Thursday, April 01, 2010

Rent w/utilities included, or pay them ourselves?

(This is another one of those posts that I'm writing to help the uninformed masses, who are as I once was.)

When we were looking at apartments in Ithaca, the complex we ended up settling on offered units with heat included, at a higher rent, or units in which we'd have to pay our own gas bill, but with a lower rent. I did a cursory search on the internet at the time to see if there was any general consensus out there on which was more cost-effective in the long run, but I didn't find anything. We took a leap of faith and went for an apartment with the heat not included.

The monthly rent discount for a pay-your-own-heat apartment is $100. So to break even on our "extra" utility costs, our gas bill would need to be less than $100/month, on average. But it wasn't that simple - gas costs during the summer would be close to nil because we'd only be paying for minor usage, like our oven. During the winter, however, we'd depend on gas to heat our house. We knew that the winter months were the ones that would make or break the success of our little gamble.

Well, I think spring is really almost quite just about here, and though the heat still kicks on now and then, I think we're out of the heavy winter usage. So I took a look at our utility bills to see how the numbers worked out.

Allowing for relatively low summertime gas usage, I figured we had anywhere from $150 to $175 to burn, per month, on gas bills in order to keep under our cost limit. During each of the five coldest winter months (yes, I just decided that winter lasts five months here), we spent an average of $88.50 on our gas bill. That means we came out way ahead in the cost-effectiveness part of the utilities included vs. pay your own way contest.

However. There is a big however. We usually kept our thermostat at around 61 degrees. Sometimes it crept up to 62 or 63 degrees, but to my knowledge it was never higher than that. Oh - except for when a family stayed in our apartment for a week while we were out of town at Christmas time and the bill for that month was much higher. Coincidence? I don't think so.

Bottom line: The pay-your-own-heat apartment ends up being cheaper only if you're willing to keep the thermostat fairly low. Although it looks like we actually ended up with quite a bit of cushion room in our monthly bills, so maybe we could have set the thermostat higher and still come out ahead. Aside from cost, I can think of two other reasons someone might want to opt out of an apartment with heat included:

1. You want to control your own thermostat. As I understand it, the apartments with heat included have little to no control over the thermostat setting. And it is set for HOT.

2. You don't want to breathe air that has circulated from another apartment. This is something the apartment company mentioned but I don't know how that works. She said something about us having our own self-contained system. Who knows what exactly that means.

I hope someone out there finds this post helpful, or even interesting. I also hope I've done my calculations correctly. The bills we get from NYSEG are not especially easy to read and electricity is lumped in there with the gas in some places. I did my best to sift the charges out correctly. Please let me know if you think I've made a mistake somewhere.

(Besides the mistake where I set the thermostat at 61 degrees, because it wasn't one.)


Susanne said...

Enjoyed this! So glad your plan worked. I would have hated for you to freeze all winter and still come out having paid more.

Thanks for sharing.

B-Rad said...

In our microecon class last semester, we learned that you always want to rent an apartment that has rent separate from your other utilities because you'll gain money in the long run (as you discovered). Interestingly enough, we did not choose this option, but I'd be curious do know if it would've been much of a gain because we kept our place pretty warm during the winter. One thing I don't buy is the talk about "recirculated air." Maybe each unit is different, but our heat came from heated coils that lined the base boards. No air came out of them, thus no recirculated air.

On another note...what is up with NYSEG and their bills?! I can never read them accurately either because it appears that they do an "actual" read one month and then an "estimate" read the next month. Andrea got really upset about that one.

Lindsay said...

Ok, maybe I have lived in AZ too long. 61 degrees sounds cold to me. :)

Lilianne said...

You guys are hard core! When our apartment is 61 degrees we are FREEZING! Guess you have to "thicken the blood" somehow! :-) Glad you made it through your first winter without any frost bite!

The Ensign's said...

Yikes! I'm freezing just reading that post =).

First, thing I do in the morning is turn on our heat to 70 and I'm still freezing.

I sooo would not survive outside of the desert. I get extremely irritable when I'm cold. It's too bad because Shay LOVES the snow. It's quite a treat when we go to Utah for Christmas. (BTW- by "loves the snow" I mean LOVES eating it.)

Liz Johnson said...

Wow, 61? You are hardcore. Our heat is electric (coming from baseboards) and it's ridiculously expensive (like $100/month)... but even in the summer (when our lights are never on and we're usually outside), we have a $50 electric bill. It makes no sense. I blame my apartment (and appliances) being from 1962.

Suzanne Bubnash said...

We let our house get down to the 50s last fall before turning on the heat, and just wore fleece & wool around the house. Typically we set it at 66-67. We don't use the AC much in the summer. It's all very costly.

When we lived in Idaho where it could go below zero in winter we may have actually used less heat. Our house had a broad southern exposure and the sun shines way more in Idaho then here in Oregon. The heat of the sun toasted the south-facing rooms and tricked the thermostat into thinking it was warm inside so the heat pump didn't turn on much on sunny days.

