How much does it cost to heat and cool a home?
Posted by jefferson on Jun 14, 2012 in Saving Money | 29 comments
Part 2 in the “Our Bills” Series: Gas & Electric
In this series we take a detailed look at our monthly expenses, in an effort to see if we are paying more or less than we should be. We examine the costs, discuss why we are paying what we are, and list any potential alternatives or cost savings. In part one of our series, I wondered “Is My Charter Cable Bill Too High?” Those expenses (television, internet, land line phone) are all completely variable, and our life could and would adapt if we decided to go without. Today, I am discussing energy costs; utilities that are rightfully considered as necessities.
At this point, a little background is in order. We live in the Midwestern USA, which means that we get to experience every season fully, to say the least. We have cold and snowy winters, which are followed by scalding humid summers, and just about everything in between. As such, both our furnace (gas) and our air conditioner (electric) get a workout every year. There is no question that both my wife and I like to keep the temperature in our home a bit warmer than most folks. In the summer, we typically set the AC to fire up somewhere around 75 degrees. In the winter, we typically set the furnace to kick in somewhere around 72. I know plenty of folks who keep their home at 68 degrees in the summer, which will certainly lead to a much larger electric bill.
The prices that one has to pay for gas, electricity, and water will vary depending on your location. Here in the Midwest, we get electricity from coal, natural gas, and nuclear– and with multiple energy sources available, our bills might be a little bit lower. The size and efficiency of your home is also an important factor in energy costs. We live in a 30 year old two-story suburban home with a finished basement, and around 2000 square feet. Smaller homes typically have smaller energy costs.
I should also mention that we don’t participate in any “budget billing” programs that attempt to even the costs out over the course of the year, as this always seems to happen naturally (gas costs up i the winter, electric costs up in the summer). With that out of the way, let’s take a closer look.
Gas (furnace, water heater)
Avg Monthly: $86.77
Avg Monthly May -> October: $41.72
Avg Monthly November -> April: $124.31
Avg Monthly Old Furnace: $99.53
Avg Monthly New Furnace: $76.13
Highest Monthly: $199.06 (Feb 2011)
Lowest Monthly: $25.76 (Aug 2010)
Our gas bill pays for exactly two things: our furnace and our water heater. Everything else in our home is electric. Not surprisingly, this means that our gas bill is much higher in the winter and lower in the summer. I mentioned earlier that we like the house warm, so we aren’t shy about running the furnace when it is cold outside. Thankfully, our house seems to be fairly efficient at keeping the heat inside, and these costs don’t feel especially unreasonable.
Last spring, our 25+ year old gas furnace stopped working and needed to be replaced. After getting multiple estimates, we ended up selecting a high efficiency Train unit with an external air intake. As you can see from the numbers above, our gas costs have actually dropped $23/monthly since making the purchase. Energy costs nationwide are on the rise, so our savings are actually much higher than that. A new gas furnace is quite expensive, and it will take some time to “pay for itself”, but it is good to know that we are heading that direction.
Our biggest opportunity for cutting our gas bill further is with the water heater. Our water heater was replaced only four years ago, but it seems like “tank less” water heaters have really emerged into the mainstream since that time. When our previous heater broke down (actually it rusted out and leaked all over the basement), we had virtually no money and I found myself at home depot looking for the cheapest option that I could find. It seems a bit excessive to me that we still average over $40/month in gas costs for months that we barely (if at all) run the furnace. Here in 2-3 years, I could easily see us switching out the unit for a tank less version, and further driving down our gas costs.
Electric (air conditioner, lights, washer/dryer, oven, dishwasher, etc):
Avg Monthly: $91.96
Avg Monthly May -> October: $102.00
Avg Monthly November -> April: $83.59
Highest Monthly: $146.00 (Sep 2011)
Lowest Monthly: $68.00 (Nov 2010)
The discrepancy between our winter and summer electric costs is actually much lower than I expected. Perhaps the difference can be explained by the fact that in the cold Midwest winter we are far less active, and spend more time inside. This means that we have the lights, television, and computers all sucking more electricity during those months.
