00:16.502 Pete Hello there, welcome to A Very Fine House, brought to you by the Energy Pros. This is the show where we help you keep your home safe, comfortable, and efficient. My name's Pete.

00:25.405 Marty And I'm Marty, and we're the Home Energy Pro s. We're going to talk to you today about everything you need to do about heating, cooling, and insulation, your drafty attic, your windows, your doors, and everything else you need to keep your space safe, comfortable, and efficient.

00:42.190 Pete On today's episode, we will be discussing saving money on your home energy bills. Now let's get started. Welcome to the podcast, Marty. Good to see you.

00:58.307 Marty Yes, welcome to our burgeoning audience. Not sure if anyone is listening, but we sure like hearing our own voices.

01:04.672 Pete We're really legends in our own minds as we're doing more of this.

01:10.076 Marty Hey Pete, if a tree falls in the woods and no one is around to hear it, does it make a sound?

01:14.540 Pete Yeah, this guy's a philosopher over here, Marty MGB. But look, a very fine house is going to be a big hit according to Noah, our editor and producer. Yeah, just behind the murder mystery genre, like that guy in South Carolina or the Manson murders, you know.

01:30.067 Marty Well, we can only hope because I have to retire soon.

01:32.509 Pete All right, let's punch the clock. Let's get back to business. What are we talking about here? We have let's get an overview. We've learned about our values. We had Dave Summer on talking about the H part of HVAC. And, you know, what are we up to this week?

01:47.610 Marty Well, Pete, I thought we would digress from some of the technical stuff and talk about something you can really help us with. Energy costs, investments in energy efficient projects, financial paybacks, ROI, you can explain to us what that means, and so forth. How to save money and make good decisions.

02:05.497 Pete Yeah, I'm happy to see if I can help. So let's get started.

02:09.348 Marty Let's get started this way. I've been taking like an informal unscientific survey of friends and family and some customers, asking them some questions about their energy costs. And the question is very simple. How much do you spend on your energy bills, utility bills, electric, heating, and even water? And to see if people even know what they spend. So what do you spend?

02:32.241 Pete Do you know? I looked it up because I thought that might be a question on the quiz today. We spent last year almost $1,000 on electricity and $1,500 on gas. So call it $2,500 for electricity and for gas.

02:47.134 Marty Sure, and I think you're probably on the low end, but in my little informal survey, I'd say less than half the people really understand their costs.

02:54.935 Pete They're a little bit things people just take for granted, right? They just pay them and figure as long as the lights are on and they're warm or cold enough in the summertime, they go with it. So you're saying that's a little bit on the low end, a $2,500 a year expenditure. What have you found in your studies so far?

03:16.739 Marty I think as we talked in one of the previous episodes, many people view their utility bills as a fixed cost of living in the house they choose, whether it's new or old or somewhere in between. The average energy cost, or a better way to look at it would be the median, I don't know if there is such a thing as an average house, is between $3,000 and $6,000 a year. So you're on the low end of that standard deviation, shall we say. So that's electricity and natural gas.

03:47.187 Pete 2500 square foot house in the midwest and as we know the rates are the cost per unit of utilities are all over the place yeah i mean i followed a little bit natural gas is that you know all-time highs in terms of its volatility and recently it's been three times more volatile than historically it has been. So it's really been all over the map. Both gas markets, electricity markets, maybe a little bit less so. But for example, Ohio, I think it's kilowatt hour, $0.11, US average and maybe $0.16 and a half cents. And in the Northeast, the New England areas, it's $0.30 a kilowatt hour.

04:23.993 Marty Yeah, that's crazy. So in Ohio, we have one of the lowest electric rates in the nation, three times as much for electricity in New England and California. And that is also very volatile. And our area just announced a 50% increase in the rate in Ohio. Wow. Wow. Well, let's dive into this. It's an average cost. People spending, what does it consist of? Electricity, lighting, what's in your electric load? It's typically lighting, refrigeration, computers. Let's assume that- Charging your cell phones, grow lights. Or your electric car. Let's assume you're heating your house with natural gas and a base load of your electricity is the basic day-to-day stuff that we take for granted, that everyone uses. Lighting, heating, refrigeration, that's what we call base load, okay? The next component of your electric bill is the heat of your home. Everyone heats their house. In the Midwest, everyone has to heat their house, and that's usually about 70% of the natural gas consumption. But in some cases, people have electric heat pumps, but we'll set that aside for now.

05:34.740 Pete Right, or they might have, you know, wood or solar.

