Last Updated May 2026
- Small changes in daily habits — turning off lights, unplugging devices, adjusting your thermostat — can add up to meaningful savings over time.
- Upgrading to ENERGY STAR®–certified appliances and LED lighting can cut your home’s energy use significantly and start paying off quickly.
- Sealing air leaks and improving insulation are cost-effective ways to lower heating and cooling costs, which make up the largest share of most utility bills.
- Many utility companies offer rebates, rate programs and assistance that can help reduce costs.
- A home energy audit can identify where your home is losing the most energy.
Lowering your utility bills usually comes down to two things: using energy more efficiently and wasting less of it. You don’t have to overhaul your whole home to see results — tweaking everyday practices, making targeted upgrades and taking advantage of information in your utility statements can help you cut what you spend on electricity and natural gas or propane. The average American household spent roughly $1,700 on electricity alone in 2024, according to the U.S. Energy Information Administration.
Evaluate your current utility usage
Before you can cut costs, it helps to know where your money is going.
Review your monthly statements. Most utility bills compare your usage to previous months or the same period last year. Spikes could signal a problem — a drafty window or an appliance working harder than it should.
Identify peak usage times. Many utilities charge more during peak hours, typically weekday afternoons and evenings. If your utility offers time-of-use (TOU) pricing, running major appliances like a dishwasher or washing machine during off-peak hours may help lower your bill. Your utility’s website can tell you whether TOU rates are available and if they might work for you.
Use smart meter data. If your utility has installed a smart meter — more common for electricity than gas — you may be able to view an hour-by-hour breakdown of your home’s energy use through your utility’s online portal, which can help you spot unusual spikes and identify where you might be able to cut back.
Get a home energy audit. Air leaks — whether heated or cooled air is getting out, or hot or cold air is coming in — are a major waste of energy. An audit can pinpoint the highest-priority areas. Contact your local utilities or check their websites to find out if they offer free or subsidized audits.
Home energy: Ways you can save
| Energy-saving action | Potential savings | Energy impact | When it helps most |
|---|---|---|---|
| NO-COST HABITS | |||
| Lower water heater temperature from 140° to 120° | Up to $400/year | Reduce standby heat loss | Immediately — an easy, permanent solution |
| Unplug devices/use power strips | Up to $100/year | Standby power is 5%–10% of household energy use | Homes with lots of electronics, gaming consoles or home offices |
| Turn thermostat down 7°–10° for 8 hours/day in cold months. | Varies | Up to 10% on heating | When you follow a consistent daily schedule or are away regularly |
| Use windows and curtains strategically: Open for light/heat, closed to insulate | Varies | Curtains can reduce heat loss up to 10% and, in hot weather, cut need for AC | Where winters are cold, summers are hot |
| LOW-COST UPGRADES | |||
| Switch 5 most-used lightbulbs to LEDs | About $40/year | Uses up to 90% less energy | Any home with incandescent or halogen bulbs |
| Use smart thermostat | $50–$100/year | Automates heating/cooling adjustments to use less energy | Homes that are empty for long stretches of the day |
| APPLIANCE UPGRADES | |||
| Replace older refrigerator with ENERGY STAR model | $220+ over 12 years | Cut energy use about 9% | When your current refrigerator is more than 10 years old |
| Replace older water heater with ENERGY STAR heat pump model | Costly installation but saves about $550/year; $5,600+ over its lifetime | Uses up to 70% less energy than a standard electric water heater | Best for warmer climates. Needs adequate space around it and most models need 240v electrical service. |
Note: Estimates are based on cited Department of Energy (DOE), ENERGY STAR and EnergyGuide guidance. Actual savings vary by home, usage, climate and equipment.
(Find out more about keeping your home in optimal shape with these home maintenance tips.)
Explore renewable energy options
Solar power is the most accessible renewable option for homeowners and can meaningfully reduce — or even eliminate — electricity costs over time. Rooftop solar prices have dropped significantly in recent years. The federal government’s 30% income tax credit for homeowner-owned systems expired Dec. 31, 2025, but several states continue to offer solar incentives and many utilities offer net metering programs that credit you for excess power sent back to the grid. (Find out whether solar might be a fit for your home.)
