Before we look at ways of saving money on your electrical bill, we have to look at how the utility charges its customers for the power they use. At present, most homeowners pay a straight Kilowatt/hour consumption rate. That is, they are charged for electricity as they use it. Ten 100-watt light bulbs left on for one hour equals one Kilowatt/hour (kWh). The utilities charge rates of between $0.06 to $0.17 and more per kWh, depending on where you live. This is calculated through your utility meter, which is a simple current sensing device that keeps a running total of how much power is used. Saving money on your electrical bill under this method is achieved by simply using more energy efficient products, turning down temperature settings on water heaters and such, or just turning lights off.

The kWh method of calculating electrical consumption looks reasonable but it does not reflect the true cost of generating electricity.  The utility company must be able to supply power during the "electricity rush hour". This usually occurs between 3 p.m. and 7 p.m. every day and is greatly exaggerated during the hottest and coldest days of the year when air conditioning or heating loads are at their highest. The utility must build their electrical generators and network large enough to supply this demand. This is similar to designing the strength of a bridge. It has to be capable of carrying the maximum load it will see in a day. But there are two ways to tackle that problem. You can build it large enough to carry 10 large trucks at once or carry 10 trucks, one at a time.

When a power company can no longer supply the electrical demands of their customers, they may purchase the energy shortfall from a neighbouring utility. The cost of this power can be up to one thousand times higher than their own standard generating costs. If this extra power is not available, the utility must shut down loads before the system voltage drops creating brownouts or a total blackout.

Building new generating stations is not always the answer. They are very expensive to build. It is also becoming increasingly more difficult obtain the necessary approvals to proceed on new projects. The only viable choices we have today are coal, water, and nuclear driven generators. All can have large negative effects on the environment. Coal fired generating stations release sulfur dioxins and other pollutants into the atmosphere; water dams disrupt wildlife such as fish spawning areas and flood large tracts of land; and nuclear power creates radioactive waste which we have not found any way of disposing. Solar and wind generators can not yet replace traditional technology. Today, they can only be used to supplement the supply.

To smooth out the peak demand periods, utilities offer large commercial and industrial power users a variety of electrical rates such as:

• Time of day rates -This method charges a high rate between 7 am to 9 p.m. but offers rates at up to a 65% discount on the off hours when electrical consumption is at it's lowest. This is similar to the phone companies method of offering reduced rates on calls made evenings and weekends when their systems are under utilized.

• Interruptible power rate - The large user is given an attractive utility rate but must shut down their loads within a specific time period (usually within ½ hour) upon notice from the utility or face huge penalties.

• Peak demand rates - these rate charges the user for kWh consumption at a low rate but are also charged a demand rate that is charged at the maximum power consumed over a 15 to 30 minute window. This peak demand once set is charged every month at 85% of highest value registered over the past 12 months.

Of the three alternate billing methods described above, the only one that makes sense to bring down to the homeowner level is time of day billing. If consumers are willing to defer use of non-essential loads until after the rush hour is over, the utility would realize savings which they could return. This works for dishwashers and clothes dryers assuming everyone in the household buys into the idea.

But what about all the loads that are controlled automatically? For instance, electric hot water heaters, electric furnaces, air conditioners, freezers, pool pumps, spa heaters, or future electric car chargers? These need to be controlled by something smarter than a simple thermostat to fully take advantage of the off peak billing rates. Ideally, a home energy controller would be programmed to calculate when loads should be turned on or off. It should also be designed to look at alternate solutions such as closing the window blinds before turning on the air conditioner to cool a room. The controller has to strike a balance between energy savings and comfort and convenience to the homeowner. The system should be almost invisible to the homeowner. If it isn't, it will soon be disabled.

A home PC can be used to make the load control decisions but an external interface must be used to do the actual power switching. This can be done through smart appliances that are capable of communicating on home networks, automatic switching circuit breakers in the electrical panel that can turn on or off on command, or power relays.  Once the loads are set up to be controlled by a central controller, safety features can be programmed into the system. If the controller receives a signal from a smoke detector, it can shut down the power to the stove, dryer, air conditioner, and ventilation fans.

Billing information from your local utility should be available on the Internet. It will be necessary to understand this before you can begin to calculate the possible savings.