05:37.381 Marty Wood, in a few cases, wood, yes. And then there's a cost of cooling. 2023, approximately 90% of the homes in the United States, which I thought was kind of high, have some form of cooling. 70% central cooling and the rest in window air conditions and the like. Wow, that is high. Way up from when I grew up, I don't know about you.

05:58.666 Pete Well, you're a lot older than me, so, you know, I'm kidding. Low blow, low blow. But look, so you're talking about base load. Okay. I understand that from what you're saying. It's the things that you generally have in a house, the heating load and then the cooling load. So let's break it down a little bit more, what these energy costs and components look like.

06:18.347 Marty So let's just pick a number and say $3,500 per year to do all those things. Run your house on a day-to-day basis, cool it, and heat it. And let's say an unimproved house like mine, it could be still a very fine house, but then everyone can look at their own usage. So if you're talking about $3,500, say approximately 30% of that is base load. $1,200. Heating, approximately 40%, $1,400. Hot water, about 10%, $350. Or cooling, about $525 a month. My house is about double that, but that's another story. And the things that we've been talking about in the previous episodes, Insulation, air sealing, ventilation, H and HVAC will improve your comfort and efficiency and help lower those costs.

07:10.312 Pete So we'll talk about that. And efficiency, another word for it would be money savings, right? Absolutely. I mean, that's where we're really getting at here.

07:17.159 Marty So Pete, this is where you can jump in here and help. So if the average utility spend is $3,500, And one could reduce their consumption through some of the means we've been talking about by 30 to 40%, which is not unreasonable. We see 50% improvements all the time in many of our projects with old houses just with insulation and maybe a new furnace. So Pete, if one of our average listeners in their very fine house could save $1,400 every year for say 25 years. Run some numbers for me. What would that look like if they took that money and invested it over this time period?

07:54.490 Pete Yeah, so you're talking about $1,400 a year for 25 years. This gets me 35 grand if I didn't do anything with it. Now the historical returns of the stock market are about 10%. So if I just invested that $1,400, every year in the S&P, which is the broad index of the stock market, at the end of the 25 years, I'd have 166 grand. That's a pretty considerable savings.

08:20.906 Marty What if you invested in FanDuel?

08:22.710 Pete Well, even more. If you take the opposite of my picks, you know.

08:30.573 Marty Okay, so what you're saying is everyone in their very fine house sitting is locked up, there's a locked up annuity in their house. Gosh, my house is horrible. I mean, I might, I probably could exceed that. My bills are like 600 a month, but there's an annuity that is.

08:48.143 Pete It's an unlocked value creating opportunity. You're taking money and literally in some cases blowing it out the window, right. It's just by, by being inefficient.

08:57.692 Marty So energy savings is the gift that keeps on giving, and you know what's interesting, or some people, I think it's interesting, my wife doesn't think so, is that everyone pays their utility bills. You're not gonna not pay your utility bill for very long.

09:11.309 Pete Yeah, right, right.

09:12.639 Marty Everyone is sitting on, would it be called reverse annuity in their house if they can save energy?

09:18.140 Pete That's an annuity that... Yeah, in some way you could think of it that way. Okay. Look, we need to allow a few minutes for some of our sponsors to get a word in edgewise with all of our hype financial analytics here. So let's take a quick break and we'll be right back to discuss more. Welcome back, and we'll continue diving in on energy costs within the home.

09:51.223 Marty Sure, so Pete, that was a good summary of what people could earn with the savings on, or investments in, energy efficiency projects. I should note that energy costs are going up. You're using that on a flat, assuming energy costs remain flat, but in 2022 to 2023, across the nation, electricity costs are up 14%, natural gas, 28%, and I don't see that changing. Those are big numbers. I don't see that changing. Right. Now, there's another side to this, though, uh... in order to achieve the savings in some cases others can be an investment right let's talk about the investment side in the return on investment of people ask us all the time well hot okay if i spend thirty five hundred dollars on an installation job or four thousand dollars when will i get my money back yeah and if you do some of the other things like lighting the controls which talk about what let's talk about payback okay so simply put what is payback right payback is the time

10:49.553 Pete that you need to recover the initial investment, right? And we'll get into some examples of what that looks like.

10:56.457 Marty So let's say for sake of argument, and this is going to take some Wall Street calculations, one spends $10,000 on insulation, a furnace, or various other energy efficient investments, and they get a 40% savings on the utilities. Drum roll, please. What is the return on investment on that project with this average very fine house.

11:18.709 Pete Yeah. So you're talking about an investment gain of, you know, about 25 grand, right? And, and then annualized return on investment over 25 years, a rate of return about 5%, a total return of about 250% over 25 years.

