Utility services are essential for keeping a functional, comfortable and safe environment in your home or business. Utility services include electricity, water, natural gas, sewage and waste disposal. Some people even consider the internet a utility, although that’s still up for debate.
Utilities play a key role in modern lifestyles and business operations, simplifying tasks like cooking, space heating, hygiene, ventilation and communication.
While necessary, costs for utilities can represent a significant portion of monthly expenses for homes and businesses alike. These costs depend on factors like the size of your property, energy and water usage habits, provider rates and even the local climate.
For homeowners, the main challenge is lowering utility costs without compromising comfort and safety. For businesses, utility costs must also be balanced with operational efficiency to remain profitable. Understanding how each utility service works and its typical costs allows you to make informed decisions and reduce your monthly bills.
What Are Utilities in a House?
Residential utility services make a home livable and comfortable by providing key resources like water, electricity and natural gas for functions like heating, lighting, temperature control and communication. In other words, modern living is possible thanks to utility services.
Depending on your location, utility services may be offered by public entities, private companies or both. For example, in certain states and areas of Texas with deregulated energy, you can choose among multiple electricity providers. However, many states have a regulated energy service, with a municipal power company as the sole electricity provider.
Water and Wastewater
Water and sewage services are critical for hygiene and daily living, and are usually provided by municipal governments or utility districts. Water consumption is measured by metering equipment installed in homes and businesses. Most providers charge a consumption-based monthly bill, similar to electricity services.
Wastewater services handle the removal and treatment of used water from homes and businesses. The sewage system transports wastewater to treatment facilities, which remove its contaminants before releasing it back into the environment. Sewage services are usually bundled along with water services and billed together.
Electricity and Gas
Electricity and natural gas are the two main energy sources for U.S. homes and businesses. Most home appliances run with electricity, while natural gas is mainly used for three specific functions: space heating, water heating and cooking. However, not all areas have natural gas service, so you may only have electric appliances at your home.
Electricity is delivered through power lines, while natural gas travels through an underground network of pipes. Both services are metered and typically billed once per month. Some states have deregulated their natural gas service, electricity service or both — allowing you to choose your providers.
Trash and Recycling
Waste management services ensure regular trash collection and proper disposal. These services may be managed directly by municipalities or outsourced to private companies. Unlike water and energy services, which are available on demand, trash collection follows a scheduled pickup system that varies by location.
Trash collection and recycling may be billed quarterly or annually, instead of following a monthly billing cycle. Depending on local regulations, recycling programs may require you to sort items by type, using different bins of designated colors.
Internet, TV and Phone
Technology-based utilities include phone services, cable or satellite TV and internet access. While these services were once considered luxuries, they have become increasingly important for communication and work. In particular, internet access has become critical with the rise of online transactions and remote work.
Modern internet providers use fiber-optic cables or satellite connections to achieve the speeds required for streaming, remote work and large-scale data exchange. Your package and provider usually determine the monthly cost of internet and cable TV services, and prices can also vary widely by location.
Average Monthly Cost of Home Utilities
Electricity, natural gas and water are the three most important utility services, since they fulfill basic needs. Below we compare the average monthly costs of these utility services in the U.S. We also summarize key factors that influence pricing and ways to reduce your monthly bills:
| Utility Service | Average Monthly Cost | Main Factors Affecting Cost |
|---|---|---|
| Electricity | $145 | Home size Air conditioner efficiency Appliance efficiency Consumption habits Local electricity rates |
| Natural Gas | $81 | Home size Space heater efficiency Hot water system efficiency Consumption habits Local gas rates |
| Water | $40 | Home size Plumbing fixture efficiency Consumption habits Local water rates |
| TOTAL | $266 |
We can estimate average monthly costs for electricity, natural gas and water based on official data from sources like the U.S. Energy Information Administration (EIA). However, costs for trash collection, internet and home security are not so straightforward.
The cost of garbage collection services varies widely by municipality. Many cities bundle trash collection fees and property taxes, meaning there are no separate bills to pay. Other cities charge a flat fee, while others charge a variable fee based on your waste volume, also known as Pay-As-You-Throw (PAYT).
The cost of internet and home security services depends heavily on your provider, plan and features selected.
What Are Common Utilities in an Apartment?
Apartments require the same basic services as single-family homes: Electricity, natural gas, water and internet access. However, billing arrangements in apartments differ from those in houses. Renters may be responsible for some services directly, while others are paid by the landlord and included in rent.
