It’s unfortunate but true – energy bills like your gas and electricity can cost you a lot of money. If you check your monthly bank statements, you are likely to find that a large chunk of your income is going towards natural gas and electricity. This can be frustrating, especially when there are so many other things to spend that money on.
Here’s the thing: your gas and electricity bills don’t need to cost you a small fortune. In fact, in most cases, there are ways you can reduce your expenses so that they don’t cost a lot.
If you want to start with the context of how electricity and natural gas bills are calculated, click here to read that section first. Otherwise, read on!
So, how do you save money on your gas and electricity bills? Here’s everything that you need to know.
How To Save Money On Your Electric Bills
Your electricity bill could end up costing you a small fortune if you aren’t careful. Here are a few small changes you can make that can make a big difference in your electricity bills.
Shop For A Cheaper Electricity Plan If Your State Has Electric Choice
The most obvious thing that you can do to reduce your electricity bill is to shop around for new electricity providers. Now, not all states have electric choice, and if your area doesn’t, then you are stuck with the local utility’s rate. Make sure you check your options in your state.
Different providers all offer different deals when it comes to electricity. Some will even allow you to have a combined gas and electricity bill, though it’s often better to keep them separate for the sake of simplicity.
When you are looking for a new electricity plan, you will need to check how much they charge in kWh. The best choice will depend on how much electricity you use and where you live.
It’s a good idea to go on an electricity plan comparison site to find the best deals. The state-sponsored sites usually have the best rates. Otherwise, you should use a concierge electric plan management service to help keep you in the cheapest plans. Getting this right can save you a lot of money!
Swap Your Light Bulbs For Energy Efficient LEDs
You’d be surprised to learn how much of your electricity bill you use to light your house.
Luckily, your lighting bill can be dramatically reduced if you switch out for some energy efficient light bulbs. You could save $225 a year, or more if you use a lot of lighting.
According to the US Department of Energy, LED light bulbs can use up to 75% less energy than your standard light bulbs. They tend to last much longer too, saving your weird uncle making those ‘how many versions of you would it take to change a lightbulb’ jokes for a long time. You can find LED lights for pretty much any kind of light fixture that you can think of.
There are a few things that you should think about before you buy your LED light bulbs though. For starters, you want to make sure you match the strength of light, in lumens, to what your current bulbs provide.
It’s also a good idea to carefully consider what color LED light you want, since you can get lots of different varieties. Most people tend to go for soft white bulbs, but that isn’t your only option.
The cost upfront for an LED bulb is higher than that of an average lightbulb, but they will pay for themselves many times over in the long run.
Use A Fan Rather Than Air Conditioning
There’s a simple solution that you can use to reduce your air conditioning use. Just get a ceiling fan! Put your ceiling fan on and you’ll have a room that feels much cooler than before.
Since you feel cooler, you can keep the target AC temperature higher and not use as much electricity. The fans still use energy, but they use far far less than an air conditioner does.
A Florida Solar Energy Center study showed that energy savings of 25% on your air conditioning are possible if you use ceiling fans in the summer. But remember you only get these savings if you increase the temperature on your thermostat!
Invest In A Smart Learning Thermostat
If you don’t have a smart learning thermostat, you need to stop what you are doing and invest in one!
A smart thermostat, like a Nest or Ecobee, allows you to set different temperatures for different times like classic programmable thermostats. This is the minimum you need to be doing. For example, automatically turning down the AC or heat when you are typically not home.
The amazing thing about smart thermostats is they can learn from your habits and detect when you are not home to optimize your heating and cooling. They can even start heating your home when you get within a certain distance of your home.
Nest claims based on a study they did, a smart learning thermostat will reduce an average home’s heating costs by 10% and cooling costs by 15%.
Use Cellular Window Treatments To Keep Heat From The Sun Out And Cool Air In
If you live in a place where it is often too hot or too cold, then it’s a good idea to get cellular window treatments installed. These are ideal since they will ensure that the heat from the sun stays out of the home and any cool air stays in the house. Since the cool air is less likely to escape and the sun is heating your home less, you will have a lower need for air conditioning.
In the winter, you should open the southern facing window treatments to let in the sun during the day. You should leave your northern and east and west facing window treatments closed during the day. At night, make sure you are closing the southern facing ones too to keep as much heat in (and cold out) as possible.
Doing this can save up to 10% on your heating and cooling costs.
