Beginning in April, the price local power companies pay for electricity will reflect these high demand periods.

Some local power companies are starting with prices that change with the seasons, called seasonal demand and energy pricing. Some of them will have time-of-use pricing that changes with the hours as well as the seasons. The new pricing structures are not designed to create additional revenue to local power companies, or to TVA, which makes no profits.

Time-of-use pricing for consumers will become more common as new meters that can track hourly changes in a consumer’s electricity usage become available. This will allow consumers to make decisions about when they can use less-expensive power to lower their bills.

Finding and implementing ways to lower peak demand on the power system will reduce the need for expensive new power plants and keep costs low for everyone.


Tennessee Valley Authority – Where NEMEPA buys electricity to supply our service area.

Tennessee Valley Public Power Association – Representing the interests of consumer-owned electric utilities operating within the Tennessee Valley Authority (TVA) service area.

Energy Right – The energy right Program from TVA and your local power company encourages, communicates, and supports the wise and efficient use of electricity.

Complaint Resolution Process – TVA provides regulatory oversight for your local power company’s rates and service practices.

TVA Kids – Learn about electricity and have fun with games and activities too.

Green Power – TVA and participating local public power companies, working with input from the environmental community, have created a program called Green Power Switch® to produce electricity from renewable sources and add it to the Tennessee Valley’s power mix.