The following services are usually provided for the entire building and paid by the landlord. In these cases, service costs are incorporated into monthly rent:
- Water
- Sewage
- Waste collection
On the other hand, the services below are usually billed separately for each dwelling unit:
- Electricity
- Natural gas
- Internet
What Are Utilities in a Business?
Businesses rely on the same utility services as homes, but they differ in terms of usage scale and billing structures.
Utility needs can also vary significantly across business sectors. For example, while a small office may have energy and water needs similar to a home, a large industrial facility may require dedicated infrastructure to support its energy and water consumption.
For businesses, utility services are an operating cost that influences profit margins. This financial factor incentivizes companies to invest in energy efficiency, water conservation and onsite power generation to reduce costs.
Additionally, businesses in deregulated markets can choose from multiple electricity or natural gas providers, which allows better pricing terms and contract flexibility.
Depending on their industry sector and scale, businesses may also require specialized services not needed in residential settings.
Business Utilities Comparison by Industry
Utility costs vary widely across industries due to differences in energy intensity, water usage, and operational needs. The table below outlines key utility requirements for various business types and typical utility expenses as a percentage of total operating costs
| Industry Sector | Primary Utility Concerns | Average Percentage of Operating Costs |
|---|---|---|
| Retail Stores | Electricity for lighting, HVAC and POS systems Water for restrooms and cleaning Internet for transactions and security systems | Energy: 4%–9% of costs, according to McKinsey & Company |
| Office Buildings | Electricity for lighting, computers and HVAC Internet for daily operations and communication Water for restrooms and break rooms | Utilities: 22%–24% of costs, according to a study by the Institute of Real Estate Management |
| Manufacturing | High electricity demand for industrial machinery and HVAC Gas for heating and production processes Water for cooling and production needs | Utilities: 20%–30% of costs, according to Trade & Industry Development |
| Food Service | Electricity for refrigeration, ovens and HVAC Gas for cooking and water heating Water for cooking, cleaning and restrooms | Energy: 3%–5% of sales, according to ENERGY STAR |
| Healthcare | 24/7 electricity for life–support systems, HVAC and sterilization Water for patient care, cleaning and sanitation High-speed internet for medical records and communication | Utilities: 1.4% of hospital operating costs, according to Southern California Edison |
| Hotels and Hospitality | Electricity for guest room temperature control, lighting and appliances Water for pools, laundry and restrooms Internet for guest services and transactions | Utilities: 3.3% of revenue, according to real estate services firm CBRE |
Seasonal Energy and Utilities Savings Tips
Utility costs vary throughout the year due to changing weather conditions, daylight hours and seasonal events. For example, your electricity usage can increase sharply in summer due to air conditioning, while your gas usage can spike in winter due to heating.
When it comes to utility costs, being proactive pays off. For example, HVAC systems benefit from regular inspections and tune-ups, but these services are usually in high demand just before summer and winter. You can usually find lower service costs by scheduling your equipment maintenance in advance while avoiding last-minute repairs.
Fall Saving Tips
Fall is the ideal time to prepare for winter. Here are some steps to prepare your home for the coldest months, which you can carry out in fall:
- Inspect and service your space heating system.
- Find and seal air leaks around your doors and windows.
- Check your insulation — focusing on your attic, crawl spaces and piping.
- Consider replacing your furnace and water heater with ENERGY STAR-certified units.
If you own a business, fall is also an excellent opportunity for a professional energy audit, which can help you identify and fix inefficiencies.
Winter Saving Tips
In colder climate zones, winter can bring the highest utility bills of the year. In particular, if you have natural gas, you can expect high gas bills during these months, since your heating and hot water systems work overtime. If you schedule a furnace inspection and tune-up in fall, you should expect better performance and a much lower risk of breakdowns.
Make sure any air leaks in your house are sealed, and consider bundling up when indoors. By dressing warm inside, you may not have to rely on your heating system to stay cozy.
When setting up your Christmas decorations, consider using LED lights rather than halogen or incandescent lights to save on electricity bills. LEDs are also safer, since they operate at a lower temperature and are less likely to start a fire or cause an electrical fault.
In addition to these measures, businesses can consider investing in a central high-efficiency boiler or heat pump to permanently reduce their heating costs.