11:34.559 Marty So what was the return on the S&P? How does that compare to your stocks that you pull around every day?

11:39.542 Pete I mean, I say that with all due respect, of course. I mean, look, in the last 10 years, the S&P has returned about 16% a year annually. Now, it's obviously not gone straight up every year, but that's a pretty good return. And that's a low volatility return, right? You know you're going to be living in the house. You know you're going to be enjoying those savings. So it's a pretty good, efficient way to think about it.

12:04.435 Marty So that kind of fits with what we explained to customers. We think that an average, very fine house, the payback, which you described, depending on where you start, of course, is between three to eight years. Okay. And then the ROI is.

12:19.129 Pete Yeah, it's a percentage annual return on your investment. Somewhere in the teens, maybe? Low teens? Yeah, that's probably right. And it's another way of saying it's kind of the opposite of your payback, of simple payback period.

12:30.616 Marty And we haven't contemplated in this also, you know, that $10,000 investment. There are tax credits now available from the federal government. There are rebates that would lower that investment, which would accelerate the payback. and increase the ROI, correct? Am I saying that correctly?

12:47.531 Pete I think that's right.

12:48.352 Marty We lower the investment. Okay, that's a good start.

12:52.503 Pete So there's simple ways to improve this and lower your costs, right, Marty? I mean, you know, obvious things like... Sure. You mentioned your kids, hey, turn off the lights. And then there's a story about you taking the lights out of the basement or something.

13:05.466 Marty No, that's an urban myth. Or is that, that's a... Urban myth. Okay. There were three areas, three ways that a family or a person, a business can lower their energy costs and improve their efficiency. One is through the things we've been talking about so far, investments in heating, HVAC, insulation, and so forth, where you have to lay out some bucks. There's also operations. And then there's control.

13:29.199 Pete So- What do you mean by controls?

13:31.561 Marty Well, we talked about the capital improvements and all that. So by controls, we mean the little things in your house. Let's just stick with a home. Things like turning out the lights.

13:41.731 Pete Right? Yeah. That makes sense.

13:43.726 Marty Lowering the thermostat at night.

13:45.587 Pete These remote thermostats, these ability to control the house and lights?

13:49.568 Marty Yes. Okay. Some studies have shown that setting your thermostat, which means setting it back or lowering the temperature in the winter, raising it in the summer at night, or when you're not at home, can save about 10 to 15% right off the top of your heating and cooling load.

14:08.824 Pete Wow, that's an incredible return on investment.

14:11.566 Marty So right now, is anyone home at your house right now? No. It's a hot day today in Ohio. If you have your air conditioner at 72 degrees, you've been cooling that house all day and no one's there to enjoy it, we hope.

14:24.156 Pete Well, I can hear my mom still saying, we're not heating the outdoors, close the door, or we're not cooling the outdoors in the summer. So you're talking, that's a pretty significant saving. So safety of the home, comfort of the home. But as you're saying, I'm learning now, it's an investment opportunity for the family as well.

14:41.499 Marty And if you have a fancy nest thermostat or any sort of digital thermostat, you have the ability to control and set back the temperature whenever you want. You can set a schedule and do all sorts of things. So a lot of people have those, but they don't utilize those. So that's what we mean by operations, shutting lights off, having lighting controls, thermostat setback, just how you run your house.

15:05.280 Pete Yeah, and you're, in essence, you know, doing a good thing, right? You're helping to conserve our precious resources. So let me ask you.

15:13.107 Marty Saving the planet.

15:13.667 Pete Saving the planet. No, exactly. What is the highest return on investment project for energy savings you could do in a house? You know, for gross savings. Not just for gross savings, but for ROI.

15:24.354 Marty It depends on where you start, but one of the, the two highest ROI, now it may not give you the highest gross savings on your bills, but the highest ROIs surprisingly is replacing an old refrigerator and lighting.

15:40.400 Pete Okay. Interesting.

15:42.000 Marty So if you replace an old refrigerator, you know, if you have say a refrigerator from the 1990s, 1995, before 2000, even to an energy star refrigerator. I remember your refrigerator runs 24 seven. I'm Googling this right now. Yeah. You could save approximately 125 to $150 a year. Wow. Now, that's a decent amount of money, but if the refrigerator lasts about 15 years, your return on investment is massive.

16:08.659 Pete So here, I just Googled LG, I think that's a good brand, at Home Depot, Energy Star Refrigerator, $648, so 650 bucks. You're telling me I can save $150 a year for 15 years? That's correct. That's incredible. So the payback period on my refrigerator is about four years.