Make Sure You Are Replacing Your Air Filters Regularly
It’s always a good idea to keep a close eye on the air filters in your home. If they are dirty, you could end up losing a lot of money! With dirty filters, your HVAC system has to work a lot harder to get enough cold or warm air into your home. The US Department of Energy found that dirty air filters can add 15% to your heating and cooling costs.
You can avoid issues by regularly inspecting your air filters and replacing them when they are past their prime. If you have any concerns about your air filters, then you should speak to an HVAC professional for further advice.
Most people have 1 or 2 inch air filters. If your filters are this size, you should change those out every 3 months, regardless of condition.
If you have 3-4 inch filters, you should change them every 6 months. 5-6 inch air filters should be changed at least once a year.
Use A Dishwasher And Use The Air Dry Setting
It’s easy enough to opt for the heat dry cycle on the dishwasher. All your dishes will be dry and ready to put away more quickly. But using the heat dry cycle on your dishwasher also costs more money.
Instead, put the air dry function on, or allow the dishes to air dry in by opening the door a bit. This is an easy thing that will save you some dollars.
Use Smart Plugs
You can also use smart plugs. These will connect to other gadgets around your home, such as lamps or even fish tanks. You can then use the plugs to turn on and off plugs using the internet.
You can do this remotely and based on timers or countless other triggers using apps like If This Then That (IFTTT). It’s a brave new world. You can have plugs that turn on when your garage opens, when you are a certain distance from house, or when your thermostat hits a certain temperature.
Adjust Your Refrigerator/Freezer Temperatures
You may not know this, but you likely have your refrigerator and freezer temperatures set too low, forcing them to use a lot more energy than they need to. You can save money by setting them to a more reasonable temperature while still keeping your food cold.
You should set your refrigerator temperature to 38 degrees and your freezer temperature to 5 degrees for the most energy savings [x]. This keeps your food out of the “danger zone” which is above 40 degrees.
A refrigerator uses 2.5% more electricity for each degree colder you make it.
Remove Or Replace Old Refrigerators And Freezers
If you have a 1970s era refrigerator you are literally throwing money away. Those refrigerators used more than 600% more electricity than today’s models [Y].
When you take into account the refrigerator will have an old compressor, looser seals, and caked coils, it could be using 1000% more.
This all adds up to real savings. A 1970s refrigerator (running perfectly) will use about $230 more a year in electricity cost than a modern model. Even a 1990s era refrigerator (also running perfectly) would cost you 267% more in energy costs, $100 more a year.
Given that you can get a new energy efficient model for $600-$900 depending on how big a fridge you need, replacing your old fridge is a no brainer. If your old fridge is an extra fridge you don’t “really” need, get rid of it now. Often your local electricity company will come take it away for free!
Think About Installing Dimmer Switches Or Smart Light Bulbs
Chances are that when you turn the lights on in a room, you don’t always want the light to be at full brightness. For instance, at night you may prefer to have slightly dimmed lighting to create that peaceful and relaxing vibe before you go to sleep. In most cases, though, your lights are going to be stuck on one intensity only.
It actually doesn’t have to be this way. You can install dimmer switches for the lights in your home so you can dim them as needed. Not only will you have more control over the lighting in your home, but you will reduce your electric bills since your lights aren’t always at full power.
And with new digital home technologies you can actually use smart light bulbs to set your LED brightness to whatever percentage you want. You can have your lights slowly turn on in the morning or dim as you approach bedtime. You can set certain rooms and lights to be off at certain times so you don’t accidentally leave them on. The possibilities are endless.
Ask Your Energy Company For Regular Energy Audits
Want to know how much energy you’re using and where you are wasting it? Well, speak to your energy provider. They often offer free energy audits where an expert comes to your home to check how much energy you are using, and what you need to do to use less.
If your provider doesn’t provide them for free, you can find energy efficiency companies in your area that will do them for a fee.
Since they can be really useful and are usually free, make sure you get one. Common suggestions include insulation, caulking, and door and window sealing.
Install Solar Panels On Your Home
This is the big one both in price and impact. If you have enough roof space, you can completely eliminate your electricity bill. Gone! Poof!
Some things to know.
- You need a south facing roof. You can install panels on east and west facing roofs, but they will have lower efficiency. Do not let an installer talk you into installing panels on a north-facing roof
- More sun means more energy. If you live farther south or in a sunnier place you will produce more kWh.
- Don’t install a system on a roof that needs to be replaced or will have to be replaced in the next couple of years
- Get a reputable installer who will stand behind their work and use qualified personnel. We are talking about high-voltage electrical equipment. Don’t mess around.
