As a home inspector, I always give advice on how to reduce energy costs to my clients; however rising prices means that reducing your energy consumption does not necessarily mean lower cost. Here is a method that I use to see if I am on target to saving money.

Summers in Houston are dreadful when it comes to energy consumption. Our air conditioning is cranked high in our hopes to get away from that heat and humidity. I generally use about three times as much electricity during the summer than any other time of the year. I keep trying to find ways to reduce my usage, in the hopes that my bills will go down. Most of my efforts to cut down on consumption are being detailed in my posts about green home conversion, which you can find under the category of that name in the sidebar to the right. What I found surprised me though; I was still spending the same amount of money on my bills, even though I did reduce the amount that I consumed. The cost of the power, gas, and water had gone up.

At the end of the year, I look over my expenses for the past year to plan out a budget. I add up the amount of money that I spent on any number of things from groceries to car repairs. I write notes to myself explaining why certain costs went up, and I also calculate averages to help me decide upon a monthly budget. This gives me a good general feel for my spending, but if I am committed to lowering my spending, I have to be more proactive during the year, instead of just once at the beginning of the year. Finding ways to reduce electricity, gas, and water usage may be good for the environment (which is a concern of mine); however, the larger concern is spending less in this economic climate, because I just may need that cash. To be more proactive during the course of the year, I needed a simple plan that would let me see what my goal should be. I drew up a table in my desktop calendar that looked much like the one below.

LYC-last year’s cost (or the amount that I paid) for that utility in that month

CYC- the amount or cost that I paid this year

I pull out my bills to fill in the columns for last year’s charges. At the beginning of January, I looked up what I spent last January, and I have a goal to spend less. This may mean using a little less than what I did last year. This may involve some green adaptations to the home. It may mean changing some aspects of my life style. It could mean going without. Using less could be watching less television. Maybe I watch two hours of TV with my children in the evening, so let’s cut that down to one hour, and then find something else to do. Adding more insulation or weatherizing the home could reduce the amount of energy needed to heat or cool the home. Changing an aspect of your lifestyle may not be so hard when you understand some facts of how you are being billed. Electricity companies charge different rates for the amount you use during different parts of the day. For example, the highest rate occurs during normal business hours (8am to 5pm) because there is heavy use from those firms. Families are preparing their meals, turning on lights, watching television in larger numbers from 6pm to 9pm. These time periods have higher rates associated with them. What can you do to change an aspect of your life to reduce your bill when you have this knowledge? How about running your dishwasher or laundry after 9pm? If I am using my dishwasher, I turn it on as I am going to bed at night. I run my clothes dryer if I have a load that has been washed. I even run a load to wash at this time, so I can immediately run the dryer for that load when I wake up. Vacuum cleaning happens only on the weekend. I wake up early on most days, so I try to do all of my computer work at that time. Little changes can help.

What happens if your cost this past month was more than last year’s cost? If you have your bill, you could find out what you were paying on average for that utility. Did it go up dramatically? That may be one reason, but you may want to remember what was happening last year which may have caused you to consume less. For example, this coming September will see a higher amount to be paid than my September of last year (I am almost sure). Last year, Hurricane Ike knocked out my utilities for just over a week. I hope that does not happen this year, so I have to assume that there will be another week of usage this September. At this point, you have to see what you did, and how can you change so that your bill will decrease.

I thought that going on a plan that would average out my cost may help me plan my expenses; it didn’t. I like the idea of average billing. The consistency helps me to know how much I have to set aside for certain parts of my budget. What I found though is balanced billing is not always balanced billing. Centerpoint has a great plan for my monthly gas bill, and it is a balanced billing program, but not all utilities actually offer balanced billing. My electric provider told me that their version is called the budget billing plan. I believed that this would be a balanced billing. They never said that it was balanced billing, but they did not explain to me that it was not. I should have caught on, but I failed to notice that they kept steering away from the term “balanced”. I calculated my average electric bill to be $109 per month. My bill was $179 per month, and they were raising it to $210. I was not using more, but they had their method to justify this higher charge. What would happen is for a couple of months I did not pay at all, then I would have to pay this above average charge, which was frequently changed to a higher amount. I just canceled my budget plan, because it seems to have helped their budget, not mine. If you are going for a balanced billing plan, make sure it really is balanced billing; otherwise, you may not know what the provider is going to do.

How about allowing costs in one part of your budget to increase, as long as another part comes down in cost? I worked for a firm that focused on making every single metric either meet or go below the budget allocation. As a senior manager, it was my job to ensure that we took measures to achieve those goals. Yet I worked for a managing director who could care less about these individual goals. He knew by spending more in one area (like training or payroll), he could achieve a better result in another area. For him, the only number to compare was the bottom line. Did we do better than what the budget stated we should accomplish. As long as we did, the head office could not complain (much). I bring this up, because many people are turning towards vegetable gardens with the idea to reduce their grocery bills. In Houston, I do have the opportunity to grow vegetables throughout most of the year. I do have a thriving vegetable garden, but I have always had one. If you are planning to start one, then you have to realize that you will be spending more in certain areas, while hopefully spending less in other areas. Your water bill will increase. It would be hard to have that amount lower than what you spent last year then. You may wish to add another column to your graph: groceries. Is your grocery bill decreasing by an amount greater than your water bill is increasing? If yes, then you have accomplished your overall plan to save money.

You may become die hard in reducing your bills, but I imagine that you will probably take it easy. That is alright. As long as you are consistently recording your payments, you may find that you will start to look for ways to decrease them. Many home inspectors are turning to services that offer advice to reduce your consumption of energy, like Energy Raters. Yes they could help, but I think if you are casual about it, your best option is to start reading my posts in the For the Homeowner category. One subcategory deals with home maintenance while the other is focusing on green measures for the home. Both can give you tips to reduce your expenses. You get the home inspector without the cost 😉

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Tags: budget, energy bills, home, Houston, maintenance, reducing
This entry was posted on Friday, January 30th, 2009 at 11:41 am and is filed under Budgets and Finances. You can follow any responses to this entry through the RSS 2.0 feed.