Let me give you a practical example.
First of all I'll explain how the electricity company calculates your bill.
Most electrical appliances have labels showing a number in Watts or Kilowatts. The Watt is a measure of power. 1 Kilowatt = 1000 Watts. If you have a kettle with 1200 Watts on the label, this is the same as 1.2 Kilowatts. The higher the rating, the greedier the appliance. The longer you run a power hungry appliance the quicker goes up your electricity bill.
Well, how fast does the electricity bill go up?
The utility company uses a measure called the Kilowatt Hour to calculate electricity bills. A kilowatt hour is a measure of the quantity of energy you consume in 1 hour.
In practice, you multiply the Kilowatt rating of an appliance times the number of hours it is used times the billing rate. I will use $0.3 per kilowatt hour as the billing rate. If I used my 1.2 Kilowatt kettle for 2 hours the number of kilowatt hours would be:
1.2 x 2 = 2.4 Kilowatt Hours
Therefore the bill would be:
2.4 x $0.3 = $0.72
You can find more detailed information on my hub.