Is Electric or Natural Gas Cheaper for Your Home?

The cost of powering a home is a significant financial consideration, with electricity and natural gas presenting distinct pricing structures and usage characteristics. Determining which energy source is cheaper is not a straightforward calculation, as it depends on numerous variables unique to each household and geographic location. This article provides insights into factors influencing energy costs, helping homeowners assess their specific situation.

Understanding Energy Pricing Structures

Utility companies break down energy costs into several components, varying for electricity and natural gas. Electricity charges often include a supply or generation charge for energy production, and a transmission and distribution charge for delivery infrastructure. Natural gas bills similarly feature a gas supply charge for the commodity and delivery charges for transportation. Both energy types may also include taxes, surcharges, and fixed customer charges independent of consumption.

Rates for both electricity and natural gas fluctuate based on regional supply and demand, fuel costs, and regulatory policies. Electricity rates average around 17.47 cents per kilowatt-hour (kWh) across the U.S., but vary significantly by state. Some electric utilities implement time-of-use (TOU) rates, where prices change throughout the day, with higher rates during peak demand. Natural gas is commonly measured in therms or hundred cubic feet (CCF), often converted for billing. Understanding these units and bill charges is fundamental to analyzing energy expenses.

Cost Comparison for Major Home Uses

Space heating represents a substantial portion of energy consumption for many households. Natural gas furnaces often have lower operating costs than traditional electric resistance heating, though this varies by local energy prices. Modern electric heat pumps offer a more energy-efficient alternative, significantly reducing electricity use for heating. Heat pumps can be more cost-effective for heating in milder climates, and in some regions, may even be cheaper to run than gas furnaces.

Water heating is another major energy user, with natural gas water heaters often more economical than standard electric resistance models. Electric heat pump water heaters provide a highly efficient electric option, reducing energy consumption considerably. For cooking, natural gas ranges typically use less electricity than electric ranges, relying on gas for heat. Clothes drying also presents a choice, with natural gas dryers generally costing less to operate per load than electric dryers due to lower gas prices and faster drying times. While gas dryers might have a higher upfront cost, their operational savings can be significant over time.

Influences on Your Overall Energy Bill

Beyond the per-unit cost of energy, several factors influence a household’s total energy expenditure. Appliance efficiency plays a considerable role; newer appliances, particularly Energy Star certified ones, consume less energy. For instance, Energy Star refrigerators can be 9% more efficient, and washing machines can use 33% less energy than non-certified models. Upgrading to energy-efficient appliances can lead to significant utility bill savings over their lifespan.

A home’s structural integrity, particularly its insulation and air sealing, directly impacts heating and cooling needs. Proper insulation in walls, attics, and floors prevents heat transfer, keeping homes warmer in winter and cooler in summer. Poorly insulated homes can lose substantial heat through walls and roofs, forcing heating and cooling systems to work harder. Improving insulation can reduce heating and cooling costs by an estimated 15% to 20%.

Local climate and daily household habits also shape energy consumption. Colder winters necessitate more heating, while hotter summers increase cooling demands, leading to higher energy use. Simple behavioral adjustments, such as maintaining optimal thermostat settings, taking shorter showers, or running energy-intensive appliances during off-peak hours (if on a time-of-use plan), can lead to noticeable reductions in energy bills. A home’s size similarly influences energy use, as larger spaces generally require more energy for climate control.

Calculating Your Specific Energy Costs

To assess individual energy costs, homeowners should locate their current electricity and natural gas rates. These rates are typically detailed on monthly utility bills or the utility company’s website. Bills show the cost per kilowatt-hour (kWh) for electricity and the cost per therm or hundred cubic feet (CCF) for natural gas. Note any tiered pricing structures or time-of-use rates that apply to electricity consumption, as these affect the actual cost per unit depending on usage patterns.

If natural gas is billed in CCF, convert this to therms; one therm is approximately 100,000 British thermal units (BTU), and utilities often provide a conversion factor. Estimating appliance usage is the next step, done by checking appliance energy guides, nameplates for wattage or BTU ratings, or using online calculators. Appliances often list their maximum power draw, so understanding typical usage patterns helps for a realistic estimate.

Analyzing past utility bills provides insight into a household’s historical consumption trends and costs. Many utilities offer online portals where detailed usage data can be reviewed. A basic calculation can help determine the cost of operating a specific appliance: multiply its wattage (converted to kilowatts) by daily use hours, then by annual days used, and multiply that total kWh by the local electricity rate. For natural gas appliances, a similar calculation involves the BTU rating and the cost per therm.