Catherine leverages her background in education and finance to write articles that help readers make informed decisions about their insurance and finances.
3+ years producing insurance and personal finance content
Main architect of the Insurify Quality Score
Courtney’s deep personal finance knowledge extends beyond insurance to credit cards, consumer lending, and banking. She thrives on creating actionable content.
Updated November 28, 2023 | Reading time: 4 minutes
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Electricity costs are on the rise because of recent increases in the cost of fossil fuels, which run power plants. In September 2022, electricity cost an average of $0.167 per kilowatt-hour (kWh) nationwide. One year later, the average cost was closer to $0.171 per kWh.[1]
Even though consumers can’t control fluctuating energy prices and utility companies, you can adopt different habits to use less energy and lower electricity costs in your own home.
Here are 10 different ways to reduce your electricity costs.
10 ways to lower your electricity costs
Many factors affect your electricity costs, like your local weather and state regulations. While you can’t control many of those external factors, here are the best ways you can lower your electric costs in your home:
Complete an energy audit
Use natural light (daylighting)
Install a smart thermostat
Use energy-efficient appliances
Schedule HVAC maintenance or replacement
Unplug unused devices
Take advantage of off-peak periods
Close blinds and drapes
Turn down the hot water temperature
Use energy-efficient light bulbs
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1. Complete an energy audit
Potential savings: 5% to 30% annually
An energy audit is when a home energy assessor evaluates your home for energy inefficiencies, shows you your energy use, and gives advice on ways to live with more energy efficiency.[2]
2. Use natural light (daylighting)
Potential savings: 22% annually
A simple way to save on energy costs is to use natural light during the day instead of electricity. The American Council for an Energy-Efficient Economy conducted a study that showed using natural light can save a surprising amount of energy and money both in residential and commercial buildings.[3]
Installing a programmable thermostat enables you to set your home’s climate at a specific temperature on a schedule, so you don’t spend money using energy to heat or cool a house when you’re not home. Energy Star recommends a certified smart thermostat to efficiently heat and cool your home.[4]
4. Install energy-efficient appliances
Potential savings: $425 annually
Using energy-efficient appliances, especially kitchen appliances, has several benefits. Not only can it save consumers hundreds of dollars on their energy bills annually, but it can also reduce pollution.[5]
5. Schedule HVAC maintenance or replacement
Potential savings: $140 annually
Properly maintaining your HVAC system, including changing your air filters regularly, can help you save on energy costs overall. The biggest savings come if you replace an old HVAC unit with an Energy Star-rated unit.[4]
6. Unplug unused devices
Potential savings: $165 annually
Many people don’t realize that many devices still use energy when they’re plugged in, even if they’re off or plugged into a power strip. Unplugging devices like computers, toasters, phone chargers, and other electronics when not in use can lower your electricity bill.[6]
7. Take advantage of off-peak periods
Potential savings: $100 to $1,000 annually
Many energy companies have off-peak hours. These are the times of day when using electricity is less expensive.
By running your dishwasher or washing machine during off-peak hours, you can save annually. Many electric companies offer calculators that can help you determine how much you’ll save annually just by shifting the time you perform certain tasks.
8. Close blinds and drapes
Potential savings: 10% in heating seasons
Closing your blinds and drapes can help insulate your home, prevent air leaks, and reduce energy costs. How much you save depends on the type of fabric or materials you have for window coverings and the season.[7]
Many hot water heaters are set to heat to 140 degrees, but this isn’t necessary to perform normal household tasks. If you lower your temperature setting to a maximum of 120 degrees, your water will still be sufficiently hot for most tasks. In fact, you can still enjoy hot showers without additional water heating costs.[8]
10. Use energy-efficient light bulbs
Potential savings: $225 annually
Switching from incandescent bulbs to LED bulbs might have a higher up-front cost but can save you significantly on energy costs annually.[9]
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How to read your electric bill
Sometimes, reading your electric bill can be a challenge. By understanding a few key terms, you can more easily interpret the information on your bill.
Here are a few phrases to look for when reviewing your electric bill:
Consumption charge: This is a charge that shows your specific energy usage. It’s typically represented in kWh. Companies usually charge rates on a specific price per kilowatt-hour you use.
Delivery charge: This is the cost of delivering electricity to your home. Sometimes this is included on energy bills, and sometimes it isn’t.
Taxes: Your bill might have applicable state taxes listed.
Usage comparison: Your bill might show a comparison between the kWh you used this billing cycle versus previous billing cycles.
Electric bill FAQs
Here are some frequently asked questions about energy usage and its effect on your electric bills.
What runs up your electric bill the most?
Heating and cooling your home increases your electric bill more than anything else, according to the U.S. Energy Information Association.[10]
How can you reduce your electric bill in the summer?
You can reduce your electric bills in many ways during the summer. First, use curtains and blinds to block out light during the day. Next, consider installing a smart thermostat you can easily program to be more efficient when you’re not at home. Using fans is another great way to circulate air and make a room feel cooler without increasing electricity costs.
Other energy-saving tips, like sealing cracks and turning off appliances regularly, can also help save on costs.[11]
What factors affect your electricity costs?
Several factors can affect electricity costs. Overall economic factors affect electricity costs, such as fuel costs. Weather conditions also affect electricity costs, including how many people need to utilize resources.
Power plants also pass on some of their operating costs to their customers, and these prices can fluctuate over time. Finally, state and federal regulations can affect utility bills.[12]
What are the best energy-efficient appliances?
To find the best energy-efficient appliances, look for the blue Energy Star label. This is a government-backed label from the U.S. Environmental Protection Agency. Every year, ENERGY STAR lists the most energy-efficient appliances. You can use its website to view the most energy-efficient clothes washers, refrigerators, dishwashers, ceiling fans, windows, and more.
Catherine Collins is a freelance financial writer and author based in Detroit. She's the co-founder of MillennialHomeowner.com and MomsGotMoney.com, and author of the book Mom’s Got Money: A millennial mom’s guide to managing money like a boss. She has written for US News, Huffington Post, Money, Business Insider, Investopedia, Entrepreneur, Go Banking Rates, and many other publications. She currently resides in Detroit, Michigan with her boy-girl twins and a rescue dog named Julep.
3+ years producing insurance and personal finance content
Main architect of the Insurify Quality Score
Courtney’s deep personal finance knowledge extends beyond insurance to credit cards, consumer lending, and banking. She thrives on creating actionable content.
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