How an Energy Audit Saved Us $2,400 a Year

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how to shrink energy billsWhen my husband and I closed on a storybook colonial house in the New Jersey suburbs on New Year’s Eve, we thought we’d bought our slice of the American Dream.

After more than a decade as renters in Brooklyn and New Jersey, we were free of the clutches of landlords – and the instability of a volatile rental market.

We were also pretty cocky about the deal we’d scored: We bought at the bottom of the market, locking in an interest rate that could make a girl blush. Our monthly payments were $400 less than what we’d paid in rent. And we had double the space. And three bathrooms! And a finished basement! The kids were downright giddy.

RELATED: How the American Dream Is Keeping Us Broke

We couldn’t wait to start putting all that spare cash back into savings. That was until we got the first call from the oil company.

The Problem With Heat

Our house is heated with heating oil. Only 6% of American homes are heated with oil and most are in the Northeast, according to a 2009 government report. We knew oil cost more than natural gas, and figured we’d eventually convert.  But we were caught unprepared for just how much more it would cost us to heat our 80-year-old home every month. Add to that, we had no idea what it meant to live in a poorly insulated house that loses heat like it’s made out of Swiss cheese.

We got the first inkling of trouble on moving day. As the movers unloaded boxes, I got a call on my cell phone from Verna at the oil company—a local supplier the previous owner had used. Our tank was a quarter full, she explained, and needed a refill. She asked if I wanted the minimum fill, 150 gallons. “Sure!” I said as I directed movers. “How much will that be?”

“$562,” she said, without missing a beat. “Do you want to pay cash?”

We were paying nearly $800 a month for energy. All our planned savings were obliterated with a single expense.

I was floored. $562! How could that be? Oil cost $3.75 a gallon, she explained. A few hours later, the owner, John, swung by. Don’t worry, he reassured me, 150 gallons of oil would last all winter.

At first it seemed like he might be right. Early January was unseasonably warm, and the red dial on our tank in the backyard held steady. But then winter set in, and every day I watched as that dial inched down to the quarter fill mark.

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We installed a digital thermometer and set it for 59 degrees at night. Two nights later, we reduced it to 58. And then 57. We piled on the blankets. During the day, I kept the house at 65 when the kids were at school, and bundled up with sweaters in my home office. But the dial kept slipping.

In less than five weeks, our 1,500-square-foot house had sucked through 150 gallons of oil. When I called the company, prices had gone up. The next fill cost us more than $600.

And then we got our first utility bill. (Our dryer, hot water and stove run on natural gas). It was $175. Added together, we were paying nearly $800 a month for energy. All our planned savings were obliterated with a single expense.

The math is pretty simple. Natural gas costs less than half as much as oil, thanks largely to the boom in domestic gas drilling and volatile global oil markets. Last winter, an oil-using homeowner paid $2,087 to heat his home compared to the $832 a gas-using owner paid, according to U.S. government data. This year, oil prices were higher and the winter was colder, so it doesn’t take a mathematician to figure out what that means for homeowners.

But our problem was bigger than the price of oil. Our house was also losing heat and a lot of it. One thing was clear: We had bought an energy hog and it needed to be reined in.

How We Finally Reduced Our Bill

Houses are not designed to be airtight. They should breathe. A typical house exhales about 33% of its air every hour, expelling dust, mold and other toxins. But if a house isn’t well sealed or properly insulated, it blows far more air than it should out into the atmosphere. So, rather than heat your house, you heat the sidewalk. I knew that without addressing the structural issues there would be no point in shelling out upwards of $10,000 to convert our house to natural gas.

But to do this, we needed money. I turned to DSIRE, a federal database of state incentives available to people who make home energy improvements. I learned that New Jersey, my home state, has a program that provides homeowners with a 25% rebate for making specific improvements to their home, including insulating and switching to natural gas. The program also provides homeowners with an interest-free loan to pay for the work. In order to qualify, you must first do a home energy audit.

  • Kristin

    I thought this article was extremely informative and I learned a ton. I am a renter and probably two to three years away from buying a house but I sent it to a friend who is currently searching for a home in Massachusetts.

  • William

    I’d like to see how the numbers actually work out. Estimates tend to be a little optimistic in my experience. I’m sure adding insulation where you had none before would make a huge difference, but on a newer house, there’s not much to be gained. 2 years ago, I had an energy audit done on my house (built in 1996) and subsequently had air & duct sealing done and a solar water heater installed. It will probably 10 years until I break even. On the plus side, the water heater should last 20 years or more and I can feel slightly good for helping the environment.

  • http://twitter.com/Shazaran Shazaran

    electric & gas companies share the previous years billings when you are looking to purchase a home. Next time, contact these companies first so you know what you’re getting in to.

    • cocoachanel74

      That’s what I was thinking….I do that when looking for property to rent….it’s one of the first things I do…I never take the owner’s word on what the utilities were with them…they will lie in a lot of cases just to sell/rent their property!

  • kcheme

    Crap, I just signed a lease on a place with oil heat! I had no idea it was so much more expensive than natural gas, Gulp…thank goodness its April, I guess I have a few months to save for winter :-(

  • Nadia

    I live in Westchester, are their contractors who do free energy audits? Our tudor home is killing us with our energy bills!

    • Ronda

      Try calling around. New York has some of the best credits available for home energy improvements. Check out NYSERDA, the state’s energy department, for information.

  • http://www.facebook.com/profile.php?id=817134618 Gary L. Dryfoos

    So glad you’re taking such good care of the house. Living there as a kid, I never saw the utility bills of course, and had no idea about the lack of insulation. Thanks for the update.