These systems don’t come cheap, though. You are going to have to pay $15,000 to $25,000 for a 5 KW system.
If you have the cash this can be a good investment depending on how much electricity costs in your area. This is especially the case after factoring federal tax credits (26% of system cost in 2022) and local state tax credit programs.
If you can’t afford the cost, you are not out of luck. There is a whole industry providing affordable financing and even more affordable lease programs that are often $0 down. Often you can get a free solar system and end up paying less for your lease then you were paying for electricity.
How To Save Money On Your Natural Gas Bills
Okay, so we’ve covered the electricity, but how can you save money on your natural gas bills? Here are some suggestions that you can use!
Make Sure Your Windows And Doors Are All Well Sealed
Energy leaks are an unfortunate fact of life that homeowners have to deal with. Energy transfer makes up 25-30% of heating and cooling usage in homes. This problem could be solved by building homes without windows. But since most people don’t want to live in dungeons, you are better off making sure the openings in your home are well sealed.
The easiest (though least scientific) way to check if you are having issues is go by a door and window and see if you feel a draft. If you feel a draft, you have a problem.
If you want to make sure you are getting every last leak, go for a blower-door test. This test will use pressure differentials caused by a high strength fan to identify areas of concern.
Either way the usual solution for issues is weather stripping and caulk. You can save money and fix the issue on your own or you can pay a professional. When it’s fixed you will have lower energy costs and a less drafty home.
Invest In New Windows
After going through your house to fix and reseal windows, you may find that they aren’t in the best shape. A little caulk can go a long way, but it can’t treat windows that need to be replaced.
Old single pain windows are just inefficient. The new energy efficient windows are double-paned and have an inert gas like argon or krypton in between the panes for insulation.
Depending on where you are in the country new energy efficient windows can save you $125-$450 per year in energy costs.
Unfortunately, double-hung vinyl windows aren’t cheap and will cost you between $300-$700 per window installed. So they don’t make a lot of sense just based on energy savings. But realtor.com data also shows on average you can expect to recoup 70% of their cost in a higher house price when you sell. Once you factor that in, they start to make a ton of sense.
As an added bonus, the windows will also reduce the exterior noise you hear in your home by up to 70%!
Adjust Your Thermostat To Be Cooler While You Are Sleeping
The best reason to lower the thermostat before going to bed isn’t to save money. It’s because you sleep better!
Experts recommend having your thermostat set between 60 and 67 degrees for the best sleep. Which is definitely less than what most people are doing.
Let’s do a little math. If you normally have your heat at 72 degrees, and you lower it to 65 degrees when you are sleeping, you will be lowering your thermostat by 7 degrees 8 hours/day. That is equivalent to lowering your thermostat by 2.3 degrees all of the time. Since lowering your thermostat 1 degree typically saves you 3% on your heatings costs, then the 2.3 degrees of savings will lower your heating cost by 7%.
That’s a lot of work to get to our rule of thumb. Lowering your heat 1 degree when you are sleeping will save you 1% on your heating cost.
Have Your Gas System Checked Any Leakages That Could Increase Your Gas Cost
In addition to costing you money, natural gas leaks are extremely dangerous. Even low-levels of natural gas poisoning can cause headaches, fatigue, and nausea. High levels can kill you. And that is without even mentioning the risk of explosion if pockets of gas are ignited
A really important point to remember is that ordinary carbon monoxide detectors do not detect natural gas. It is important to get special carbon monoxide detectors that are ALSO natural gas detectors.
Now that we got the real important stuff out of the way, low level leaks and leaks outside your home will actually also cost you a bunch of money. And this is not infrequent, I had an external natural gas leak at my home that was costing us a bunch of money.\
Here is what to look for:
- The smell of rotten eggs: naturally natural gas is odorless, but natural gas companies add an odor to make it easier to detect
- Hissing noises: gas escaping from small holes often make a hissing noise since the gas was under pressure
- Bubbling in water: If you see bubbling in standing water outside your home the culprit could be leaking natural gas.
- Natural gas usage that is significantly higher than what you historically use
If you think you have this problem, DO NOT try to fix it yourself. Call your natural gas company.
Use A Fan On Low Setting To Circulate Warm Air Down From The Ceiling
If you have a ceiling fan, you should also be using it when it is cold! It’s counterintuitive, but it’s going to save you money.
When you have the heating on a lot of that heat is lurking near the ceiling because heat naturally rises upwards. If you use the fan on the ceiling, then it will circulate the air pushing the warm air down, so that you feel it more and you are warmer.