16:29.350 Marty That's correct. And that refrigerator may have a life of 10 to 15 years. Yeah. Yeah. Interesting. And again, it's not saving, it's still a lot of money, but it's not taking a chunk out of your bill, but that has a huge ROI. Right. So if you have an old beer refrigerator in your garage, maybe could replace it with an energy star refrigerator. The second one is lighting. And most people, there's still a lot of homes we go into where they have old incandescent bulbs or older CFL bulbs. Of course, LED bulbs are the rage and have been for a number of years. But just to think about this, again, I find it interesting, but some don't. If you have a 100 watt light bulb in your house, on your porch, or somewhere running 24-7, 365, which most people don't, but just to use in this example, that costs about $100 a year to operate in Ohio at these low electric rates. It'd be three times that much in California and New England, okay? An LED light bulb, a straight up replacement, same capacity and everything, costs about $20 a year to operate.

17:34.480 Pete Wow. Wow, so it's one-fifth of the cost.

17:37.665 Marty One-fifth. One-fifth of the cost of a traditional light bulb. For all our listeners, a free giveaway here. If you have an incandescent bulb in your house or older CFLs, go out and replace them with LEDs right away. CFLs are compact fluorescent bulbs. It's kind of this second step.

17:52.742 Pete I almost got into the business of selling light bulbs for GE.

17:55.863 Marty Oh, people made a lot of money off that. Relamping factories and office buildings. Smart. So that's a simple one.

18:03.525 Pete So what other simple saves? You talked about swapping out the refrigerator with the Energy Star. You talked about these LED lights being, you know, one fifth of the cost of a traditional light.

18:14.828 Marty Well, we talked about the fan. We're not here to promote Nest, but they're a popular brand. A digital thermostat. Uh, to control the setbacks and humidity and things like that. Uh, lighting controls for outdoor lighting or even indoor lighting to shut the lights off when you leave a room or enter a room. Uh, cumulatively that could save a lot of money. Power surge strips. Um, again, base loads are not a huge cost. It was, we said the total base low is 30% of your energy spend.

18:44.338 Pete And that's just to think about that. Just, that's just the, to run your house.

18:47.799 Marty Yeah. But if you cut that in half, half of 30%, you know, 15% you save 10% of your energy bill with very, very little investment. Okay. No, that makes sense. If you really want to geek out, they sell little power meters you can plug in to determine how much energy any little appliance is using. But that's next. That's graduate school stuff, OK?

19:10.033 Pete What about the grow lights? That's how you watch some of these shows. That's how they track these little products, right?

19:16.678 Marty That's correct. Yeah, utility company's watching you folks out there, all right? Closing your drapes in the summer. To reduce solar gain. Solar gain is a fancy way for the sun beating into your house through windows that heats up the house. So having drapes or awnings or overhangs or trees. over your house reduces your cooling load dramatically. Makes sense. Dramatically. That's why houses with trees around them are cooler.

19:45.750 Pete Yeah, no, it makes sense. So let's talk about, you know, last topic here, the energy bill itself. You came into our office, you know, I don't know, a year ago and helped myself and a few of my work colleagues, buddies, hopefully who are listening, they remember this, but we saved a lot of money on our energy bills. Let's talk about that a little bit too.

20:05.519 Marty Sure. And if folks would take the time to look at your electric and gas bill, there's a number of components to your gas bill. In short, there is a fixed portion of both your electric bill and your gas bill that deals with the power company's cost or alleged cost to deliver electricity or natural gas to your house, maintaining the pipelines, servicing the account, billing. There's some taxes in there. Those are all fixed.

20:36.531 Pete I look at that thing before you explain it to me and my eyes just glazed over. Yes. There's so much info and I think they maybe purposely make it hard to understand. But what you're telling me is zero in on the fixed charges.

20:47.375 Marty If you unplugged everything in your house and used zero energy, you still would have a bill. Okay. for the privilege of being hooked up to the grid, okay? That's the fixed component of your bill that you really can't control. Then there is another line item that talks about the usage, how much energy you actually consumed in your home, kind of like how much gasoline you used in your car. And in the case of an electric bill, it's going to say, I consumed X number of kilowatt hours of electricity or X number of cubic feet, 100 cubic feet of natural gas, or 1,000 cubic feet of natural gas, depending on how your bill is structured. Now, in most states in the country now, I can't think of a state that has a regulated utility for the fuel itself, you can purchase uh, and choose your actual electric supplier and gas supplier. That is the company that is providing the actual energy to you.

21:44.974 Pete And which is fascinating. I didn't, I didn't never, I always thought you just had to go with who they told you you go with. So you, you told me there's a way to comparison shop this using a website.

