Utility bills are an inescapable part of modern life. Before COVID-19, heating, cooling, lighting, cooking, electronic gadgets, and other mod cons cost average American families $115 per month. Then people began working from home during the pandemic, their energy bills rose accordingly. So, how can you protect yourself from utility bill increases in an ever-shifting world?
We’ll begin this guide with a brief foray into climate change, and then we’ll explore a few common reasons why utility bills rise over time. After that, we’ll delve into ratemaking, and then we’ll discuss ways to guard against energy bill hikes. Let’s get started.
Will Climate Change Affect My Utility Bills?
If the recent weather in Texas has proven anything, it’s that energy grids aren’t infallible—even in the land of 10-gallon hats. For the third time in ten years, Texas power plants completely failed, leaving millions of residents without electricity in the middle of a freezing winter storm. Wholesale electricity prices went up nearly 7,400%, and without regulatory safeguards in place, some of those eye watering costs passed directly to consumers.
Unfortunately, previous grid failures in 2011 and 2014 didn’t cause wholesale change in the independent Texas power market. Wind turbines, gas-driven generators and other energy sources weren’t winterized because providers weren’t legally obliged to upgrade equipment.
Many leading scientists agree that the latest Texas storm, and probably the two previous storms, were caused in part by rapid warming in the Arctic circle. In the future, they say, polar vortex weather events may become more common—and utility companies must prepare.
Climate Change and Carbon Tax
Residential utility prices may rise as economies shift from fossil fuel-based energy production to green energy production over the next few decades. According to the International Monetary Fund (IMF), carbon taxes designed to offset the effects of climate change will likely trickle down to consumers, pushing household bills up 43% by 2030.
Climate change is an important issue, but should you have to take on the financial strain? Some experts believe that the answer lies in carbon tax-funded compensation for consumers. If you’re curious about legislative plans for climate change in your state, get in touch with the representative in your district—or view existing state legislation online.
Why Do Utility Bills Increase?
Utility bills increase for many reasons—and some of them are easy to fix. If you’ve run through more kilowatt hours lately, check your insulation, change your light bulbs and vanquish energy vampires in your home.
Nearly all insulation eventually fails. Loose-fill insulation settles to the bottom of a cavity, fiberglass loft insulation crumbles into dust and rigid foam disintegrates. If your utility bills have crept up gradually, get up close and personal with your insulation and replace rolled batting and blown-in insulation if need be.
Quick Tip: Consider replacing rolled and loose-fill insulation with spray foam insulation. When properly applied, contemporary spray foam insulation lasts indefinitely. Be careful around electrical boxes and light boxes, and make sure you go for closed cell spray foam for roof insulation.
Old Light Bulbs
Incandescent light bulbs convert a lot of energy to heat—and compact fluorescent light (CFL) bulbs aren’t much better. In contrast, ENERGY STAR-certified LED bulbs use much less energy—75% less than a traditional incandescent bulb and 50% less than a CFL bulb. If you switch incandescent bulbs in your home for LED bulbs, you could make a sizable dent in your monthly electric bill.
Do you keep your cell phone charger plugged in all the time? What about your TV? Perhaps surprisingly, appliances use a little power whenever they’re plugged in—in fact, idle devices consume about about 10% of all residential energy. Unplug those “energy vampires” and you could save about $100 a year on your energy bill.
Can Utility Companies Charge Any Price They Want?
In short, no, utility companies can’t charge any price they want. They have to justify generation and distribution rates—and they do this via a process called ratemaking. Public utility providers in the United States all have to go through ratemaking processes to ensure that their rates are fair. Public Utility Commissions in all 50 states handle energy generation and delivery rate regulation.
How To Protect Yourself From Utility Bill Increases
At best, utility bill hikes are annoying—at worst, they’re catastrophic. Case in point, after the 2021 winter storm, some Texas consumers received $7,000 bills. Keep expenses low and fight back with the following tips.
Check Your Meter
Electricity meters sometimes fail. The easiest way to check a meter is to switch off and unplug all the appliances in your home. If the dial on your standard meter still moves—or if the numbers on your digital meter keep increasing—you may have a problem. In that case, contact your utility company right away.
Scrutinize Your HVAC System
HVAC problems are a major power drain—especially in winter and summer when heating and cooling systems are active. Clogged air filters, loose air vents and electrical issues can make your HVAC unit much less effective and bump up your energy bill. Give your air conditioning and heating system a thorough inspection and tackle any glaring issues.
Update Old Appliances
Older appliances are notoriously energy hungry. In contrast, newer appliances are much more efficient. Consider replacing vintage ovens, freezers, washing machines and dryers with newer ENERGY STAR-certified models to reduce your energy bills.
Contact Your District Representative or Congressperson
If you feel you’ve been subjected to an unfair rate hike, contact the Public Utility Commission in your state—or better still, your district representative or congressperson. Ask if they can intervene on your behalf. This approach is most effective when unexpected rate hikes affect a large number of utility provider customers at the same time.
Seek Legal Advice
If you believe you’ve been treated unfairly by your utility company and your district rep or congressperson can’t or won’t help, consider seeking legal advice. Most states have a consumer bill of rights, which a knowledgeable local attorney can help you navigate.
You can’t always protect yourself from utility bill increases, but you can nix energy vampires, replace failed insulation and tackle other common issues—and you can try to reduce the amount of energy you use. If you believe you’ve been subjected to an unfair price hike, contact your district representative or congressperson and seek legal advice if necessary.
Ready to make utility payments work in your favor for a change? Sign up for ExtraCredit and use the Build It tool to add on-time utility payments to your credit report.
DISCLAIMER. The information provided in this article does not, and is not intended to be, legal, financial or credit advice; instead, it is for general informational purposes only.