Americans are cutting back on groceries to pay for AC
And now, climate change is coming for American pantries. Indeed, one in three American households are cutting back on groceries to help pay for their utility bills as 75% of them expect their expenses to increase during the summer and “cause them financial strain.” The figures are according to survey results of 2,000 U.S. adults by PowerSetter, an energy comparison platform that educates consumers about different energy plans and options. For context, July 22 was the hottest day recorded on Earth, according to satellite data.
“Extreme heat is driving higher energy consumption. Households are more likely to turn up the AC amid the raging heatwave, which increases their energy consumption and associated expenses,” Mark Feygin, founder and CEO of PowerSetter, tells Fortune. “However, the problem doesn’t end there, as utility providers have been forced to increase their prices to keep up with inflation. While many consumers are cutting back on electricity usage because they simply can’t afford the growing bills, they still might end up paying more than the year before.”
In some of the hottest states in the U.S. including Texas, Oklahoma, Arkansas, and Louisiana, consumers can expect to pay an average of $858 on their June through September bills, according to National Energy Assistance Directors Association (NEADA) forecasts. West Virginia, Virginia, North Carolina, South Carolina, Georgia, Florida, Delaware, Maryland, and Washington, D.C. can expect to pay $723, which accounts for 16% to 23% of the average salary in these states.
Not only are Americans cutting their grocery budgets to cover the mounting utility costs, but one in three households are also spending less on outdoor dining and entertainment such as concerts, events, and paying for streaming services to be able afford their AC, survey results show. Plus, about 20% are canceling their summer vacations and nearly 50% are making other budget cuts to make ends meet.
Why have AC bills gotten so expensive?
Consumer energy bills are up nearly 30% year-to-date during just the past 10 years with 2022 showing the largest annual increase in average residential electricity spending since the early 1980s, according to the U.S. Energy Information Administration. Based on the typical monthly energy usage in the U.S., Americans spend more than $151 on their electric bills alone.
There are several factors at play explaining the increase in energy bills. Global warming and climate change have undoubtedly contributed to higher energy bills, experts say, since more energy is required to cool a home with higher external temperatures.
“Weather is becoming more volatile and extreme,” Andrew Meyer, CEO of home energy advisory Arbor that helps consumers find lower energy rates, tells Fortune. “When it’s hotter, we use more electricity to cool our homes. When it’s cold, we use more gas to heat our homes.”
But while global warming and climate change “certainly play a part in how high energy bills have gotten, but it’s not necessarily just in the way you might think,” Meyer says. A major problem for electric utilities, however, has been increasing demand is also causing energy prices to rise.
“Consumers are both using more and paying more per unit of energy,” Meyer explains. Energy units are measured in kilowatt-hours (kWh), and can have a “huge impact on our bill totals at the end of the month,” Meyer adds.
Indeed, more than two times the demand for electricity year-over-year across both consumer and industrial sectors is also “putting pressure on energy bills as utilities race to make sure we have the right infrastructure in place to support that,” Robert Brook, senior vice president at Neara, a company that uses machine learning to help utilities improve their infrastructure, tells Fortune. Extreme weather episodes have also had an impact on monthly energy bills. Brook calls this one of “downstream effects of global warming” that have added to energy costs.
“Already aging infrastructure is increasingly buckling under sustained environmental pressure,” Brook says. “Preventing outages requires more vigilance than ever,” but that comes at a higher cost and shows up on consumer energy bills.
Ways to save on energy bills
There’s no fool-proof way to try to lower your energy bills, experts say, especially if you live in a regulated energy market, where a utility company owns all of the electric transmission lines and associated infrastructure like power poles, power lines, and transformers. These companies generate electricity and directly sell it to customers, making it impossible for consumers to shop around for better rates. Only 13 U.S. states are deregulated, allowing customers to choose from where they buy electricity.
“It’s imperative to keep a close eye on how much you are being charged per kilowatt-hour,” Meyer says. “In states that are deregulated—13 total—all customers have a choice to shop around for rates, which can be a great way to lower your overall energy bill.”
But consumers who live in regulated energy markets have some options for cutting energy costs.”
“If you live in an area served by a monopoly utility, there are plenty of other ways to go,” Feygin says. Some providers will charge more during peak hours, so Feygin suggests adjusting consumption based on those hours.
“If you tend to use less energy during the peak hours, typically the early evening, you could save hundreds of dollars per year,” Meyer says. “For households with smart thermostats or electric vehicles, it’s possible to program those devices to avoid usage during the peak hours, making the savings easier to realize.”
Meyer also suggests looking into community solar energy programs, which allow consumers to remotely subscribe to a solar farm and get credits on monthly bills that can result in 5% to 10% in savings.
There are also other “simple tricks” aside from buying less food at the grocery every week to help compensate for higher energy costs. Switching to energy-efficient light bulbs and appliances can “go a long way,” Feygin says, along with using the washing machine on full loads and letting your clothes and dishes air dry.
“Little savings here and there can add up to a significant sum and won’t require too much effort,” Feygin says.