21:55.085 Marty Sure. Since it's deregulated, consumers have a choice. And there are many companies out there that compete for your business every day. The companies that are allowed to sell you energy are regulated by, generally, the state's public utility company. In Ohio, it's regulated by the Public Utilities Corporation of Ohio. A consumer can go to a website in the state of Ohio, it's called Apples to Apples, and choose a supplier.

22:19.414 Pete So if I Google Apples to Apples Utilities Comparison,

22:23.455 Marty And you would know from, there are companies out there that purchase large, energy is a commodity, they purchase large quantities of natural gas and electricity and they resell it. And those markets bounce around all the time. So a consumer can lock in. an electric rate or a gas rate, much in the same fashion they lock in an interest rate. A rate per unit, and it could be on a fixed term, it could be a fixed cost, a variable cost, month to month. So whatever your risk profile is and where you think the market's going, you can buy your energy in a competitive fashion.

22:58.921 Pete And I remember it was so simple. So I'm on this site right now, Energy Choice Ohio. We both, uh, my colleague Steve and I both locked in, uh, I think 24 months at a far cheaper rate than we were paying. And it was like, and then rates went up and they, like you've said, they went up 28% in the last year on net gas.

23:21.057 Marty Right. So you can pick your poison and there's a number of choices. It's fairly clear. How much per kilowatt hour are you paying and what term?

23:29.779 Pete And then I don't think I even had to go and notify my old provider. No. I just signed up for the new one and that was it.

23:36.301 Marty Now, of course, if you sign a five-year term, you're stuck with that contract for five years. What a lot of people do or don't do, Pete, is they don't do anything. Right. They may get a phone call. They may get something in their bill. Hey, this is your time to choose your new electric gas provider. And if you do not proactively choose a supplier, then one will be assigned to you. And you're probably going to get a month-to-month rate. And then as this market bounces around, I'm not crazy about giving advice on commodity prices, but they're volatile, I think, is the best thing we'd tell our audience. And you should keep an eye on it. Yeah, totally. So if we talked about the $3,500 bill, approximately 80, depending on how much energy you use, 75% to 80% of that is fuel, is the actual energy. So take 80% of the 3,500, that is the part you can control through rates. So if I can knock off 15% by buying cheaper fuel, like buying cheaper gas, coupling that with all these other things we talked about, non-investment, operational savings, and energy, energy savings as a result of an investment, you could really put a dent in your energy bill without going crazy.

24:52.986 Pete Wow, that's a lot. I mean, so how do you know your base load? What's the best way to do that?

25:00.470 Marty Well, when you look at your bill, they give you a little graph. If you look at your bill, you can determine what your base load is by looking at a month when you're not really using much. Like this time of year in the spring, you're not really heating or cooling. Whatever you're using in a month like this, we're in May, is your base load. OK. Or if you want to get real geeky, you can You can go out and watch your meter, you know, look at your meter, mark it, and then 24 hours later, measure it. You can measure your usage. So I think the way I'd summarize this is there's a lot of opportunity to save money on energy without going crazy or disrupting your lifestyle through some investment decisions that can have a long-term payback, the way you described it. a financial savings, unlock that annuity as the way we described it, or non-investment operational based methods or practices that can save you money without really even thinking much about it.

25:58.657 Pete Yeah. No, it's fascinating. Well, I know I learned a lot this episode and I'm sure our audience has as well. So we'll keep digging in on a lot more of these topics, but really just fascinating stuff all around.

26:12.572 Marty Sure, yeah, so take a look at your bills, folks. Take a look at the rate you're paying, and we hope this was helpful in taking your very fine house and making it more efficient.

26:22.818 Pete There you go. I'm Pete Carroll. And I'm Marty Berry. And this has been A Very Fine House with the Energy Pros, sponsored by Berry Insulation. You can find us on Instagram, Twitter, Facebook, MySpace, you know, you name it.

26:41.647 Marty Got a question you think we can answer? Reach out to us and maybe we'll answer it on the next show. Learn more about Barry Installation on our website. Link in the description.

26:50.712 Pete And if you enjoyed today's show, a five star rating and a subscription would go a long way. We appreciate it. Subscribe too, so you never miss an episode.

26:58.437 Marty Our sound designer, audio engineer and producer is Noah Foutz. Recorded at Evergreen Podcasts, executive producer Michael Dealoia and David Allen Moss.

27:08.843 Pete We'll see you next episode. And if you only remember one thing from this podcast, it's this.

27:14.157 Marty Insulation is an investment, not a cost.