Shannan said...

you're my kind of girl as I'm one who likes a nice 64-65 degree house during the winter day and no heat at night. My mom is always stunned that my kids are running around perfectly happy with the house "so cold" but it's been like that their whole life so they think it is normal. BTW, in Oregon which has super duper high utility bills IMO, to keep my house at 63 during the day and nothing at night, I still can pay upwards of $150-$175 during the winter. We don't have gas in any other part of our house other than the furnace. I have no idea why, but Oregon charges A LOT for heat and eletricity.

EmmySue said...

I wonder if it works the same for AC here in the summer... My SIL has utilities included in her bill and we do not. Our summer AC bills can get up to $200 a month...
Another big thing is insulation. All the air goes right out our doors and windows... You must have a well insulation and sealed house. Lucky you...

Eevi said...

We would always turn the heat on at night because it would drop to 64 or so, so we would set it at 68 for the night and got a heater for Saku's room. And i thought we were being pretty conservative. You guys are way hardcore!

Suzanne Bubnash said...

Shannan, we also don't use heat at night. Cheaper to buy a down comforter for each bed than to pay sky-high Oregon utility rates.

Bridget said...

Can anyone tell me how to find cost per kWh or whatever it is? I tried to find a simple number on my bill but it's all split up into taxes and fees and delivery charges. I'd be interested to see if utility gas is more expensive here.

Katie said...

One thing I loved about living in Utah is they have "equal pay" they average your cost over the year and you pay the same each month, the next year they do it again and adjust your payment accordingly. If you have paid over then you have a credit on your account, and if your under, I guess they just up it the next time to make up the difference. Anyway, I loved it because I knew exactly what we would be paying, it was so much easier to make and stick to a budget, because $100 difference between winter and summer months is huge.

JosephJ said...

We considered the included/separate issue too as various landlords work things differently, but always figured we are more conservative than most renters. And what landlord is going to set a fixed cost so that he pockets less? (They'll always sufficiently pad the utilities-included cost.)

So in the winters, we beef up the insulation (window coverings), wear an extra layer, and spend most of our time upstairs where the heat rises. We set the thermostat program to a balmy 64 for the parts of the day where we are likely to be downstairs, and 60 for the rest. We come out WAY ahead under this method... though now with the baby, we're more likely to give the daytime levels a bump and spend a little more time downstairs.

On the "equal pay" option, we have avoided that so that we CAN feel the difference financially when we change our useage. The connection to "so that's what $25 more in heat feels like" helps us be more judicious.

Regardless of who the bill gets mailed to, YOU, the renter will be paying it in the end. If you run the bill up, you can bet that your rent will go up. Might as well be a good steward and use what you can afford or are comfortable with!

Trina said...

I think if you deduct the deliver charge (which is the same, if you use a lot of a little) and taxes and then divide the total usage by the kWh, you'll get the per kWh price. I figured it out once but I don't remember.
We got some fun bills for a couple months, our first year here. Our electricity bills (yes, electricity only), in the winter months were just over $100 for a couple months in a row. I was confused but didn't know of a dang thing I could do about it the first month. I just figured that what their meter said was what they'd go by. Then I realized that the first bill was an estimate. Having no idea why they would randomly estimate so high, because it was usually between $30 and $40. I just figured that we'd have then next months bill covered with a credit toward the next month even. Well, the next months came and the bill was even a little more than the previous $100. I called, still sure that there was nothing that they would do. They figured (it was someone in the mid-west that I was talking to, not sure why NYSEG customer service is based in the mid-west, I thought NYSEG stood for New York State Electric and Gas) that the meter-reader read the first number on the meter as being a 1 and not the 0 that it actually was. Making it look like we used 1000 extra units of electricity. She was not sure, so she said that I just needed to pay my bill. Finally, after a few months the bills were equalized and we were able to start using the huge credit that we'd paid.
Not a huge fan of NYSEG's billing.

Also, I had not ever even heard of the option to not have heat included in rent, until you and the Burke's moved in. It was never offered to me, the only thing that was offered was to live in a non-smoking building.

Also, we have no re-circulated air. Our heat was not turned up high enough, so I asked them to turn it up more and they did. I'm pretty sure that I'm glad that the heat is included, because we'd have a hard time turning it up high enough if it were not, and our girls room is the coldest in the house, as it is.
What I'm saying is that I'm not sure I'd be willing to keep my thermostat at 61 all winter (even with being pregnant and hotter than normal), to save money, so I think I'm glad that it's just included for us!

Kristen said...

Geez, 61 is freezing. You're crazy. Here in the NW, there is an option for billing where they guesstimate your average annual cost and divide it up into equal payments so the gas bill doesn't fluctuate so much in the summer vs. winter. Then at the end of the year they adjust for any actual difference. It's a nice option for people who depend on knowing what their bill will be each month and/or want to spread out the cost of the more expensive months.


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