What are utilities? While utility bills at homes and businesses are inevitable, your bills might look different based on usage, property configuration, and personal choices. It’s important to factor utilities into your total monthly “cost of living” when choosing a new home, apartment, or business space. This article covers how to properly anticipate utility bills.
What Does the Term “Utilities” Mean?
Utilities are basic services that are essential for modern, functional, and comfortable living. While it’s easy to think of water, electricity, and sewers as being “free” or “universal” essentials, the truth is that these utilities are accessed for a fee. In the modern era, technology-based utilities that were once considered “optional” are becoming more essential. These also come with fees.
According to a Forbes report, Americans pay an average of $429.33 per month for their utility bills. If you’re buying a home, ask to see a typical month of utility bills from the seller to get an idea of how much you can expect to pay for utilities once you move in. While you can expect your energy bills to be similar in the same property, it is possible to replace windows, upgrade to a smart thermostat, switch to LED bulbs, and make other updates for creating an energy-efficient home in order to reduce monthly costs.
Common factors influencing home utility bills include:
- A home’s size.
- A home’s age
- The number of windows and doors
- The number of light fixtures
- Age of HVAC system
- Age of appliances
- Local energy rates
- Local supplier availability
- Local weather patterns
While some landlords and corporate companies include utilities in the cost of monthly rent, it can be helpful to ask to see recent utility bills for current or previous tenants to get an idea of how much you’ll pay in addition to rent if utilities aren’t included.
Here’s a rundown of the most common utility bills:
- Water and Sewer: When moving to a new home, it’s necessary to set up water and sewer services with the agency that handles hookups and billing in your municipality. Towns and cities across the country handle billing for water and sewer differently. Possibilities include monthly billing, seasonal billing, usage-based rates, or flat fees. If your home relies on well water and a septic tank, these utilities won’t be necessary.
- Electric: It’s necessary to select an electric provider to get your home connected. Billing is generally based on kilowatt-hour (kWh) usage. As a result your bill will equal your monthly usage multiplied by your electricity rate. While some areas have robust options for providers, choosing from just one or two providers is common in parts of the country. Many states offer tools that allow residents to compare supplier rates
- Gas: If your home’s heating system is powered by natural gas, you will be billed by your supplier’s natural gas rate multiplied by your usage amount. Natural gas is usually billed by volume in units of 100 cubic feet (1 ccf). If your kitchen has a gas stove instead of an electric stove, your natural gas hookup will also be fueling your cooking area.
- Garbage and Recycling: Most residents need to pay a monthly fee to have their trash and recyclables picked up weekly. However, rules vary a bit by location. In some cases, the town handles trash and recycling collection. In other cases, residents pay private companies. It’s even possible for trash collection to be “free” for residents because the cost is folded into property taxes.
- Technology/Connectivity: Is Internet a utility? Yes, cable television, Internet, and phone service are all considered utilities today. This is one of the categories where consumers have lots of room to shop around. In most areas, it’s possible to purchase bundles for Internet, television, and phone based on what’s available in your location. Generally, technology providers charge more for residents in rural areas simply because these parts of the country are more expensive to service. If you need a reliable, fast connection in a rural or remote area, it may be necessary to pay extra for high-speed Internet.
- Safety: Digital security systems that include live video streaming and monitoring can be considered utility services.
Most utility companies in all categories bill their customers monthly. It’s important to pay on time to avoid having any of your essential utilities shut off. What’s more, unpaid utility bills are likely to affect your credit score because utility companies will report these bills to the major credit bureaus. One smart strategy for ensuring that utility bills are always paid on time is to set up automatic payments a few days before the bills are due.
Are Utility Rates Fixed?
Not necessarily. Your monthly rate should stay locked for at least a year. However, utility companies are generally free to raise their rates. That’s why it’s important to review your contracts with all utility providers each year. This is especially important if you’ve set up auto payments because your account may actually become delinquent if the payments aren’t adjusted accordingly. Keep in mind that a fixed usage rate doesn’t equate to a fixed monthly cost. Aside from technology utilities, most utility bills are determined by your usage.
How Do You Get Utilities?
Utility companies won’t automatically provide service to your home! You will need to sign up for access by creating accounts with each individual utility provider. The process of making sure that “the lights are on” when you move in actually begins several weeks prior to your move. Give utility providers a window of at least two weeks to set up. The first step is choosing your providers. In some cases, you will need to be at the residence during hookup or installation. In other cases, the setup can be handled remotely.
Of course, you’ll also need to cancel any current utilities that are under your name before you move. If you are moving locally, it’s often possible to transfer utilities with the same providers to your new address. If you’re making a fresh break, you’ll need to contact your providers to cancel service. Remember that you will still be billed for any ongoing utilities even after you’ve moved out unless you complete this step.
Do Renters Pay for Utilities?
This is something that’s decided on a case-by-case basis by landlords. In fact, it’s important to factor utility costs into your decision when looking at different rentals.
Landlords that include utilities generally charge higher rental rates because they are folding the costs into your rent. Landlords that do include utilities often only include water, electricity, and heat/air conditioning. High-end and luxury rentals might include television, Internet, and other “technology” utilities as part of your rent.