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The last time you received an energy bill, you may have been shocked by the amount you owed. You're not alone. With prices for electricity and natural gas expected to stay high into 2023, high energy bills can surprise anybody. How can you handle higher energy bills? To pay a high energy bill, you can see if your utility company offers financial assistance or payment plans or seek financial help from local organizations. You can also reduce your energy costs and avoid a high bill by taking a few simple steps.
How Can You Pay Off a High Energy Bill?
To get help paying a high energy bill, start by contacting your energy provider. Many energy companies offer assistance for ratepayers who are unable to pay their entire bill. For example, options available through Southern California Edison include:
- 12-month repayment plans for ratepayers with a past-due balance
- An Energy Assistance Fund that gives eligible ratepayers up to $300 once a year to help pay their bills
- Discounts on electric bills through the California Alternate Rates for Energy (CARE) or Family Electric Rate Assistance (FERA) programs
Ohio's Percentage of Income Payment Plan (PIPP) lets ratepayers pay a percentage of their household income for natural gas and electricity, with the rest subsidized by the state.
The Low Income Home Energy Assistance Program (LIHEAP) is a federally funded program to help low-income households pay their energy bills. Each state administers its own LIHEAP program.
Depending on your state, COVID-related government rental assistance programs may still be available. These programs help eligible households pay rent and utility bills.
Exhaust the options above before using your credit card, applying for a loan or raiding your emergency fund to pay your bill. Then consider taking measures to reduce your bill in the coming months.
What Can You Do to Lower Your Energy Bill?
To avoid an unpleasant surprise the next time you receive an energy bill, take steps to reduce your energy usage. Compare your energy costs to the average for your state to see if you're using more energy than most people. Visit your utility company's website; many provide do-it-yourself energy audits to reveal which parts of your home use the most power. Some utilities will even visit your home to conduct an in-person audit for free.
To lower your energy bill, you can:
- Set your thermostat higher in summer and lower in winter. Setting your thermostat up or down between seven and 10 degrees from its usual setting for just eight hours a day (such as when you're at work) can cut your energy costs by 10%, according to Energy.gov.
- Get a programmable thermostat. Available for as little as $25, programmable thermostats let you set temperatures to change automatically even when you're not home. For instance, you could keep your house hotter during summer days and set the thermostat to cool it down before you get home from work.
- Maintain your systems. Have your air conditioning and heating systems serviced regularly to keep them running efficiently. Change or clean filters monthly or as recommended.
- Check the insulation in your walls, attic and basement. Seal and insulate heating and cooling ducts.
- Look for air leaks. Pay attention to leaks around doors and windows that can let warm or cool air escape. Use weatherstripping to seal them.
- Limit air conditioning use. In summer, use fans and open windows to pull cool air inside in the early morning or at night, when outside temperatures are cooler.
- Check your lightbulbs. Replace incandescent lightbulbs with high-efficiency CFL or LED bulbs (look for Energy Star bulbs).
- Block sunlight. Use trees, awnings or outdoor sunshades strategically outside your home to block the sun. Inside, use light-blocking curtains to keep rooms cooler.
- Avoid using electricity during peak hours. Energy companies often charge more at times of day when many people use power (generally mornings and evenings) and less during off-peak hours (typically at night or mid-day).
- Investigate savings options your provider offers. For instance, Southern California Edison offers a summer discount plan for customers who let Edison cycle off or turn off their air conditioning during times of high demand.
- Opt for Energy Star appliances. When replacing appliances or electronics or buying new ones, look for energy-efficient products. You can search for products on the Energy Star website or check the product packaging for the Energy Star label.
- Look for rebates. Purchases of energy-saving appliances and systems may qualify for rebates. Visit the Energy Star site or your utility company's website to find rebate programs in your area.
- Compare energy providers. If your state is deregulated (meaning you have a choice of energy providers), shop around. You could save money by switching providers.
- Check local programs. Low-income households may qualify for the U.S. Department of Energy's Weatherization Assistance Program (WAP), which weatherizes homes to improve energy efficiency. Visit the WAP site to see if you're eligible and apply.
How Can You Better Budget for a High Energy Bill?
Comfortably paying your energy bill going forward might require some physical discomfort. But setting the thermostat higher or lower than normal isn't the only way to save on energy bills. There are also some financial moves you can make to better budget for energy costs.
- Opt for budget billing. Many energy companies offer budget billing, which can make it easier to plan for energy expenses. This method averages out your payments over the year, based on previous usage patterns, so you pay the same amount every month.
- Sign up for energy usage alerts. Some utilities can also alert you when your energy usage is on pace to exceed normal usage or a standard that you set. Forewarned, you can dial back energy usage for the rest of the month so your bill stays manageable.
- Factor in higher energy costs. Building higher energy costs into your budget may help you handle a big bill without breaking the bank. If your utility bills have been rising, now is a good time to make a budget or revisit your current budget. Be sure your budget sets aside some money every month to build an emergency fund. Having savings to tap into will help ensure you can handle any surprise bill that comes your way.
- Avoid using a credit card. Thinking about paying your big energy bill with a credit card? While some utility companies accept credit cards, this may not be the best payment method unless you can pay the bill in full when it's due. Otherwise, you could run up a big balance and accrue interest charges.
Do Utility Bills Affect Your Credit Score?
Utility companies don't report your payments to the credit bureaus. However, if you don't pay your energy bill, the utility company may send your debt to collections. Accounts in collection do appear on your credit report and stay there for seven years—even if you pay the debt—which negatively affects your credit.
If you keep up with your utility bills, however, your good payment history can help improve your FICO® Score☉ powered by Experian data. With Experian Boost™† , you can get credit for your on-time utility, phone and streaming service payments, and you won't be penalized for late payments.
Don't hide an unexpectedly large energy bill in a drawer and try to ignore it. Taking quick action when you get a hefty energy bill can uncover sources of assistance. Paying your bill on time may require finding assistance, but will help you maintain good credit.