More Consumers Need Installment Loans to Pay for Electricity

Electricity prices rise steadily

Mary Grace of Spokane, Washington said, “More than a few times this summer we’ve had to dig deep into savings and use installment loans to make ends meet. Our electricity bills are outrageous this time of year.” Grace is not alone in her issues with the electric company. Her main concern seems to be mirrored by many Americans: “What am I going to do if electricity goes up in cost, like everything else?” Electricity is one of life’s necessities but paying for it is becoming increasingly difficult. Grace added, “The company knows we need electricity so if they raise our bills, we’ll complain but in the end, we are going to do what we need to do to pay it.”

The state of the economy

The economy has been in turmoil since the recession first began back in 2008. A hefty stimulus was created to turn things around, and though it did help there are still a lot of issues to deal with. Oil and other commodities are dropping in price, but that does not mean that the cost to consumers is on its way down. On the contrary—residential electricity prices are expected to rise 4.7% in 2010 and another 3.3% the year after that, according to the Energy Information Administration’s Short-Term Energy Outlook estimates.

What consumers can do

Despite estimated rises in the cost of electricity, there are still some things consumers can do to cut down on their bills. Here are some tips to keep energy costs manageable:

Take care of equipment. One of the biggest energy drains is equipment that is not maintained on a regular basis. Much like cars, HVAC units need to be tuned-up once a year, at minimum. Consumers are told to have a yearly inspection and let a certified technician check heating, ventilation and AC systems. Marty Roman, of Roman Heating and Cooling, said, “Leaks in air ducts are the main cause of losing heat or air…the machine keeps running harder to regulate the temperature, and costs shoot up.” A good schedule of basic maintenance can mean the difference between a controllable electricity bill and having to use installment loans to afford monthly payments.

Use a programmable thermostat. The easiest way to regulate temperature is set it to automatically manage itself. A programmable thermostat can be found at most hardware stores for about $50. You can set it to lower heat and air while the family is gone for the day and while you sleep. That way machinery is only working during waking hours and not all day long.

Incentives on appliances. Most big-ticket items have Energy Star-certified options. This means that these items are not only more efficient than alternatives, but they usually cost less to operate. The stimulus of 2008-2009 had considerable tax benefits for households willing to “go green” and purchasing large appliances fall into that category. Qualifying A/C units can make a homeowner eligible for a tax credit of 30% of cost, up to $1,500.

Check out the house. Energy drains can be found by professionals, but consumers can do things themselves to assure their homes are energy efficient. Sealing windows and doors, changing to energy efficient light bulbs, closing blinds, using fans rather than the A/C are all good habits to adopt when trying to cut back on energy costs. Roman added, “Closing blinds may sound like a small thing, but over the course of a year, it can add up to substantial savings in heat and air loss.”

Combined, these suggestions can all bring down the electricity drain of a house. Roman said, “If you save only $25 as a result of maintenance and $15 as a result of using fans rather than A/C, it only adds up to $40. But what happens if you don’t have regular maintenance done to save money and then the unit breaks down? A service call is normally at least $65 just to have someone come out. In the end, the small cost of preventative maintenance is worth it.”

The future of managing electricity costs

Consumers are looking to save money in today’s difficult economy. Electricity is one of the biggest costs they face and as oil and commodity prices continue to rise, they are going to be more vigilant about watching for energy drains. Though in past years consumers used emergency savings or installment loans to manage, now it is time to take on a more proactive approach to keeping bills down.