Understanding Those Utility Bills and How to Cut Their Costs
When was the last time you took a good, hard look at your gas or electric utility bills? Like, you actually read through the various parts of it? If your answer is “Never,” you’re certainly not alone.
But as we hopefully begin paying a bit more attention to our energy usage and its cost, understanding how to read those bills can have huge benefits.
When you understand what your bills say, you can start to make smarter decisions to reduce your energy usage, which will save you money on your energy bills in the long run.
Perhaps some of you receive your gas and electric bills on one statement. Others receive separate bills. Still, others, no doubt, have a different utility company than family members in a nearby community. That’s why we’re going to discuss your electric and gas bills separately and speak in generalities, so as to help each reader have a better grasp of their utility bills.
We’ll follow this up with some tips on how you can reduce your utility bills, saving you those hard-earned dollars for other necessities.
Why is my electric bill so complicated?
Great question. Here’s the thing. For consumers, it’s rather straightforward. You use electricity, and you pay for what you use.
However, for utilities and electric suppliers, it’s not as simple.
The production, distribution, and sale of electricity is a decidedly regulated market, possibly one of the most regulated markets in the nation. Electric utilities are obliged to adhere to every regulation, and state regulatory commissions exist to make certain utilities and electric providers do so.
In order to abide by these regulations, companies must keep an eye on a ton of moving pieces.
Your electric bill contains a lot of information. For example, it shows what electric category you’re are part of (residential, small business, large business, or non-profit). In addition, it shows what rate you pay and what taxes, fees, and transmission charges you pay.
But let’s not get too complex, because by knowing just a few basics, you’ll be better able to read your electric bill better. So, let’s get into it.
What’s on your bill?
Most electric bills usually consist of two distinct parts: a general rundown of your basic account information, bill summary, existing charges, and electric price, plus a more thorough itemization of your energy consumption. This breakdown will typically include these two important items:
Meter reading provides supply charges
Your meter data will show the date the meter was read, plus your current and previous meter readings. The variance between your previous and current meter readings is the number of kilowatt-hours (kWh) of electricity you consumed in the billing period. So, if your previous meter reading was 18,000 kWh and your current meter reading is 18,700 kWh, then you used 700 kWh during that period.
What is a kWh? A kilowatt-hour is the standard unit of measurement for electricity usage. It’s really two measurements in one: speed and time. Wattage measures how fast electricity is being used, and time measures how long that electricity is being consumed at that speed.
Put another way, if you multiply the wattage of any appliance by the number of hours you use that appliance and then divide by 1,000 (one kilowatt is equal to 1,0000 watts), you’ll have the kWh measurement for that appliance.
What is the delivery charge all about?
The delivery fee is the amount for line maintenance and upkeep, which helps guarantee that steady power is delivered to your home or small business. Your bill may display another term such as “transmission fee,” but the effect on your electricity bill is the same.
Note: In many states, your electric rate is set by your utility, and the customer has no choice about it. You basically must pay the rate your utility charges per kWh.
However, in some states, including Pennsylvania, where energy choice or energy deregulation exists, home and small business owners are able to select what supplier they get their energy from, opening the door to more competitive electricity prices.
The ability to lower how much each kWh costs is one of the fastest and stress-free ways to cut your electric bill. Your electric bill’s delivery and supply segment jointly make up the total cost. After adding it all up, those cents and even fractions of a cent can add up.
Natural gas bills
Making sense of your energy costs doesn’t end with becoming familiar with your electricity bill. Your natural gas bill can also be a huge share of your home energy charges and, depending on where you live and your gas supplier, there’s probably a number of terms you should become familiar with to understand your natural gas bill better.
Here are some of the more common natural gas billing terms.
Natural gas is measured in one of two ways: hundred cubic feet (Ccf) or thousand cubic feet (Mcf).
As with your electricity bill, your natural gas bill normally involves two primary parts – the delivery or distribution cost and the actual cost of the gas.
The distribution cost usually accounts for 35 to 40 percent of your gas bill. This pays for services furnished by the local utility, such as the actual delivery of natural gas to your home, installation, maintenance, and repair of pipelines, meter-reading equipment, administration of billing, and other such tasks. The largest part of the distribution fee will appear on your bill independently or as part of a service charge. There is also a fee for usage based on the quantity of gas used each month.
