Would an energy audit help to reduce it?

What Makes My Electric Bill So High?

by Gary Foreman

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I always do my best to keep the electric bill down in our home. I'm constantly turning off lights and appliances and reminding my family to do the same, yet our electric bill never seems to decrease. Am I missing something? Where does electricity waste happen normally in homes? Is there something more I can be doing? I've noticed a lot of cable companies are now providing services to manage energy usage in homes. Is this something worth looking into?
Jaxon from Santa Fe, NM

Good question. For most of us the electric bill is one of the larger bills that we pay each month. Therefore, it's only natural that we'd want to reduce it if possible.

So let's look at your question three ways. First, how does your bill compare to the average? Second, what makes the average electric bill so high? And, finally, what can you do to reduce your bill?

We'll begin by learning a little about the typical electric bill. According to the U.S. Energy Information Administration (EIA), the average New Mexico home uses 656 kWh per month and spends $74.62. That's lower than the U.S. average of 903 kWh and $107.28.

You don't say how high your bill is, but if it's concerning you, I'd have to assume it's above average. Of course, the difference could also be explained by an above average sized home.

For your information, the EIA published a short-term forecast that electric will increase modestly to about 12.3 cents per Kwh in 2014. So expect that your bill will increase a little in coming months.

Next, let's take a look at what devices consume the electricity we pay for. The EIA released a paper in 2013 that answers that question.

- 41 percent was for heating our homes
- 34 percent was for appliances
- 17 percent was for water heating
- 6 percent was for air conditioning

Let's break down that appliance figure. Duke Electric assembled an impressive list of what it costs to run various appliances. They used a cost per KwH of 8.2 cents. You'll want to compare that to your rate (which should be clearly stated on your monthly bill).

A computer with monitor and printer left on without sleep mode 24 hours a day would run $8.86 per month

Leaving your whole house furnace fan run 24 hours a day would cost $29.52 per month. By comparison, a ceiling fan on high speed would cost $3.84.

A newer model freezer would consume $4.94 in electricity each month, but an older model would consume $7.97.

You probably wouldn't use a 1500 watt portable heater 24 hours a day in New Mexico, but for our northern readers, it would cost $88.56 each month. You're more likely to use a 1000 watt heater that only runs 50% of the time for $29.52.

Lighting might not be as bad as you think. Consuming 1875 watts for 8 hours per day would run $36.90 per month. To think of it another way, you could have 18 lamps with 100 watt bulbs running 8 hours per day.

A new medium-sized refrigerator consumes $5.90 per month. The same mid-sized fridge that's over 10 years old would double that cost running $11.80 per month.

See Cutting Your Electric Bill: The Refrigerator

An LCD television consumes $2.21 per month. A standard TV consumes the same amount, but a plasma TV would use $5.17 per month. The standby (instant on) feature alone costs you $1.18 per month.

Your water heater will consume $29.71 per month assuming the heater is housed in a warm space. You'll spend $8.46 for clothes washing alone, assuming you wash 8 loads per week.

Now that we have some interesting facts, let's look at your situation. While it's foolish to waste electricity powering lights in an empty room, the cost of a few hundred watts isn't going to bloat your bill too badly.

The culprit is more likely among the big consumers of electricity in your home, which is generally heating and cooling if you have a larger home.

If you haven't had an energy audit, you should have one. It's the best way to find out if your home is properly insulated. Proper insulation is the first step in controlling costs.

Also have your air conditioner serviced. It's not uncommon to find a unit that's cooling your home, but running much longer than necessary. That wastes money. If possible, keep the outside unit in the shade and make sure that bushes aren't blocking airflow.

Related: Determine if a new air conditioner will save you money on your electric bill

Even though you live in the southwest, it's prudent to have your furnace checked every few years. You'll want to do this to make sure it's operating efficiently and also for your family's safety.

Next move on to second level appliances like your water heater and refrigerator. Consider an insulated water heater blanket, and clean the refrigerator coils regularly.

Interest rates could be creeping up this year. Consider these 5 reasons to refinance your mortgage while you still can.

As to the energy management systems, you can probably gain nearly the same savings with a programmable thermostat or even by adjusting your heating/cooling temperatures manually. In a few years, they may provide big savings, but right now you're better served checking for insulation and making sure your heating and cooling systems are running efficiently.

Related: How to install a programmable thermostat

Finally, do encourage your family to turn off lights that aren't being used, but don't get too hot under the collar if they're not perfect. That'll only give you an excuse to increase your air conditioning!

Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.

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