How to Estimate the Cost of Utilities

Key utility bill statistics

  • Average monthly electric bill: $117.46 (U.S. Energy Information Administration, 2020)
  • Average annual gas bill: $667 (American Gas Association, 2020)
  • Average monthly water bill: $112.04 for four-person household (Circle of Blue, 2018)
  • Average annual internet bill: $1,392 (Parks Associates, April 2022)
  • Year-over-year increase in energy prices: 32 percent (Consumer Price Index, March 2022)
  • Year-over-year increase in gasoline prices: 48 percent (CPI, March 2022)
  • Year-over-year increase in fuel oil prices: 70.1 percent (CPI, March 2022)
  • Year-over-year inflation rate: 8.5 percent (CPI, March 2022)

The bottom line

When looking at potential homes, it’s important to ask, “how much are utilities?” to plan your budget. The answer will depend on multiple factors. For a start, look at national averages to get a baseline idea of how much utilities cost in the U.S.

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What Is the Average Water Bill?

The average person uses roughly 85 gallons of wate

The average person uses roughly 85 gallons of water per day, which is split between the bathtub, toilet, washer and shower, as well as the water used for dishwashing, hygiene, drinking water and outdoor use. And, while utilities like water, sewage or garbage are often included in the rent, several other services related to water and sewer provision may also be part of a local bill — such as the clean water program, the drinking water program, stormwater policies and more.

So, before signing the lease, ask your landlord whether the water bill is included in rent. If it’s paid separately, then you’re looking at an average water bill of about $41 monthly — and, again, depending on where you live, this price can change. If you add an average sewer bill, you’re looking at an extra $58 monthly. On top of this, a small fee may also be added to your bill for garbage collection, but your rent or city fees most likely already include this amount.

Research for low monthly rates

Once you’ve determined what you’re responsible for, start shopping around for the best prices. Retail energy providers can help you find the lowest rate and lock it in. Search online for one in your area.

Gas companies are very competitive, with some even offering cash-back incentives to use their service. Cable and phone companies often bundle services for a discount.

Compare:

  • Installation charges
  • Services provided
  • Fees
  • Length of introductory rates

What seems like a bargain to begin with can quickly shoot up once the initial rate expires.

How to estimate utility costs for a home

Most customers receive their utility services from state-regulated private companies. Among other factors, states oversee the prices those companies are allowed to charge.

The various energy sources you use, including renewable versus non-renewable, also have an impact on the utility costs you pay. Some potentially cheaper sources, like wind and hydro power, aren’t widely available, so you might be paying for more expensive sources simply due to location.

The age and efficiency of your appliances and systems, and the size of your home, also affect costs. If your home is older or has issues like insufficient insulation or deteriorating pipes, that can lead to higher bills, as well.

To estimate utility costs for a specific home, take into account the size of the home, the number of people in the household and the types of energy sources available. If possible, ask the seller or landlord, or your real estate agent or the utility company, for estimates. You can also get a rough idea using this map of average monthly electric costs by state:

Utility costs landlords may cover

When shopping around for an apartment, be sure to

When shopping around for an apartment, be sure to ask the apartment manager for details about utility costs before you sign the lease. Find out what the landlord is responsible for and what you’re responsible for. Be sure to get this written down in the lease if you decide to rent the apartment.

In the apartment listing, you may see a short blurb about what landlords cover.

Some utility costs covered by your landlord may include:

  • Water: Landlords usually cover the cost of water each month. The national average cost of water per unit is around $40 per month.
  • Garbage: The average cost of residential trash collection is between $12 to $20 per month, according to the National Solid Wastes Management Association
  • Electric stove: In older units, landlords may cover the cost of an electric stove

Landlords usually won’t cover the cost of electricity, so be prepared to pay for this.

Request a home energy audit

Hire a home energy auditor to evaluate the home’s energy efficiency and, thus, provide you an idea of what it will cost to heat and cool. The lower the residence’s Home Energy Rating System score, the more energy-efficient the home. A new house built to building codes should have a score of 100. An older home might have a bit higher score, but, generally speaking, you’ll want to see a HERS score below 130.

You can often get a referral to a home energy auditor through your local power company. Dominion Energy, for example, can refer you to a home energy auditor.

Tips for Saving Money on Your Gas Bill

To save money on your gas bill, first check the seals on windows and doors to determine if you’re losing heat anywhere. Mostly used during the winter to warm the home, gas consumption can also be reduced by adjusting the temperature — and a smart thermostat can help with this. Likewise, get used to lowering the temperature during the winter, even if only by a few degrees. The difference will certainly show up on your bill.

Get a HERS evaluation

“If you’re about to buy a home and you want to know how much your utility bills will be and how quickly energy efficiency improvements can pay for themselves, a HERS rating performed by a home energy auditor is a great place to start,” says John Milligan, owner and president of Goals2Green, an Indiana-based energy auditing firm. “You can also use it as a tool to compare with other homes you’re considering.”

This thorough pre-purchase evaluation by a certified home energy auditor uses the HERS (Home Energy Rating System) Index, a scoring system established by the Residential Energy Services Network (RESNET). The critical point on this scale is an Index of 100 earned by a new home matching specifications of the HERS Reference Home built to guidelines of 2006’s International Energy Conservation Code. Meanwhile, a net-zero energy home earns a HERS index of zero, so the lower a rated home’s HERS index is, the more energy efficient its regarded to be.

Hiring a qualified auditor to perform a HERS rating on the home you hope to buy can help clarify trouble spots and opportunities for improved efficiencies. Some sellers may also have their homes rated before putting them on the market, advertising a positive HERS rating as a feature of the property. To find a qualified HERS rater in your area, visit www.resnet.us. RESNET also offers information on tax incentives and Energy Efficiency Mortgages that can help buyers pay for the costs of home improvements.

How do I calculate utilities for a single-family rental?

Your first step is to create a complete list of the utility bills you will be responsible for as a tenant.  Determine which are absolute necessities (heat, electricity, etc.) and which are somewhat optional (internet). This is helpful if you’re working on a tight budget or if the utility costs are the deciding factor on  your ability to rent a specific home. Ask clarifying questions such as is the home heated with gas or electricity, and are utilities paid to the landlord or directly to the utility company before signing a lease agreement to make sure everyone is on the same page.

You probably won’t be able to know how much utilities cost exactly before moving in, but you should be able to come up with a pretty accurate estimate with a little research. Ask the landlord if they would be willing to share some previous utility bills with you, or reach out to utility companies directly to ask for average costs at the property address. Most will at least provide you with a high and a low. If you have any friends or family living in the area, ask if they would be willing to share their utility costs with you to get a sense of what’s reasonable in your location.

Utilities should fit in the overall budget

Remember,  rent isn’t the only expense to account for in your budget. Utilities can encompass a large portion of your monthly housing expenses especially if you are renting a single-family home. Do your best to research how much utilities cost, then consider if these additional expenses are realistic for your budget before entering into a lease agreement to set yourself up for success.

Categories: Moving, Renters

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