by
According to the latest forecast from the US Energy Information Administration, utility bills for the average US household are expected to remain stable or fall over the next few years. But you can make immediate savings by taking a few steps now to reduce your energy use.
After a big spike in utility costs since 2020, utility bills are likely to remain fairly flat in 2023 and 2024, with a drop in consumption offsetting a modest rise in prices, according to a CNET analysis of the EIA data. Natural gas bills are expected to fall after rising last year.
Energy savings so far this winter can largely be attributed to lower heating bills due to the weather, according to Chris Lafakis, a director at Moody’s Analytics who oversees the company’s climate risk initiative.
“This was one of the mildest winters on record,” said Lafakis. “It’s really taken a toll on natural gas prices.” While the mild winter was the biggest driver of household energy savings, global factors affecting the natural gas supply chain and the war in Ukraine also play a role.
It’s hard to say if or when you’ll see savings on your energy bills, as so much depends on your utility and how you pay for energy — plus it can take time for macro-level price changes to hit customers leak out . Here are some ways to reduce your energy use now and make direct savings on your bills.
What do experts predict about energy prices?
We used EIA data to calculate the average monthly electricity bill based on average home consumption and EIA retail prices. The average household electricity bill has increased significantly in recent years, from an average of $117.51 per month in 2020 to $136.34 in 2022. This figure is expected to vary only slightly in 2023 and 2024 – $135.69 in this year and $138.24 next year.
We calculated natural gas bills using EIA data at retail prices and assumed an average monthly consumption of 5,000 cubic feet per month. Natural gas bills are expected to fall after rising sharply in 2022. The average monthly bill increased from $61.05 in 2021 to $73.70 in 2022, but is expected to fall to $67.10 in 2023 and $62.55 in 2024 as gas prices fall.
Monthly consumer costs for electricity and natural gas*
|
*Based on MSRP data |
2020 |
2021 |
2022 |
2023 |
2024 |
|---|---|---|---|---|---|
|
Electricity (average private consumption and retail costs) |
$117.51 |
$121.03 |
$136.34 |
$135.69 |
$138.24 |
|
Gas (average residential retail cost for 5,000 cubic feet) |
$53.80 |
$61.05 |
$73.70 |
$67.10 |
$62.55 |
Remember that the global energy market is volatile and these are only predictions. Your bill can vary widely as energy prices vary by state, utility, and supplier. Your bill may also include fees and fixed charges that are not included in these prices.
“There is still a lot of uncertainty, including the possibility of extreme weather conditions later this winter that could increase demand and slow production temporarily, but those possibilities are diminishing as we get closer to spring,” EIA Administrator Joe DeCarolis said in a press release.
Regarding natural gas, Lafakis said one factor to watch is the reopening of the Freeport LNG facility, a major liquefied natural gas export facility in Texas that has been closed since an explosion in June. The plant’s closure has led to a natural gas glut in the US because less can be exported, Lafakis said. Its reopening, which could take place in March, could increase demand for American fuel and drive up prices.
What global factors influence energy prices?
The last 12 months have been volatile in energy prices, which have been a key reason for the highest inflation in 40 years. Natural gas prices surged in 2022, surpassing $9 per million BTUs in the summer after the Russian invasion of Ukraine. As recently as mid-December, natural gas was still costing around US$7 per million BTU. At the end of January 2023 it was below $3. When the wholesale price of natural gas increases, it can have a significant impact on your heating bill – and you may find some relief when it decreases.
Natural gas prices are also impacting electricity prices, as it’s the single largest source of electricity generation, according to the EIA, accounting for nearly 40% of U.S. electricity capacity.
Unfortunately, the price change might not affect your gas and electricity bills too much – at least not yet. That’s because the price you pay your utility company isn’t directly tied to wholesale energy prices, and it takes time for the changes to reach customers. Most of the savings consumers are seeing right now is from using less energy because it’s not as cold, not because energy is cheaper.
“You won’t get as much of the windfall of a fall in natural gas prices, and you won’t get hurt as much if the price of gas goes up,” Lafakis said.
This is how you save energy costs
You now have some power over your energy bills. Here are some ways to train it:
Check with your energy supplier
Depending on where you live, you may have choices about who provides your energy. That means you can look around at different providers and compare the prices. In states with a deregulated energy market, you can select and contract a supplier that has either a fixed or a variable tariff.
Now might be a good time to consider a longer-term fixed-rate contract when lower prices make it more affordable, Lafakis said. “Try to freeze prices while gas prices are still low because it won’t last,” he said.
Be careful which contracts you sign. Some providers offer “teaser” prices that are low for a short time but rise quickly after you’re already locked in.
Get an energy audit for your home
This can work in a number of ways. Your energy supplier may be able to send someone to check and see how you can save energy. Or you can conduct an audit at home using the US Department of Energy’s instructions. You can also hire a professional service, which will likely give you more detailed insight than your utility.
Consider solar panels
One way to save on your electricity bills is to generate your energy directly on your roof (or in your yard or in your kennel). Solar panels can drastically reduce or eliminate your electric bills entirely, depending on how much energy they produce and how you’re compensated for the excess. Combined with other steps to electrify your home, they could go a long way toward meeting your overall energy needs. Check out our picks for the best solar providers of 2023.
Important points
- Energy prices fell in early 2023 due to a mild winter across much of the US.
- A government forecast predicts better times for utility bills after a rough 2022.
- If you’re facing high energy bills this winter, consider an energy audit to find ways to make your home more efficient.