Our average electric bill in the summer is actually quite low, a testament to the fact that we keep the house relatively warm. We do have a programmable thermostat (it came with the furnace), and we use this to set the temp a few degrees higher for periods when nobody will be home or awake. We also replaced our outdoor AC unit about five years ago, and do get it serviced yearly to make sure that we don’t have any issues.
The biggest area we can improve on, with regards to our electric bill involves waste. My wife and generally make it a point to turn off devices that we aren’t using; from the coffee maker, to the television, to the laptop. My boys on the other hand (ages 11 and 8), tend to be rather forgetful. They often leave lights on in rooms with nobody in them, something that drives me totally batty. At one point, the problem got so bad where I fined them a nickle every time that I noticed that their room or the basement lights were on, with nobody in them.
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I don’t think that our energy costs are out of control, but we are always looking to shave these costs down a bit. A few years ago, I turned down an offer for a free “deep freeze”, because I didn’t want to pay the extra electric costs each month (it was an older non-efficient chest model). We have an energy star fridge and washer/dryer, which goes a long way. At this point, our biggest win would be to improve the efficiency of our house even further by getting new windows, but this is not a priority at the moment. Like many things in life, you have to spend money to save money.
How do our gas and electric bills compare to yours?
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Ok I’m going to try and keep my comment short…but as I work in the energy efficiency industry (specializing in high efficiency heating and cooling) it might be a little difficult.
If you want to lower your energy bills, hands down the biggest improvement you can make is to upgrade your heating and cooling system. This is simply because this makes up the biggest portion of your energy bills.
The most efficient heating and cooling system hands down (according to the EPA) is a geothermal heat pump system. The system absorbs heat from the ground in the winter to heat your home, and removes heat from your home in the summer and puts it in your domestic hot water tank (for essentially free hot water).
I have one, and sell them, and I love them. Plus, since they run on electricity and get the heat energy from the ground (which is a green, renewable resource) they’re very environmentally friendly too!
Sorry for the shameless plug, I just love and really believe in the product as a good solution for lowering heating bills and helping the environment at the same time.
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Jordann… my in-laws went with the geothermal unit, and they love it. The up-front cost would have been double what we paid for our unit, which we just couldn’t afford at the time.
Well I won’t share my energy costs since it wouldn’t be too relevant as a single guy living in an apartment in Canada. I think I do a pretty good job at saving electricity, but I got pretty obsessive in my unemployment stint. I turned into one of those people who unplugs things when not in use. Have you considered getting one of those energy monitoring devices to see if any of your appliances are wasting to much energy when left plugged in?
By the way, I love the idea of fining your sons when they leave lights on. Has that been effective?
As for heating and cooling, have you thought about getting an home efficiency audit? I’ve heard that some electricity companies offer these for free. Maybe they could find some random drafts that are jacking up your prices.
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I am pretty sure that if I had an extended unemployment, I would find myself pinching pennies everywhere– and my energy costs would be no exception.
Good idea about the energy audit, I may look into that, especially if it is free.
Our bills are very similar to yours (since we live in the same area). Our electric bill is much lower though. When the AC isn’t cranked, our electric bill is usually only around $30 to $40 a month.
I don’t know why mine is so much more cheaper than others! My friend just started renting an apartment with her boyfriend, and their electric bill is at around $130 a month! And they’ve never turned on the AC yet because they’re afraid.
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It probably depends on how big your place is, and how many people live there. Our kids use as much as electricity as we do, if not more.
We do the budget billing for the simple fact that I like to have a fixed number when I set my budget each month. With that said our average cost/month last year was $135/month (we’re all electric here).
I think our insulation and newer windows help out a lot. But we’re pretty anal about turning everything off when we’re not using it and we rarely leave light on.
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If we could combine our gas/electric.. I think we’d settle in right around that same amount. Not too outrageous.
I like that you actually do averages and show us when the highest and lowest months were. Instead of just blindly paying for your energy bills and pressing on, you’re being proactive about it. Our water heater leaked too but my BF was able to fix it. Not sure how. I’ll look into that tankless one though.
We like to keep the heater on too…and we live in California haha.
