In the United States, nearly 3% of a home’s annual income goes towards electricity bills.
According to the U.S. Energy Information Administration (EIA), American households spent nearly $118 per month on electricity in 2020, which averages to an annual cost of over $1,400.
And with the EIA projecting a 6% increase in electricity costs by the 2021 winter season, understanding how to save on an electric bill could help to save homeowners a significant amount in the long run.
1. Understand the Electricity Bill
How energy is being used and charged directly affects the money homeowners spend on the bill each month.
But it doesn’t mean you have to spend a lot of money each month in order to pay off your electric bill.
And even though rates can vary between electric companies, homeowners can create a plan with the goal in mind to help lower the monthly electricity bill.
To do so, it’s important to understand the components that comprise an electric bill.
The three main charges that make up an electricity bill are:
- Consumption Charges: Often listed as the delivery charge on most electric bills, these are fixed rates set by the electric company — covering services such as transportation of power from the source to the home and maintenance of infrastructure like powerlines.
- Supply Charges: As the name implies, supply charges are billed based on the amount of electricity the consumer uses within a billing period. Most companies bill per kilowatt-hour (kWh) — the unit of measurement for energy used in an hour. Supply charges are not fixed and tend to increase during “peak” hours. National Grid’s peak hours for New York residents are typically from 8 a.m. to 9 p.m. on weekdays. Holidays and weekends are considered “off-peak.”
- Other Charges: Local sales tax, state sales tax, and penalty fees for activities like late payments are typically tacked on after the subtotal.
Taking each area into consideration can help consumers determine where they are able to save each month.
Compare Prices to Reduce Consumption Charges
Those who live in a state that has a deregulated energy market can choose their energy supplier and should use this to their advantage. Deregulated states include New York, New Jersey, Maryland, Illinois, and Ohio.
Because consumers in these states have multiple options, utility companies tend to alter the pricing to remain competitive.
Residents can compare the consumption rates of the local suppliers to help determine which choice is the most economical for them.
Calendarize Appliance Usage to Save on Supply Charges
To save money on electricity supply charges, consumers can consult with their electricity company and learn when rates are highest or reach their “peak hours.”
Operating large appliances like dishwashers during these hours as set by the individual utility company can increase the supply charge — which would then increase the monthly bill.
If consumers wait to run the dishwasher, clothes washer, or dryer during times that are considered to be “off-peak” hours — when supply rates are lowest, this can help to reduce the electricity bill overall.
Avoid Incurring Late Fees
Late fees can add up rather quickly, especially depending on the amount charged by the utility company.
Ensuring that you are not wasting money on these penalties can be essential as the costs can add up quickly.
Depending on personal circumstances, a late fee might be unavoidable from time to time but shouldn’t be made a common occurrence.
It can be beneficial to either set a reminder or automatic payment to help ensure a due date isn’t missed.
2. Conduct an Energy Audit
Many electricity companies run free energy audits for their customers.
These audits assess the energy or electricity used by each appliance in the home.
For instance, Upstate New York residents who are serviced by National Grid can enroll in the power company’s Green Button Connect program. Under this program, customers can work with National Grid’s partners to better understand and analyze their utility data.
Homeowners can use this information to help reduce their electricity bill. By knowing how energy is being distributed across the home, residents can determine which appliance(s) use the most energy, could be conserved, or could be replaced.
3. Install a Home Energy Monitoring System
Residents who can’t receive energy audits from their suppliers or would prefer to perform one on their own can do so by installing a home energy monitor.
With a home energy monitor, even the energy usage of large appliances like laundry machines, water heaters, and air conditioners can be recorded in real-time.
This information can be beneficial to homeowners as it paints a picture of exactly where the most energy is being used — and allow them to adjust usage as needed.
A home energy monitor can cost upwards of $100 but its tracking capabilities can help to reduce the electricity bill each month — making it a worthwhile investment
4. Use Energy-Efficient Appliances
If possible, upgrade the appliances in the home for ones that are energy-efficient. This can be especially helpful for those who work out of a home office as their equipment — like computers, can require a lot of energy.
The U.S. Department of Energy (DOE) estimates that energy-efficient devices are up to 75% less expensive to power than standard products, as it can automatically shut off when not in use. This can eliminate wasted energy.
Homeowners who invest in products like energy-efficient windows, doors, or insulation may also be eligible to claim a residential energy or tax credit.
Appliances that are not energy-efficient should be unplugged when not in use since these products can still waste electricity even when turned off.
Alternatively, homeowners can connect such appliances to an advanced or “smart” power strip, which helps to reduce wasted energy.
Save Smart with HRCCU
Determining how to save on an electric bill or how to increase your savings can be overwhelming.
But it doesn’t have to be this way.
Let the financial consultants at HRCCU help. Our members enjoy a suite of resources that they can use to learn how to allocate their funds in a way that suits their needs.
For more information about how we can help you save and hit your personal financial goals, contact us.