The cost for the actual gas itself, which, as a rule, accounts for approximately two-thirds of your bill, is passed on by the utility on dollar-for-dollar. It also includes transportation costs paid by the local gas distribution company that takes delivery of the gas and supplies it to your home.
By law, Pennsylvania’s local natural gas distribution companies cannot profit from the resale of the natural gas commodity. The cost of the actual gas made use of by customers can be no higher than the sum the utility paid in acquiring it.
Tips on how to save on your utility bills
Now that we’ve looked at your electric and gas utility bills, let’s review some tips on keeping these costs as low as possible. Please keep in mind that some of these tips will pertain only to your electric or gas bills while others will cover both services. That’s why we’ll simply refer to them as energy-saving tips.
Insulate, insulate, insulate
The quality of your home’s insulation plays an important part in determining the size of your energy bills. Heavy-duty insulation makes your home more energy-efficient, which simply indicates it will stay cooler in the summer and warmer in the winter. Without proper insulation, a good deal of the energy you would use to heat or cool your home will leak out. Luckily, there are methods to enhance your home’s insulation, including fixing cracks and gaps around your windows and using window blinds to keep your home cooler.
Watch those routines
The electrical gadgets you employ in your everyday behaviors are another influence on your energy bills. When you actually use those gadgets can make a huge difference in your bills, especially if your utility charges more for electricity during so-called peak times, i.e., the hours when most people are at work.
For example, performing chores that demand more electricity, such as running the dishwasher or doing laundry, earlier in the day or later at night to cut down on peak-time energy use will have an impact on your bills.
Be smart . . . use power strips
Use smart power strips to reduce your idle power usage. Smart power strips lower the flow of power to so-called vampire power devices,, i.e., devices that consume energy even when you’re not being used. By plugging your TV, computer, and any other high-energy usage appliance into a smart power strip, you can slash your idle power usage.
Switch out to LED bulbs
Once you begin using LED bulbs, you’ll never turn back. True, they may cost a bit more than traditional incandescent bulbs, however, LED bulbs expend 75 percent less energy than incandescent bulbs and last considerably longer.
Check for blockages
The warm air your natural gas heating system emits needs to be able to flow freely throughout your home. That’s why it’s important to make sure all required vents are open, and you also need to consider the layout of your home to help ensure no large furniture or appliances are blocking these vents. If air cannot flow freely, the heating system will use up precious energy attempting to heat a home that stubbornly refuses to warm up. Proper airflow will lessen stress on your heating system and help bring down energy costs.
Always clean and maintain filters
Because your HVAC system is such a huge contributor to your energy bill, it’s essential to ensure it’s functioning efficiently. If you disregard your air filters, your HVAC unit’s performance will increasingly decline while your energy use will gradually increase over time. The Department of Energy calculates that by replacing an old, clogged filter, you can lower your HVAC’s energy consumption by as much as 10 percent.
Close up those cracks
If you were to add up all the gaps around the windows and doors in an average American home, you’d have the equal of a 3-foot by 3-foot hole in the wall. Caulk and weather-strip to close these air leaks and use window putty to close spaces around loose windowpanes. Also, prevent heated or cooled air from seeping under doors by attaching “sweeps” or “shoes” to their bottoms.
Adjust the temperature
Even if your install the most efficient air conditioner, furnace, or water heater available, your energy savings are still very dependent on the temperature settings, you select. So ask yourself: Do I really need an A/C cranked up to sweater-wearing temps? If you own your home, think seriously about investing in a programmable thermostat; it costs $100 or less and can slash energy usage by 20 to 30 percent, saving about $180 per year, by simply adjusting the temperature for specific times during the day.
Maintenance, maintenance, maintenance
When you’re contemplating how to save on your natural gas bill, maintenance of your current system should be atop your list. An “mature” natural gas furnace or water heater is prone to be less energy-efficient as time passes.
But you can help keep them running cost-effectively by getting regular furnace inspections and routine maintenance. Replacing leaky worn-out parts as needed helps keep your system from losing energy and running up your gas bill.
Perform an energy audit
An energy audit involves hiring a professional to come into your home and assess where energy is being lost or used inefficiently. Audits can be performed by public utility companies, energy service companies, or the state energy office. You can also perform an energy audit yourself. The U.S. Department of Energy has a useful guide on its website.
Note: Often times companies recommend inspections they call “energy audits” when trying to sell windows or other such items. These are not energy audits. They are haphazard partial inspections that generate information with a planned result. That result will usually steer you to buying their product.