Energy Bills Can Be Unpredictable. Here's How to Plan for Them

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Everything seems to cost more these days, and energy bills are no exception. About 78% of US adults are worried about increased energy costs, according to a recent CNET survey. 

To make matters worse, energy bill amounts can vary by month, making it difficult to know exactly how much to budget for them. It’s possible to stay on top of inconsistent energy costs without going into debt. Here’s how.

How to fit variable energy expenses into your budget

High energy bills don’t have to bust your budget. Here’s how to afford them.

💡Sign up for budgeting billing

Many electricity and gas companies offer budget billing, which enables you to pay the same amount for your bill each month. The utility company examines your energy usage over the past year to calculate your average monthly cost, which it charges as a set amount each month.

To check if your utility company offers a budget billing option, contact customer service. They can walk you through how to sign up if a program is available.

💡Cut your spending in other categories

If you don’t make enough money to cover rising energy costs, it may be time to tweak your budget. For example, you could eat at home more or cancel subscriptions you don’t use. A budgeting app can help you see where you may be overspending and where you can cut back.

💡Put aside money for the pricier months

If your utility company doesn’t offer budget billing, you can create your own budget billing strategy by starting an energy bills savings fund.

Review your bills over the past year and calculate your average monthly cost. Then, budget for that amount each month. In months when your bill is lower than the budgeted amount, put the extra savings to use when your bills are higher. 

💡Set up a payment plan

Many utility companies offer a payment plan option, which allows you to spread out a high bill over several payments. Call customer service to find out if your utility company offers this option, and be prepared to give a specific reason why you need help, such as job loss or a family emergency. You may also need to make a down payment to create the plan.

💡Lower your energy usage

There are many things you can do to keep your energy costs down, including:

• Turn off the lights. When you leave home, turn off all the lights. When you’re home, turn off any lights you’re not using, including when you leave a room.
• Lower your thermostat. Keeping the temperature in your home a few degrees higher in the summer and a few degrees lower in the winter can make a significant difference in your energy costs. You can stay comfortable by doing things like wearing extra layers in the winter and closing the curtains during the day in the summer.
• Limit water usage. The more water you use, the more you pay for. Try taking shorter showers, turning off the sink while brushing your teeth and only running full loads of dishes and laundry.
• Install energy-efficient appliances. Energy-efficient dishwashers, ovens and other appliances help keep costs down. As a bonus, you may also qualify for tax credits for installing them.
• Use energy-efficient lightbulbs. New appliances may be out of your budget, but switching to energy-efficient lightbulbs is a low-cost way to lower your energy usage.
• Switch to solar energy. Installing solar panels requires an initial investment, but the savings they net you can add up over time. You may be eligible for tax credits if you install solar panels, plus there are federal and state programs that could help you afford them. 

💡Apply for energy assistance

The US Department of Energy runs a weatherization assistance program to help low-income households reduce energy costs. You can also look into the federally funded Low Income Home Energy Assistance Program and find local resources in the LIHEAP assistance directory. Each program has its own eligibility criteria and application process. 

💡Participate in local energy-saving programs

Some utility companies offer a rewards program. Each program is different, but they usually encourage participants to lower energy usage in exchange for a credit on their energy bill or other perk. 

For example, PG&E’s Power Saver Rewards Program gives participants credit for lowering energy usage during peak summer heat days. BGE offers a chance at an average $3,000 rebate for participating in an energy audit. 

Emma Woodward is a personal finance writer with a passion for simplifying tricky financial concepts. She has covered loans, budgeting and credit cards for Bankrate, The Financial Diet, Finch, Gusto and Human Interest. When she's not helping you balance your budget, you can find her writing about real estate, food and restaurant tech.