Outsmart your Electricity Bill

There are two ways to save money on your electric bill. Either pay less for you electricity or lower your electricity consumption. Fortunately, you’ve got the power to do both! Most advice focuses solely on using less electricity (which is always a great step), but I’d like to address both strategies since they can both save you a large chunk of change each month!

I’ve employed both strategies over the past few years, and I now average about $30/month. I know a number of friends that pay a few hundred dollars per month heating and cooling their old, leaky homes, but there’s a better way. Use your electricity more efficiently, and pay less for the electricity you use.

Reducing Energy Consumption

The first surefire way to lower you utility bills is actually to use less energy. Let me go over a few of the most cost-effective measures, (meaning DIY projects that pay for themselves in less than a year). They are not the sexiest investments, but any project that pays for itself that quickly is a smart choice for you wallet and planet earth!

• Install a Programmable Thermostat: If you don’t already have a programmable thermostat controlling your home, you are throwing money down the toilet! It’s super easy to install a programmable T-stat right where your old fashioned one used to be. It will take you about 30 minutes of minimal labor, and then you’ll have a shiny new brain for your HVAC equipment. Just make sure to set the set back temperatures properly so it only controls the room temperature when people are actually there and conscious.
• Switch your incandescent bulbs to CFLs: CFLs use about 70% less energy to produce the same amount of light. All the bugs of earlier generations have been worked out, and they cost about the same as incandescents. Lighting tends to be 10%-20% of residential electric bills, so you’ll see substantial savings just from swapping bulbs.
• Caulking and Weather Stripping: Everybody knows these are great measures to take, but no one wants to actually go through the effort. I would estimate (though I haven’t done the math), that each ounce of calk added around your windows is literally worth it’s weight in gold over it’s lifetime.
• Running the AC: Running the AC is by far your biggest energy waster. It seems cliche, but using fans to cool a room is crazy efficient compared to air conditioning. If that doesn’t work, grab a glass of ice water and man-up, most humans throughout history didn’t have AC and they turned out just fine.
• Plug loads: Before you just start unplugging everything, I’d suggest you buy a Kill-A-Watt plug load meter and see what’s sucking energy. A big one is actually your cable box, so I’d recommend putting a Christmas timer on there and killing it when you don’t need it
• Energy Star Appliances: At this point, the Energy Star cost premium is almost non-existant for most appliances. Just make sure the Energy Star label is on that new fridge you’re going to buy. You can thank me later.

Changing Electricity Suppliers

The other way to reduce your electric bill is to actually reduce the amount you’re charged per kwh. You can do this without changing anything about how the wires come into your house. It’s as simple as signing a contract with a new company.

Here’s the cliff notes version of an incredibly complicated history of the electricity market. Starting in the 90’s, some states decided that their utility markets would be more competitive if they let a variety of suppliers compete for consumers. If you live in one of the “deregulated” states (Check out this handy-dandy map), you can now actually switch suppliers and get a better electricity rate than what your utility is offering.

Your utility will still maintain the wires, it’s just that the supply of electricity will be coming from a different source. Nothing will change except who issues the bill to you each month. I know it seems too good to be true, but you’ll have to trust me that this really is the proverbial “free lunch” (at least for consumers).

Let’s say you live in Illinois, like I do, then you can go to power2switch.com (they aren’t paying me to say this) and look at the different rates available with a variety of supply companies. Check out some of my rate options.

Check out how much cheaper I can get my electrons if I switch to another company and sign a contract for 6-24 months! My electricity supply costs would go from $0.0832/kwh to $0.0510/kwh (or a 38% discount).

The supply portion of your electricity bill is typically about 70% of the bill (transmission and distribution is the other piece). The average American’s annual electricity bill is $1,200, so about $840 goes towards the supply portion. Now since we are getting a 38% discount by switching suppliers, we just saved $320/yr! That’s a pretty good savings for the 15 minutes it takes to change suppliers.

Pay Less For Electricity

So whether your able to invest in a little energy efficiency, or you just get a better electricity rate from a different supplier, taking these steps should chop off a significant chunk off your electric bill each month.

Today’s post is a contribution from Ross at Cash Rebel. Thank you to everyone for helping me through a busy period with your contributions!