I like the idea of fining the boys whenever the lights were on. My brother is very guilty of this. It drives me nuts when people leave lights on! Thankfully my little sister keeps him in check and yells at him each time she catches him doing this.
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I thought it was cool to see, in numbers, what a difference our new furnace is making! It will take years to “pay for itself”, but it is nice to see that it actually will happen one day. Of course, the old furnace was completely dead, so it isn’t like we had a choice.
I wish our gas/electric bills were more in line with yours, but unfortunately they are much higher! We spend more on electric because we live in the south (Georgia) and it gets incredibly hot and humid here. That said, we try to keep costs down, but having 5 people in the house(2 of them teenagers) doesn’t help much.Personally, I would keep the thermostat turned up higher, but some people in the house (my husband) have complained that it gets too warm. I think he should just buck up and deal with it, but when it’s time to replace everything, we will definitely consider the geothermal system, I had never heard of that before! Good article
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Hey Monica.. I am sure that your electric bill would be higher in the south.. We were briefly entertaining the idea of moving down south, but decided against it. Now that I am feeling the summer heat in the midwest, it is hard to imagine what it would be like in a place that gets even hotter.
Summer cooling bill tends to be pretty high, and the heating bill tends to be high during the winters too. I guess that speaks to poor insulation and probably the same thing that you noted: it is easy to stay in and use more gas/electricity thereby driving expenses up.
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You must live in a place, like us, where the weather is totally variable.
We’ve only gotten one bill since moving into our first home, but gas for mid-April to mid-May was a little under $30 and electric was $65. I’m pretty much the opposite. I won’t turn the heat up over 60 (if it was just me, I’d probably set it more like 55) but don’t like a hot house in the summer. I spend all day outside, I want to cool down when I get home.
The next bill will probably be considerably higher as the A/C has been on for several weeks. We have all CFL lights, but the fans run pretty much 24/7 and I’m the only one out of the three of us who will turn a computer off it seems.
It is strange how different folks are when it comes to what temperature they keep their houses.. I have been in homes that feel like a walk-in freezer, and I know that others wonder why we keep our home so warm. It takes all kinds to make the world go ’round, I suppose.
I don’t think your costs are too bad. I have electric heat (baseboard heaters that suck)and our average cost is about $160 per month.
I have heard that those baseboard heaters can get quite expensive… But that probably means that your home is old and made with good materials
I think houses ought to be built with better insulation. That would definitely reduce the need for air conditioning in many climates. My house has a brick exterior and the brick keeps out the heat for all but the two hottest weeks of the year. The ceiling fans do the rest.
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Thankfully, our home has good insulation, which keeps our costs down. I think that the main place where we lose heat & cold is through our windows.
Our house is older and has terrible insulation. Actually, that’s one of this year’s home improvements!
At $23 per months savings from the old unit to the new Train system, how long until it pays for itself?
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Now that I actually do the math..
It may break before it pays for itself.
But the old one was broken, so I didn’t really have a choice
It really “paid for itself” on the first frigid winter night when we weren’t freezing.
I swallow my tongue every time we get a heating bill in our rental property. We definitely need to upgrade our system – it’s an 85-year-old system in a 105-year-old 4400 square foot brownstone…. nuff said?
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Hopefully you pass those high energy costs onto your tenants!
I pay about $50 – $100 on the electricity bill every month. It’s a small place so it’s much cheaper to heat/cool. It’s also good to heat/cool only the rooms that you are in. Check out my kotatsu table post.
http://retireby40.org/2011/11/save-heating-stay-warm/
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We do shut the vents in a few of the rooms in my house that we don’t use very often. Great idea..
I live in Arizona, so I don’t understand this “winter” you speak of.
In my physics class, we spent one day learning how the electric companies bill each house. We calculated it to cost roughly 8* cents per kilowatt hour, which isn’t that bad until you add it all together.
*Numbers come from my teacher’s last electric bill.
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Are you saying that I should have fined my kids 8 cents instead of 5?
I’m not sure if this is an option in your area Jefferson, but I save $60 per year on my electric bill by participating in my power company’s Load Guard Program. The program allows the power co to save on money by not increasing their capacity to account for peak usage hours. They pass that savings on to the customer at $30 per unit, per year.
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