Dear New Frugal You,

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

Dear Jaxon,

Good question. For most of us the electric bill is one of the larger bills that we pay each month. So 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 energy consumption 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. 

FYI, the EIA published a short-term energy 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% was for heating our homes.
  • 34% was for appliances.
  • 17% was for water heating.
  • 6% was for air conditioning. 

Let's break down that appliance figure. Duke Electric as 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 $7.97. 

You probably wouldn't use a 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. $8.46 for clothes washing alone assuming you wash eight 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. Generally heating and cooling. Especially if you have a larger home.

If you haven't had an energy audit, 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.

Even though you live in the Southwest, it's prudent to have your furnace checked every few years, to make sure it's operating efficiently, but also for your family's safety. 

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

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. 

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!

See related: Big house, big electric bills, Want to cut electric bills? Beware 'phantom loads'