U.S. markets open in 7 hours 19 minutes

Cooling Down Summer A/C Bills

Kelli B. Grant

The dog days of summer may not be as big a burden on household energy bills this year.

Natural gas prices are down 46% compared with last year, due to increased supply and a mild winter, according to the Energy Information Administration. Utilities that use natural gas to generate electricity are passing their savings along to customers in the form of lower rates. "The bills are coming down in some areas," says Keith Voight, a spokesman for the Edison Electric Institute, an association of shareholder-owned electric companies. In New Jersey, for example, the Board of Public Utilities estimates that Public Service Electric & Gas customers could see rates drop 6.4%. Nationwide, "we may not see full effect happening until next year," says Tyler Hodge, an economist with the EIA. Electricity rates are projected to increase a modest 0.6% this year, he says, and fall 2.1% in 2013 -- the first decline since 2002.

Despite one of the warmest Marches on record, consumers may also find less reason to reach for the thermostat this summer. The National Oceanic and Atmospheric Administration expects a 16% decline in so-called cooling-degree days those days when temperatures rise above a comfy 65 degrees Fahrenheit. "That [drop] is mainly because last year was so much higher than normal," Hodge says.

[Related: Best Buys in June]

Of course, summer cooling bills can still amount to more than one hundred dollars a month. The Environmental Protection Agency's Energy Star program estimates that the average household's spends $2,100 on energy annually, with as much as half of that going toward heating and cooling. Exact costs can vary widely depending on where you live, the size of your home and how efficiently you cool it. "One of the best ways that homeowners can make an impact on their energy bills is to make smart decisions about their heating and cooling equipment," says Jonathan Passe, manager of the Energy Star Residential Branch.

A few fast maneuvers could put extra cash in your pocket, and cut bills by 20% or more. Here's how:

Sign up for utility rewards
More utilities are offering reward programs that offer cash back and other deals in exchange for cutting your energy bills. Specifically on the cooling front, some trade cash for giving them the ability to cycle off your air conditioning for short periods of time during peak-demand days. Midwest and Mid-Atlantic utility Dominion, for example, offers $40. Just keep in mind that signing up could mean the house gets a little warmer at some points during the day.

[Related: 5 Major Markups]

Rethink the thermostat
Energy Star estimates even older programmable models can save $180 a year if homeowners set them to allow warmer temps when they are at work or asleep. But manufacturers and even cable companies are introducing smarter models that could increase the savings potential, says Ronnie Kweller, a spokeswoman for the Alliance to Save Energy. They let users adjust the home temperature from afar using a smartphone, or even set it so the air-conditioning won't kick in until the system can tell (by your phone's proximity) that you're heading home. The catch: many smart thermostats run $200 and up, negating savings for the first year.

Clean up a/c units
Dust and dirt hinder air flow, forcing the air conditioner to work harder, Passe says. Change filters at least once every three months; ideally, monthly. It's also important to clear leaves and other debris from around outside condensers, which can similarly block flow, he says.

Weigh upgrading
Replacing an older air-conditioner with one that's Energy-Star-rated could cut bills by 30%. Just make sure it's the right size for the space -- a too-powerful unit wastes energy, Kweller says. This time of year, there are plenty of sales on units, and utility companies may have rebates, too, she says. Austin Energy in Texas, for example, is offering $50 on some window air conditioners. But although many central air units tend to decline in efficiency after 10 to 12 years, there's no hard-and-fast rule on when a unit should be replaced, Passe says. "It depends on how much use that system has had and whether it's getting the job done," he says.

Seal in cold air
Air leaks around windows, doorframes and other areas can pad energy bills, says Kate Muller, a spokeswoman for the New York State Energy Research and Development Authority Invest in some caulk and weather-stripping to plug up drafts, and consider adding insulation to the attic.
For a window air-conditioner, use inexpensive foam insulation kit to create a tighter seal and keep cold air from escaping around the accordion sides and window sash, she says. In all, Energy Star estimates a properly insulated, sealed home can knock as much as 20% off your bill.

Reduce home heat loads
"Heat getting into the house means your system has to work to cool that load," Passe says. Keep it out, and you might not need to turn on the a/c at all, or at as low a temperature. Outside, trees and awnings can block sun from hitting the home directly. Inside, closing curtains during the day can also keep out heating sunshine, he says. Muller says it's also smart to use heat-generating appliances such as ovens and clothes dryers only during the early morning and evening, when it's generally cooler.

Use a fan
Turning on a fan can be cooling enough to justify setting the a/c to let the room get two degrees warmer. That's a combination that can shave 14% off your bill, Passe says. But don't leave the fan on when you leave a room. "A ceiling fan cools you, your body," he says. "It doesn't actually cool the living space." Leaving it on will eat into energy savings.