With high heat and humidity blanketing NJ this summer, our AC is working overtime to keep us cool.
The cost of staying cool (and warm) continues to rise with prices for residential energy services forecasted to continue outpacing overall inflation in the US.
To control these rapidly growing costs, many renters and homeowners have turned to energy efficient methods ranging from simple habit changes to significant home upgrades.
If you are interested in learning more about energy costs and how to lower your monthly bill to reduce your energy burden, then please read on.
The cost of comfort on the rise
Between 2013 and 2023, electricity prices largely tracked inflation. However, the U.S. Energy Information Administration expects electricity price increases to outpace inflation through 2026.
More recently, US energy prices rapidly increased from 2020 to 2022. This was largely due to economic recovery after the pandemic and disruptions in energy supply chains caused by Russia’s invasion of Ukraine (see chart below).
While prices for some fuels like gasoline and heating oil have declined since 2022, retail electricity prices have continued a steady increase.
According to the latest CPI release (June 2025), energy services prices have increased by 7.5% over past 12-months, with electricity up 5.8% and natural gas increasing by 14.2%. By comparison, prices for all CPI items (including energy services) increased 2.7% over same time period.
It’s important to note that these are averages, and actual changes can vary significantly by region and individual household consumption patterns. Factors like extreme weather (increasing heating or cooling demand) and regional fuel costs also play a substantial role in annual fluctuations.
There is some good news. Thanks to advancements in energy-efficient technologies combined with government incentive programs, per-household energy consumption has declined by almost 20% since 2005, despite significant increases in the number of households and the number of appliances and electronic devices per household.
How to lower energy costs
Whether you pay for utilities as a homeowner or renter, lowering your residential energy bill is a common goal. There are many effective strategies to offset price increases, ranging from simple habit changes to significant home upgrades. Here are 19 quick and easy ways to start saving without major investments:
For a comprehensive list that includes 34 ways to generate higher savings with behavior changes, home upgrades, and government programs, please check out this information brief.
Shop for lower rates in deregulated energy markets
Energy deregulation empowers consumers by offering them more control over their energy choices, potentially leading to cost savings, better service, and the ability to choose greener energy options. However, it also requires consumers to be more proactive in comparing plans and understanding contract terms to make informed decisions.
Several states in the US have deregulated their energy markets, allowing consumers to choose their electricity and/or natural gas providers. Currently 29 states have deregulated their electricity and/or gas markets, in whole or in part according to TruEnergy.
If you live in a deregulated energy market, shop around suppliers and find a fixed-rate energy plan that’ll help you keep costs low during peak demand.
How do you switch? It depends on where you live. Some communities negotiate rates with suppliers for their residents, while in other areas, you’re free to go about shopping for your own plan.
If your community does the negotiations for you, check your mail for any notifications, as they’ll include notices and ways to choose another supplier.
If you’re on your own, use sites like Choose Energy or SaveOnEnergy to shop for and compare prices in your area. Once you find a plan you like, you can complete the process through the website or call customer service for any questions you have or to sign up.
Alternatively, aggregator services like Arbor can automate the process for you. You link your current account, and they will find and switch you to lower rates, often taking a percentage of your savings.
Another option is to reach out to your local utility. They have resources available, where they direct you to shopping platforms to pick a plan.
Budget and environmentally friendly comfort
When it comes to budgeting, a good rule of thumb is to spend no more than 6% of your gross monthly income on energy services (gas and electric combined). Here’s a breakdown of how to think about it:
- Affordable range:
3%–6% of gross monthly income
This is considered manageable and typical for most households. - Energy burdened:
Spending more than 6% on energy is considered a high energy burden, especially for lower-income households. - Severely energy burdened:
Spending more than 10% is considered severe, often requiring intervention or more significant energy efficiency improvements.
Some studies show that a quarter of all U.S. households and two-thirds of low-income ones have high energy burdens (more than 6% of income on utility bills), and two of every five low-income households have severe burdens (more than 10% of income on energy costs).
An energy burden calculator, like this one from the Sierra Club, can be used to help you estimate the percentage of your income that is spent on energy expenses (electricity and home fuels).
Energy service costs are expected to continue rising. By implementing a combination of these strategies, you can significantly reduce your residential energy bill and make your home more comfortable and environmentally friendly.
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