Explaining the basic terms

It takes a while for the average consumer to get up to speed with terms like “kilowatt hours”, “second price tags” and “lifetime costs”. Here are some basic terms relating to EnerGuide and ENERGY STAR® that you need to know to help customers make informed choices.

Annual energy cost: the total cost of energy required to operate a unit in a year. It is calculated by multiplying the unit’s EnerGuide rating (in kWh) by local electricity costs (in $/kWh).

EnerGuide label: a label applied to an appliance or other product and that displays a product’s energy-consumption rating and other important information about the unit. EnerGuide is a mark of the Government of Canada and proof of the independent verification of the data displayed.

Energy Star logo

ENERGY STAR: an initiative administered by NRCan, operating under an agreement with the United States Environmental Protection Agency, which identifies those units that perform at or above high efficiency levels.

First price tag: the purchase price of a unit. Normally, a unit’s energy efficiency rating affects the purchase price only very slightly, if at all.

Greenhouse gasses (GHGs): pollutants such as carbon dioxide, nitrous oxide and methane that are released into the earth’s atmosphere and that contribute to planetary warming by trapping excess heat from the sun. GHGs are by-products of the energy used to manufacture the product and the energy used to run it.

Kilowatt hour (kWh): the amount of electrical energy supplied by one kilowatt over an hour. A kWh is equivalent to using a 100-watt light bulb for 10 hours or running a hot shower for about three minutes.

Lifetime energy cost: the total cost to run a unit over its expected lifetime. It is calculated by multiplying the annual energy cost by the number of years of expected use.

Second price tag: the price paid by the buyer to operate a unit over its lifetime. Products that carry the ENERGY STAR designation always pay for themselves in reduced energy costs over their lifecycles.


The ENERGY STAR name and symbol are administered and promoted in Canada by Natural Resources Canada and are registered in Canada by the United States Environmental Protection Agency.