Finance Guru Offers Smart Ways to Cut Utility Bills
As any homeowner can attest, energy expenditures represent a large portion of the cost of owning a home. According to a recent U.S. Bureau of Labor Statistics Consumer Expenditure Survey, the averages for annual energy spending in the U.S. amount to nearly $1,500 for electricity, about $420 for natural gas, and nearly $115 for fuel oil.
As one might imagine, energy efficiency is a major goal for new home builders and contractors, particularly with trends in efficiency and the transition to clean energy gaining more and more steam. But what of the millions of Americans who live in older homes? Even homes that were built 10 to 15 years ago are considered to be far behind in terms of efficiency compared to those that have been approved for occupancy within the last few years.
Time-Honored and Novel Solutions
Last month, the financial advice publication Kiplinger—a long-time go-to financial guru for many investors—released a report detailing several ways that energy customers can cut their utility bills. Citing the Bureau of Labor Statistics (BLS) survey, Kiplinger examines both time-honored and novel ways to reduce home energy costs.
First, there are tax credits, which the federal government established to encourage energy-efficient home improvements. Depending on the area being improved, some items qualify owners of primary residences to take a tax credit of either 10% of the cost or specific amounts ranging from $50 to $300. But be warned—this credit is set to expire at the end of 2021, and while the policies coming out of Washington may be encouraging, there’s no guarantee this particular credit will be renewed or expanded.
Next, Kiplinger advises that homeowners employ due diligence to research incentives available to them at the state level. Yes, this involves some work, but the payoff can be worth it if it translates into deep savings. For example, there are states like Massachusetts, which offer a tax credit of $1,000 or 15% of the cost (whichever is smaller) for installing solar or wind energy systems. Then, some utility companies themselves are offering rebates for purchasing energy-efficient appliances or making other energy-efficient home improvements.
The Home Energy Audit
Before any investments, Kiplinger recommends spending a few hundred dollars on a home energy audit. Yes, it’s a few hundred dollars, but they say that it’s a few hundred dollars well-spent. Bringing in a professional who can identify problem areas in the home and suggest improvements is a far more prudent measure than a bit of research on YouTube and is likely to derive far more in the way of savings. “With a blower door test, for example, a powerful fan set in an exterior door frame lowers the air pressure inside the house, causing higher-pressure air outside to stream in through the house’s openings so the auditor can spot leaks.”
This is a simple procedure, but something the average homeowner wouldn’t even think of, nor would they be likely to have the requisite equipment on-hand. Professional home energy auditors also employ infrared cameras, thermometers, and furnace-efficiency meters to detect efficiency-compromised areas of the home.
Make a List, Check it Twice
Finally, Kiplinger offers some bullet points for savings, with average costs and the savings detailed. While some involve a significant financial outlay, they all deliver long-term savings. For example, while replacement windows with frames can range from $400 to $1,600 or more per window, new EnergyStar–certified windows can save a homeowner from about $100 to nearly $600 in household energy bills a year.
Replacing a heat pump or air conditioner that is more than 10 years old can save up to 20% on heating and cooling costs, and the newer, certified gas furnaces are up to 15% more energy-efficient than standard models. These furnaces can save homeowners up to $85 a year in energy costs.
Homeowners can find certified home auditors through the Residential Energy Services Network at www.hersindex.com. To research efficiency-related incentives available in your area, Kiplinger recommends visiting www.dsireusa.org or www.energystar.gov/rebate-finder.