2004 = $2,255.74, plus internet access = $2,821.19
2005 = $3,004.51
2006 = $3,270.98
2007 = $2,977.51
2008 = $2,060.22 for 8 months, probably $3,090.33 for the year.
Some notes about the above numbers. They include our household's definition of utilities, which include natural gas, electricity, water, sewer, telephone, basic cable TV and basic internet access via cable. 2004 did not include the cost of internet. So this should be adjusted to add the difference, which was $566.16 in 2005, to make a valid comparison with 2005. We do have central air conditioning and we use it. We did upgrade our hot water heater to a more efficient unit in 2006. We do annual preventative maintenance on our HVAC so it is in good condition and I change the filters quarterly. We also use a set-back thermometer. I've made no attempt to account for differences due to weather from year to year.
So what does this indicate? Here are the changes per year, expressed as a percentage, with 2004 as the base 100%. Years with utility costs higher than 2004 have a number greater than 100%. Years with utility costs less than 2004 have a number less than 100%:
2004 = 100.0%
2005 = 106.5%
2006 = 115.9%
2007 = 105.6%
2008 = 109.6%
Costs, while increasing, are not as great as I assumed. 2008 is on a trajectory to be about 10% higher than costs in 2004. That might seem like a lot, but consider inflation, which is historically expected to be in the range of 3.5 to 4.5% per year. Here is what my costs would be if my utility prices increased at the lower annual rate of inflation of 3.5%:
2004 = 100.0%
2005 = 103.5%
2006 = 107.12%
2007 = 110.87%
2008 = 114.75%
This compares fairly well to the actual costs over the past 5 years. Actual out of pocket "utilities" have cost my household $15,164.52 over the period 2004 through projected December 2008. Using the percentage increases based on a low inflation rate of 3.5% I would have spent $15,128.54 over that same period.
My conclusion? Surprise. Based upon what I have heard in the media, I expected my actual out of pocket costs to be higher than what they actually were. Over a period of 5 years, there had been continuous, but moderate increases. There are some spikes. 2006 was 15% higher then 2004 and about 9% higher than 2005. So it would seem that my budgeting needs to be tailored to accommodate large jumps from time to time. Other than that, I feel pretty good about the outcome. One caveat: to get a better handle on true "energy" costs, electricity and natural gas costs should be seperated from the other costs.
Looking toward the future, I expect that the next 5 years will have steeper increases than the previous 5 years. But who knows?
Basic Utilities Only
I did an analysis on just the energy components of the utilities; that is, natural gas and electric. The year 2004 was unusually low. Possibly due to milder weather. So I have included the year 2003 to determine if 2004 was an anomoly, and I believe it was. Here are natural gas and electric costs only:
2003 = $1,056.13
2004 = $ 884.92
2005 = $1,120.17
2006 = $1,186.58
2007 = $1,109.69
2008 = $ 714.53 for eight months, probably $1,071.80 for the year.
Options for Decreasing Utility Costs
If at some point I decide that the costs are "intolerable" I have a few options. Internet access in our area has become more competitive and I could switch from my current provider to another. This would decrease the cost for one or two years. Something worth considering. Another possibility is changing our phone service. We use AT&T with a robust package which yields unlimited calling within the US. We could downgrade to a local service and an internet telephony service, or a local service and an upgraded cell phone service. Either approach would lower our annual costs. So we have some options and we can use them to control our costs. As for the future, who knows? Of course, cable TV and internet access are ultimately "discretionary" expenses and we could limit or eliminate them altogether.
I have tracked all of the gasoline consumed in one of my cars. I'll post that in the next installment.
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