Electric power is the rate at which electrical energy is converted into other forms of energy (heat, light, mechanical work, and so on) by a device. Electrical power is given by the product of potential difference and current:

P = V × I = I²R = V²/R

Unit of Power: The SI unit of electric power is the watt (W), named after James Watt; one watt equals one joule of energy converted per second (1 W = 1 J/s). Larger appliances are often rated in kilowatts (1 kW = 1000 W).

Electrical energy consumed by a device is simply the power multiplied by the time for which it is used: Energy = P × t. If power is in watts and time in seconds, energy comes out in joules (the SI unit of energy). However, the joule is inconveniently small for everyday household consumption, so electricity bills are calculated using a much larger practical unit called the kilowatt-hour (kWh), commonly known as a 'unit' of electricity.

1 kWh (1 'unit') = the energy consumed by a device of power 1 kilowatt operating continuously for 1 hour = 1000 watts × 3600 seconds = 3.6 × 10⁶ joules.

Household electricity billing works by having an electricity meter installed at the consumer's premises record the total number of kWh (units) consumed over a billing period; the electricity supply company then multiplies the number of units consumed by the tariff rate (cost per unit, which may itself vary in slabs depending on total consumption) to arrive at the bill amount. This is why appliances with higher wattage, or those used for longer durations, contribute proportionally more to the total electricity bill; a common practical exam-style question asks the candidate to calculate the number of units consumed by an appliance of given wattage used for a given number of hours per day over a given number of days, and then to compute the cost at a given tariff rate.