Don’t put the fan on a high setting since that might just make you feel cold. Instead, keep it on a low setting to get some good, comfortable heat circulation in the room.
Unlike when using fans in the summer to save energy, to save on heating you don’t need to adjust anything on your thermostat. The circulating heat will automatically raise the temperature to your thermostat’s level. This reduces the amount of time your heating needs to run.
Use The Smart Thermostat You Invested In For AC Savings To Reduce Heating Gas Costs
Remember that smart thermostat that we recommended getting to reduce your expenses on electricity? Well, it’s definitely worth your while for the gas savings too.
As we mentioned earlier, the smart thermostat will detect when you are away and learn your habits to make the system as efficient as possible.
Turn Down The Temperature On Your Hot Water Heater
Take a moment to check the temperature on your hot water heater. How hot is it? Have you ever even checked the temperature setting for it?
Most homeowners install the heaters without changing the original temperature settings, often set to 140 degrees. For most families, this is way higher than it needs to be.
The US Dept of Energy says you can usually get by with 120 degrees unless you have a dishwasher that requires 130 degrees. Either way you can lower it. The savings from lowering the temperature can be up to $61 a year.
Not sure how to adjust your water heater temperature? Check out this video for step by step instructions. It’s easy and costs $0 to do!
Insulate Your Water Heater
Now that your water heater temperature has been lowered, it’s time to insulate your heater!
If you’ve ever stood next to a water heater, you know that they can sometimes be hot to the touch and can heat up to the surrounding area. This is energy that you’ve paid for going to waste.
Whether you use a gas or electric heater, insulation is an easy and effective way to reduce standby energy losses.
It will only cost about $30 and 1.5 hours of your time, and it will pay for itself in less than a year. Here are step by step instructions from the Department of Energy to help you
You can also check out this video for a step by step guide on insulating a water heater.
Keep Your Furnace Maintained Annually
This is not expensive and is a must do for many reasons. On the energy use side, a system that isn’t maintained can be costing you up to 30% more on your heating costs.
That should be reason enough, but annual maintenance will also lower the risk of system failure by 95%, increase your air quality, and keep your home safer.
This will cost you $100-$200 a year. If you aren’t doing it, you are making a huge mistake.
Inspect For And Fix Leaky Ductwork
Have you ever had the ductwork in your home inspected? Leaky ductwork can lead to you heating or cooling your attic, basement, or wall cavities instead of the spaces you live in.
The Energy Star site says that leaky ductwork reduces your HVAC system efficiency by up to 20% and it’s not very expensive to fix. If you are inclined you can even take on the task yourself.
Here is a great resource from Energy Star that walks you through how to do it yourself. It also gives you checklists for contractors, if you decide to hire someone to help you out.
Due to the ease and low cost this cost reducer is a must!
Invest In A High Efficiency Furnace
The most straightforward, though not the cheapest, way to save money on your natural gas heating bill is to get a more efficient heater.
A lot of homes have inefficient furnaces because home builders are more interested in lowering their expenses than worrying about your heating bill.
A typical budget furnace only has an 80% efficiency. That means only 80% of the energy in the natural gas being burned is making it into your home as heat.
High efficiency furnaces are typically about 96% efficiency and can get as high as 98.5% efficient. That’s 20% more heat from the same amount of natural gas.
If you are replacing your furnace anyway, you should definitely pay up for the more efficient option.
Invest In Proper Insulation For Your Home
We touched upon this briefly earlier, but it’s definitely worth your while to get some proper insulation in your home. Common places that need improved insulation are walls, basements and attics.
Insulation can save you 15-20% on your heating and cooling costs, for most families that will be about $200 a year. Good places to start are attics, crawl spaces, and basement rim joists since these areas are typically accessible.
Once you’ve taken care of those spaces it’s time to tackle your exterior walls. These can either be done from the outside or inside of your home. From personal experience, I can tell you doing it from the outside is less disruptive. Either way, there will be more repair costs with this step.
Most insulation costs $0.20-0.50 per square foot of insulation. So 2500 Square feet of space in an attic would cost you $500-$1250 to insulate (if you did it yourself).
Switch To Geothermal Heating (And Cooling)
You can eliminate your entire natural gas heating bill by switching to geothermal heating. You will be using some electricity instead but it will still lower your total cost.
Geothermal uses the year round stable temperature in the ground to heat and cool your home. Instead of generating heat or cold air for your home, a geothermal system moves hot and cold air into your home using the stable ground temperature.