Community solar programs are available in some areas, letting you subscribe to a share of a larger installation without putting panels on your own roof.
Geothermal heat pumps can deliver significant long-term energy savings but can involve high upfront installation costs. But they may be worth researching if you’re already planning a major HVAC system replacement.
Take advantage of utility programs and incentives
Check your electric and gas utilities’ websites for savings programs like these.
Demand response programs pay you or credit your bill for reducing energy use during high-demand periods, typically by allowing the utility to make small, brief adjustments to your thermostat or water heater through a connected device.
Rebates for energy-efficient upgrades are offered by many utilities and some states for ENERGY STAR–certified appliances, smart thermostats and HVAC equipment. The ENERGY STAR Home Savings tool lets you search available rebates and tax credits by ZIP code.
Utility assistance programs. The federal Low Income Home Energy Assistance Program (LIHEAP) can help qualified households with heating, cooling and energy-related repairs. The program’s website lets you search for resources in your state.
FAQs
Does unplugging devices actually save money?
Yes. Electronics and chargers left plugged in continue drawing standby power even when their power button is off (sometimes called phantom load). According to the U.S. Department of Energy (DOE), standby power can account for 5%–10% of a household’s energy use and could cost the average home as much as $100 a year. A power strip makes it easy to cut power to multiple devices at once.
What temperature should I set my water heater?
The DOE recommends 120° for most households. Many water heaters ship set at 140°, which wastes energy and poses a scalding risk. Dropping to 120° can save $36–$61 a year in standby heat losses and much more in the cost of water actually used, up to $400 a year. Dishwashers without a built-in booster heater may have their own water temperature requirements; the owner’s manual may have details. Water heaters account for roughly 14%–18% of the average home’s utility bill — about $400-$600 a year, according to the DOE.
Is a smart thermostat worth it?
A programmable or smart thermostat certified by ENERGY STAR, a joint program of the Environmental Protection Agency and DOE, can save you about $50 a year on heating and cooling costs — and around $100 a year if your home is unoccupied most of the day.
At a typical cost of $100–$250, an ENERGY STAR-certified smart thermostat generally pays for itself within two to three years — and sooner if your utility offers a rebate on the purchase.
Even if you don’t invest in a smart thermostat, the DOE says turning your thermostat back 7°–10° for eight hours a day in cold months can save as much as 10% on heating. DOE recommends setting the thermostat at 68° when you’re awake and home in winter, and lower when you’re asleep or away. In hot weather, the recommendation is to set the thermostat as high as is comfortable when you’re home and higher when you’re out.
Do ceiling fans lower electricity bills?
They can help, if used correctly. Fans create a wind-chill effect that makes people feel cooler in hot weather, so you can set your thermostat a bit higher without sacrificing comfort. In summer, run fans counterclockwise to push air down from the ceiling. In winter, switch to clockwise on a low setting: this draws cool air up and pushes warm air trapped near the ceiling down along the walls without creating a chilling draft. Turning off fans when leaving a room keeps costs down too; fans cool people, not spaces.
Can energy-efficient upgrades affect my homeowners insurance?
They can, depending on the upgrade. Improvements that increase your home’s replacement value — like a new HVAC system or rooftop solar installation — may mean your current dwelling coverage limit in your homeowners insurance is no longer adequate. If you make significant upgrades, a Farmers® agent can help you choose your coverage to reflect your home’s current value.
Does it make sense to make efficiency upgrades if I’m renting?
It depends on the upgrade. Low- or no-cost changes — adjusting your thermostat schedule, unplugging devices, using power strips and switching to LED bulbs — are worth doing in any home where you pay the utility bills. Larger investments like insulation or a new water heater are generally the landlord’s responsibility. If you rent and want to protect your personal belongings, it’s also worth looking into renters insurance.
The information contained in this page is provided for general informational purposes only. Read our editorial standards for Insurance Questions and other content. We make no representations or warranties of any kind, express or implied. This does not refer to any specific insurance policy and nothing herein is intended to replace or modify any terms in your actual policy.
Farmers may also provide information on topics that are not directly about insurance policies or coverage that we believe could be helpful to you. Information in such articles is not meant as professional advice, and any reliance you place on such information is therefore strictly at your own risk.
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