Why You Could See Cheaper Energy Bills This Winter

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A little warming -- whether it's global or not -- may be music to people's ears this year after one of the harshest winters in memory last year. Milder temperatures make for a more enjoyable winter and may even leave you with a few extra dollars in your pocket.

That Furnace May Be Working Less This Year

In preparation for winter, the U.S. Energy Information Administration analyzes expected consumption (using National Oceanic and Atmospheric Administration weather predictions) and pricing for heating fuels. A vast majority of America's homeowners heat their homes using natural gas or electricity, and both sources are expected to be cheaper this year -- but the big savings are expected in heating oil.

The federal agency expects natural gas consumption for heating to be down 9.8 percent this year, which will lower the average home's heating bill by $31 to a season total of $649 -- despite higher prices for natural gas. The biggest savings are expected in the Midwest, where heating bills are projected to be 7.9 percent lower than a year ago. But don't be shocked if prices move even lower this winter. Low demand can lead to quickly falling prices, and if that happens, bills could be down double-digit percentages from a year ago.

Electricity is a little less volatile in pricing, and prices typically rise a small amount each year. But electricity consumption for heating is expected to fall 4.6 percent, helping save consumers $17 for a total cost of $938 this winter. Again, the Midwest is expected to save the most money, because of a 7.1 percent decline in consumption.

The big winners this year could be the 5 percent of America's households that use heating oil. The agency expects consumption to fall 9.6 percent, and when combined with a 6.4 percent drop in prices from a year ago, consumers could save a whopping 15.4 percent, or $362, this year on heating.

How to Save a Few Extra Dollars on Your Energy Bill This Winter

Beyond predicted warmer temperatures and lower fuel costs, there are other ways to cut your heating bill.

  • Smart thermostats are easy and fun to use and easy to install. They could save you hundreds of dollars over the course of the winter by automatically turning the heat down when you're not home and yet having your home toasty warm when you return. Google's (GOOG) (GOOGL) Nest thermostats start at $250 and can be controlled remotely with a smartphone. Honeywell's (HON) Lyric thermostats have similar features and start at $280.

  • Replacing old windows with double-pane windows will keep the warm air inside and hence will save you lots of money. Kirk Lindstrom of Building Energy Experts tells Bankrate.com that these energy-efficient windows can cost as little as $150 and earn their money back in as little as two years. If you're not ready to spend that kind of money, you can put plastic sheeting over windows to reduce heat transfer.

  • Check your chimney's air damper. If it's not airtight, you'll have heat going up the chimney all winter long.

Motley Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Google (A and C shares). Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

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