Spring and Summer Saving Tips
Spring offers an opportunity to inspect and service your air conditioner, replacing filters if necessary. If your air conditioning unit is old and inefficient, consider upgrading to an ENERGY STAR-Certified air conditioner with a Seasonal Energy Efficiency Ratio (SEER) of 20 or higher.
Water usage also tends to increase in summer, especially if you have a large lawn. You can use a smart irrigation system to schedule watering early in the morning or late at night, mitigating water loss due to evaporation.
For businesses, spring also offers an excellent opportunity for a professional energy audit, identifying and correcting issues before summer arrives. If you manage a large office building with plenty of windows, consider automated window blinds to reduce solar heat gain.
Year-Round Tips for Saving
Here are some measures that can help you save on utility bills all year long:
- Upgrade to WaterSense plumbing fixtures: WaterSense is a labeling program managed by the U.S. Environmental Protection Agency (EPA), and certified fixtures offer verified water savings of 20% or higher.
- Set back your thermostat: According to the U.S. Department of Energy (DOE), setting back your thermostat 7°F to 10°F during eight hours per day can save you around 10% on annual heating and cooling costs.
- Install a solar panel system: Solar panels generate electricity all year long and can lower your electricity bills if you’re prepared to make a long-term investment in them.
- Switch to an electricity plan with lower rates: If you live in a deregulated area, you can usually find the lowest electricity prices in spring and fall, thanks to the milder weather. Look for a fixed rate with a contract term of 12 months or longer to keep your lower rate for that period.
Smart Technology for Utility Management
Modern technologies can help you monitor and control your usage of utility services more effectively. Here are some popular devices that are helping modern homes save on utility bills:
- Smart thermostats can learn your temperature preferences over time, optimizing your HVAC equipment without sacrificing comfort.
- Energy monitors can provide real-time feedback on energy usage by appliance and circuit, helping you find and eliminate waste.
- Smart power strips and plugs can disconnect appliances based on a schedule or remote instructions, helping you reduce “vampire energy” consumption.
- Leak detectors can help you find water leaks when they start, preventing damage to your plumbing systems while keeping your water bills low.
- Automated window blinds can help you maximize natural lighting, which is especially useful in apartments or office buildings with many windows.
- Occupancy sensors can switch off lighting fixtures in rooms when they are empty or when natural lighting is enough.
Energy Efficiency Savings
- Lighting: Upgrade to LED bulbs, install occupancy sensors to switch off lamps that are not being used and use natural daylight whenever possible.
- Air conditioning: Upgrade to a modern AC unit with a 20+ SEER rating, set back your thermostat and clean your air filters regularly.
- Appliances: Upgrade to ENERGY STAR-Certified appliances and use smart power strips to minimize their standby power consumption when not in use.
- Building envelope: Make sure your property has adequate insulation, prioritizing your attic and crawl spaces, and seal any air leaks around your doors and windows.
Understanding Utility Bills
The format of utility bills can vary depending on your location, provider and type of utility services. Most bills across the U.S. include several common elements:
- Billing period: Utility service providers break down your usage into billing periods. Monthly billing cycles are the most common, but you can also find quarterly or annual bills for some services. You can even find prepaid energy plans.
- Base charges: Utility services often include a base charge regardless of your consumption, which covers fixed costs. For electricity bills, base charges are usually below $20 per month. Many energy plans have $0 base charges.
- Usage-based charges: Electricity, natural gas and water bills normally include a “variable” charge that changes based on your measured usage in the latest billing cycle.
- Taxes: U.S. utility services are generally taxed, but the exact rates vary by location.
Frequently Asked Questions
The average monthly cost of electricity, natural gas and water for a typical U.S. home is $266. The cost of internet access and home security can vary widely depending on your provider and service tier.
Apartments usually receive individual bills for electricity, natural gas and internet access. Services like water, sewage, trash collection and security may be paid by the landlord and included in monthly rent payments. Keep in mind that billing arrangements will vary by apartment building.
Small businesses and homes rely on the same utility services, but their usage patterns are different. Businesses usually have higher electricity bills because they use office equipment, lighting and HVAC all day long, when most homes are empty. On the other hand, homes tend to have higher water and gas bills, since they require more water heating and cooking than a typical small business.
You can upgrade to low-flow showerheads, faucets and toilets. We recommend looking for WaterSense-labeled plumbing fixtures, which are certified by the EPA, offering at least 20% water savings compared to standard models.
