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The Formula For Energy Prices
After rent and car payments, energy bills rank as one of the largest expenses most people have to make on a regular basis. People living with friends or family cannot use past experience as a barometer because living alone usually means lower energy costs. Most renters ask the landlord how much can I expect to pay for my gas and electric living on my own? The answer has a lot to do with the state in which one resides.
Electricity and gas are priced very differently, and the cost of the electricity varies on the proximity of electrical plants and a state's energy infrastructure. People living alone can minimize expenses by turning off lights, using dimmer switches and unplugging electrical appliances, but beyond being conservative with the usage, the monthly bills vary from state to state.
In 2008, electricity in West Virginia only cost $7.06 per Kilowatt hour, whereas in Hawaii it cost $32.50. This means people relying on electricity alone, pay almost five times as much because they live in Hawaii as opposed to West Virginia. States in the mid-West including Kansas and Missouri also ranked among the least expensive for energy and the development of wind farms in the area is likely to keep costs down just as it does in coal producing West Virginia. The overall average residential energy bill in Hawaii during 2007, was not as high as you might expect relative to West Virginia, but it averaged $158 versus West Virginia's $76; so more than twice the price, once gas and taxes are added into the equation.
Perhaps unsurprisingly the average monthly electric bill in Maine is $145 virtually the same as hotter Texas. People in Maine consume lots of energy during cold winters while air conditioners keep bills high in Texas during the summer. The average annual electric bill in the United States is $1,600, although it is estimated that using energy efficient light bulbs reduces that by $50 per year.
Gas prices are harder to predict because gas is a commodity traded on the open market, and like crude oil and gold, it has become a safe haven for investors wary of stocks. Russia is the leading exporter of gas and prices of Russian gas have increased rapidly in recent years as that country increasingly relies upon energy sales to stimulate its own economy. During cold winters, demand increases and gas costs escalate rapidly whereas in mild winters, demand and prices fall.
Many state governments have increased electricity and gas prices in recent years to help offset the economic impact of the recession and as of 2010, New York state implemented price hikes that will add $14 to the average monthly bill, which in 2007 was already over $100 a month.
Image Credit: (gstatic)
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Some rental properties only charge the renters for electricity usage and cover the cost of gas, sewage, and water in the actual rent. Some apartment rentals use previous bills to determine an average per month cost factor to determine the average monthly energy costs to include into the monthly rent.
Traditionally, natural gas has been cheaper than electricity and in Wisconsin, the Madison Gas and Electric Company estimates that an average bill using electricity is $153 versus just $74 for the same consumption when using gas. The electrical price is likely to stay steady unless the renter suddenly starts using more energy, and the gas price could rise and fall very quickly if another cold winter or a downturn in the stock market drives up prices again.
An apartment with newer energy-efficient appliances, and good insulation, will have a much lower energy bill than one without and the only real way for someone renting to get an accurate idea of the costs involved. The best ideas is to contact the local energy or utility company and request information on past bills for the physical address. Most, if not all, companies will provide the information.
People, like certainty but energy bills, are hard to accurately predict. The best way to answer the question: How much can I expect to pay for my gas and electric living on my own, is to say look at the available data and assume the worst, because it is better than being wildly optimistic; especially in these days of rising and unpredictable energy costs.
Image Credit (Wikimedia Commons)
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- Department of Energy http://www.eia.doe.gov/electricity/epm/table5_6_b.html
- Madison Gas and Electric http://www.mge.com/Images/PDF/Brochures/Residential/RentersGasVsElec.pdf