How electricity costs affect your living expenses—and how you can manage them on a monthly basis

At the end of some months, it seems like we have a little less in our bank accounts than we should. Although that could be because of a few too many fast-food binges or too many movie nights, a possibility that many people don’t consider is utilities. They may be necessary expenses, that doesn’t mean we should overlook them.

You might be saying to yourself, “but utilities can’t cost that much, to begin with, can they?” Well, it all depends on how you see it.

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Power lines with city lights in the background. /Archive

The typical American family averages more than $2,000 a year spent on utilities, according to Energy Star. A bit farther north, as reported by the Fraser Institute, 2.6% of total spending on average for Canadian households was used on energy costs, such as electricity and natural gas.

That might not sound like a lot, but such an amount adds up over the course of a year; Statistics Canada found that households spent an average of $16,846 on principle residence associated costs in 2017, of which utilities are a part of 2.6% of that sum is about $438 – that amount could pay for a month of groceries for a family.

In Atlantic Canada, energy costs are even higher, accounting for 4% of household spending. What might surprise you even further is that 7.9% of Canadian households were found to be energy poor in 2013, meaning that more than 10% of household expenditures go towards energy.

In plain English, many Canadian families could be foregoing other necessary costs, such as food or transportation, in order to pay for energy. But there is more to the story. The question you have now may be, “how can I cut down on my utilities each month?” Luckily, there are a number of ways to do it.

First, let’s break down what these costs are. Most commonly, they are heating, cooling, water heating, and appliance/lighting usage. In the United States, for example, winters can be quite cold and costly. In 2017, the U.S. Energy Information Agency predicted that the average household would pay $644 or $980 to heat their homes with gas and electricity, respectively, during winter.

Heating your home during winter

If you live in Canada, you’re probably no stranger to long, harsh winters — not to mention costly. As reported by Natural Resources Canada (NRCan), space heating accounts for 61% of the energy used in the average Canadian home.

In addition to that, there are heating costs. After having a stressful day or spending the day outside in the cold, you might be tempted to relax with a long, hot shower. Please keep in mind, however, that 19% of the energy used in Canadian homes is spent on water heating, according to NRCan.

The good news is that you can still take relaxing showers or feel warm at home during winter by changing small habits and investing in energy-efficient devices. From low-flow showerheads to wearing more sweaters and blankets on cold days, you can make your home heating costs much more affordable, sometimes 15% lower.

The not-so-fun side of summer: Cooling costs

If you think heating is the only “energy villain,” you will be surprised to find out that cooling can cost a lot, even in cold countries. In Canada, NRCan data shows that the amount of energy being used for space cooling has been trending upward since the 1990s.

In case these numbers aren’t making you sweat enough, wait until you learn that the air conditioning costs in the United States range from $262 to $525 per year, or as much as 12% of total home energy expenditures.

Even basic gadgets at home could be spending more energy than they should, such as lighting and appliances. According to NRCan, these devices represent 4-14% of a home’s energy usage. As an example, if you own older appliances and incandescent light bulbs, you’re probably wasting more energy (and money) than you should.

Small steps toward energy efficiency

Smart power strips, LED light bulbs, smart thermostats, and motion sensors are only a few of the many solutions you can find to save energy without investing a lot of money. Some energy-efficient home upgrades can be quite costly, so it’s worth it kicking off your new energy habits with small steps.

Energy efficiency doesn’t have to be complicated. Just by thinking about your utilities and your monthly energy costs, you will be already thinking in an efficient way. The more you pay attention to your bills, as well as your daily habits, the more you will find opportunities to cut down on your costs.

Who knows? Maybe someday you could use the money you used to spend on utilities to treat yourself with a new phone or even save for your next trip.

About the Author
Matthias Alleckna is an energy expert at EnergyRates.ca, a leading energy rate comparison website that provides unbiased, third-party reviews of electricity and natural gas retailers. He also writes weekly blog posts on energy-efficient living and personal finances.


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