To do this, a geothermal system will have horizontal or vertical wells drilled in your yard to circulate fluid deep into the ground. The fluid moves the energy from the ground and deposits extra heat or cold from your home into the ground.
A geothermal system heats your home using the stable 50 degree ground temperature by using refrigerant to run like a refrigerator in reverse. Just like refrigerator coils give off heat, the system will too and use that heat to warm your home.
Besides efficient heating, the system will also save you money with more efficient air conditioning too. In air conditioning mode the system only needs to move the cold ground temperatures into your home.
Depending on the efficiency of the system you are replacing, you could save 50% on your combined heating and cooling bill. If you are using something like fuel oil to heat your home the savings can be even more.
Systems aren’t cheap running $15,000-$30,000 depending on the size and age of your home, but the government will pitch in covering 26% of that cost with a tax credit.
Understanding Your Energy Bills
Basic knowledge of gas and electricity bills is essential to maximize your savings. Now it’s time to turn on your math brain, because today we’ll be diving into all sorts of fun stuff like BTU and kWh. Let’s go!
How Are Electricity Bills Calculated?
Electricity Costs
The cost of your electricity bill is determined by two simple things – how many kilowatt hours of energy you use and the cost per kilowatt hour.
Electricity use is measured in kilowatt hour, or kWh. Your electricity meter measures the amount of energy you use each hour. At the end of your meter read cycle, your hourly usage is added up and you get your total electricity usage for the month.
It’s important to know that if you run a 1000 watt appliance for one hour, you use 1 kWh of electricity. The number of kilowatts per hour will vary for each appliance. For instance, if you had a 50 watt device then it would take 20 hours to consume 1 kWh of energy. It would take half an hour to use 1 kWh of electricity if you were using a 2000 watt appliance. You can learn more about it here.
There is one other charge you may get in your electricity bill, a utility delivery charge. This is an extra charge that you would get to maintain the electricity lines. It’s usually part fixed cost fee, and part variable charge tied to your kWh usage.
Use The Common kWh Calculation Method To Understand Electricity Costs
So how do you actually calculate kWh? This is fairly simple. First, find the wattage of an appliance and divide it by 1000. This will give you the number of kilowatts. You will then need to multiply this number by the amount of time that you would use the appliance each day. Finally, multiply the number you just got by 30 days and this will tell you the amount of energy that the appliance is using every month.
Some appliances are going to use more energy each month than others. For instance, your refrigerator is going to cost you more in kWh each month than your alarm clock.
The cost per kWh could also vary depending on your electricity plan, so it’s important you are getting the cheapest electricity plan possible. It can make a huge difference in your monthly budget.
How Are Natural Gas Bills Calculated?
Unfortunately, your electricity bill isn’t the only charge that you will need to consider. You are also going to have to think about your natural gas bill. Gas bills can cost a lot of money, though it is possible to lower your monthly bill, as we will explore later. It all depends on the plan that you are using.
First of all, it’s important to understand the way that your gas bill will be calculated.
Natural Gas Costs
When it comes to calculating the cost of natural gas each month, there are some terms that you first need to understand. Let’s break them down.
The other term that you need to be aware of is BTU. This translates to British Thermal Units, and you may see it used to measure natural gas use on your bill. 1 BTU is how much energy is needed to increase the temperature of one pound of water by one degree Fahrenheit.
You will often see the units of usage on your gas bill in therms. A therm is 100,000 BTUs. It’s what you often see on your gas bill as a measurement for how much natural gas you used.
Finally, you will also see something called price per therm when you are looking at different gas providers. Essentially, it’s how much you pay per therm of energy. You will find this on your contract with the gas provider. It’s not always a price that’s set in stone either because it can vary based on the season, weather, supply and a range of other things.
In some places they may use CCF instead of therms. CCF just means one hundred cubic feet. 1 therm equals 1.037 CCF, so they are basically the same.
You may notice some additional charges on your bill too based on your service usage. It’s always a good idea to budget for more gas during times of the year when it’s likely to be colder. If you live in a cold climate and have gas heating, you will consume much more gas in the winter than in the summer!
You will need to check your bill to see how you can calculate the amount of natural gas you have used each month and how much it costs.
Summary
Saving on your gas and electricity is definitely possible. Many strategies are even cheap and easy!
Just follow the tips listed in this article, and you will have an energy efficient home in no time. Trust us – you and your wallet will definitely be happier!