The average US household’s monthly power bill pushed past $120 in 2021, then continued to climb in 2022 as the hot summer increased air-conditioner use and the war in Ukraine inflated global natural gas prices—natural gas is burned to generate much of America’s electricity.

Good news: There are ways to significantly lower your household power bills—by using simple strategies to lower energy usage and by taking advantage of tax incentives to upgrade to the latest energy-saving equipment. Here’s how…

Start with the basics

Use a laptop rather than a desktop computer. Laptops typically use only a fraction as much electricity as desktops—it’s hard to be precise because power consumption varies substantially from computer to computer. This isn’t a big deal if your computer is on for only a few hours a day, but if yours is on for much of the day most days, it could easily add $100 to $200 to your annual electricity bills, compared with perhaps one-third of that amount or even less for a laptop.

Unplug older electronics chargers. A decade ago, the chargers that powered up our electronic devices tended to be very inefficient—they often consumed substantial electricity even after the batteries were fully charged. That’s no longer true—any charger made or imported after Department of Energy “Level VI” regulations took effect on February 10, 2016, should be much more efficient. Problem: Some older, inefficient chargers remain in use.

If you regularly use rechargeable devices that date back to 2016 or earlier, take a look at the markings on their chargers. If you see a roman numeral “VI” inside a circle, perhaps following the words “Efficiency Level,” the charger meets today’s efficiency standards. But if you see a roman numeral lower than six…or no markings at all…unplug this charger once the device is fully charged to avoid wasting electricity.

Time your towel heaters. There’s nothing wrong with enjoying a warm towel after a shower, but you might be paying a steep price for that morning comfort. Heated towel racks that operate 24/7 can rack up massive annual electricity bills of $140 to $375. Better: Plug these racks into electrical outlet timers, available for less than $10 apiece, and set these timers so that ­towels are warmed only during the minutes immediately preceding and during daily showers.

Replace an always-on hot-water recirculation pump with an on-demand model. The plumbing systems in some homes include pumps that continually cycle hot water through the pipes so there’s never a wait for hot water, even in bathrooms located far from the water heater. These pumps cost around $100 per year to operate. That can be trimmed to a fraction of that amount without sacrificing comfort by replacing the pump with one featuring a timer set to circulate hot water only during hours when bathrooms located a long distance from the water heater get regular use. Or you can install a pump system that circulates hot water only when a button is pushed or the hot water is turned on—push the button when you enter the bathroom, and by the time you’re ready to step into the shower, the hot water will be waiting.

Bigger Steps—Heat-Pump Tech

Heat pumps use electricity to transfer heat from a cool space to a warm space, making the cool space cooler and the warm space warmer. This technology now is being used in several household appliances.

Bonus: New tax incentives give heat-pump appliances an even greater financial edge. The recently passed “Energy Efficiency Home Improvement” tax credit allows homeowners to offset up to 30% of the cost of these systems from their taxes starting in 2023. And a “High-Efficiency Electric Home Rebate” soon will cover up to $1,750 of the cost for homeowners who qualify—that rebate can help with the purchase price of, say, a heat-pump water heater.

Eligibility for these rebates will be linked to income—the buyer’s household income must be less than 80% of his/her area’s median income level to qualify for a rebate for the full project costs up to the $1,750 limit…or between 80% and 150% to qualify for half of project costs up to the same limit. The rebate programs will be administered by the states, but it’s likely that many states won’t have the programs up and running until late 2023 or after.

When it is time to replace one of your current appliances, consider these money-saving heat-pump alternatives…


Heat-pump water heater. A heat-pump water heater consumes around 60% less energy than a conventional water heater. Potential savings: More than $300 per year for the typical household.

Bonus: Heat-pump water heaters dehumidify the surrounding air—so if your water heater is in a damp basement, switching to a heat-pump model might mean that you no longer need to run a dehumidifier. What you need to know…

The up-front cost is significantly more than that of a conventional water heater. A typical 40-to-50-gallon heat-pump water heater costs $1,500 to $3,000, versus $500 to $1,500 for a conventional water heater, depending on the size and model. And depending on the configuration of the home, the installation may cost more as well. But the lower electricity bills will cover that expense several times over during the water heater’s 10-plus-year lifespan.

You will need a larger tank for the heat-pump water heater than the one it’s replacing. Most heat-pump water heaters actually are “hybrid” systems that also feature conventional water heating as a backup. Reason: Heat-pump technology heats water slowly, and the backup system kicks in when necessary to ensure that the home isn’t without hot water for hours. The larger a hybrid water heater’s tank, the less often it will have to resort to that inefficient conventional water heating.


Heat-pump home heating system. Potential savings: Overall heating energy use is reduced by about 60%. The savings here are not usually in the form of electricity—heat pumps typically replace furnaces that burn natural gas or heating oil, not electric heaters. And upfront costs for these systems, including ducting and electrical work, can be daunting—possibly $4,000 to $10,000 or more for an “air source” heat pump that draws heat from the air outside the home…or $15,000 to $30,000 or up for a “geothermal” heat pump that takes heat from the ground.

But the system will more than pay for itself in the form of lower energy bills…and tax incentives could tip the financial balance dramatically in the heat pump’s favor. Tax credits already available can cover 30% of upfront costs, up to a maximum credit of $2,000…and the rebate program described on page four soon will cover up to $8,000 of the bill for qualifying households.


Heat-pump clothes dryer. Potential savings: Electricity savings in the neighborhood of $50 to $70 per year for a household that averages one load of laundry per day, depending on local electricity rates and other factors.

While the savings from a heat-pump clothes dryer isn’t as impressive as from a water heater, it’s still significant. A heat-pump dryer uses one-half to two-thirds less energy than conventional dryers. What you need to know…

Heat-pump dryers often cost $1,000 to $1,600, roughly twice as much as conventional dryers, but lower electricity bills can easily cover that higher price tag over the dryer’s 10-to-20-year life span. The rebate program described earlier soon will provide savings of up to $840 for heat-pump dryers, too, making these the clear-cut choice for homeowners who qualify.

They are gentler on clothes than conventional dryers…and most don’t require air venting to the outdoors, though water drainage is necessary. Downside: They’re somewhat slower than conventional dryers, but some models let users select faster, less energy-efficient drying when they’re in a hurry.

Also: Washing in cold water saves even more. According to The American Cleaning Institute, washing in cold water uses about 90% less energy than using hot water and, according to one government estimate, can trim the typical household’s annual electricity bills by more than $60. Reminder: Use a detergent formulated for cold-water use—most now are—and read detergent package labels for details.

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