Homeowners feeling squeezed by higher prices for just about everything may be looking for relatively simple ways to lower their bills. Energy bills are one area in which many people are feeling squeezed. 

In 2023, the average residential electricity bill in the US increased 2% year-over-year, according to data from the U.S. Energy Information Administration. That follows a couple of years with additional energy price increases, including a 13% jump between 2021 and 2022. 

One way to try to blunt the impact of those increases? Paying more attention to your energy usage. There are tools that can help you do that. EnergyGuide is one of them -- you may recognize the name from the bright yellow tags that come with many appliances. 

EnergyGuide tags or labels are designed to give you a quick and easy way to determine how efficient an appliance or product is. Learning more about energy guides, and understanding the difference between EnergyGuide and programs like Energy Star, can also help you get a handle on your energy costs and find ways to try to bring your energy bills down as much as possible.

What is the EnergyGuide label?

As noted, the EnergyGuide label is the yellow tag found on appliances in stores. The EnergyGuide program is managed by the Federal Trade Commission and gives consumers a rough idea of how much energy an appliance or product will likely use over the course of a year and the associated annual operating costs.

You're most likely to notice EnergyGuide labels on large appliances such as dishwashers, refrigerators and air conditioners. 

"Think of EnergyGuide as a 'nutrition label' for your appliance," said Josh Lake, cofounder of Elephant Energy. "It outlines the efficiency of the appliance, the expected energy consumption and cost in a year, and more. It is a useful tool to help you compare fossil fuel-powered appliances like water heaters to electric alternatives like heat pump water heaters."

Lake said the information on EnergyGuide labels is trustworthy -- you don't need to necessarily worry about getting bamboozled by manufacturers, who are required to place the labels on their products. 

"Testing is performed by government-sponsored and third-party labs," he said. "The information is validated by the Federal Trade Commission and managed by the Energy Star program, which is a federal program. In terms of standards and testing, this is the gold standard."

How to read an EnergyGuide

If you're shopping for a new appliance and come across an EnergyGuide label, deciphering it isn't terribly difficult. But it can still be helpful to review the key components to make sure you fully understand what the label is saying. Just remember that each and every home is different, and the information on the label may not provide completely accurate information due to a number of variables. 

Here are the common components on EnergyGuide labels and what you'll need to know for translating it into energy costs for you and your home.

Estimated yearly energy cost

The most prominent section and piece of information on the label is the estimated yearly energy cost, which is found in the middle of the label, in a dollar figure. This gives the consumer an idea of how much they should anticipate spending to power the appliance in question, though there may be some stipulations. For instance, you may see "$40" as the estimated cost, but with a note such as "(when used with an electric water heater)."

As for how the cost is estimated? The FTC says it's "based on typical use and a national average price for energy." Accordingly, "your cost will depend on how you use the appliance and your local energy price."

If you want to try to get a more exact calculation, you'd need to find your local energy rates. That would mean checking out your electric bill, finding the rate you're paying per kilowatt-hour (kWh), and multiplying that rate by the "estimated yearly electric use," which is also listed on the label.

Estimated yearly electricity use

The estimated yearly electricity use, as mentioned, gives consumers an idea of how much electricity an appliance is going to suck up over the course of a year. Of course, it's difficult to say how accurate this estimate will be, as it'll depend on how much or often you actually use the appliance, in addition to several other factors. 

So take this number with a grain of salt and think about the factors in your household that may increase or decrease total usage. A household with a single adult, for instance, is likely to use a dishwasher or washing machine much less often than a household of five or six. 

But if the appliance in question is a refrigerator, it may not make much of a difference, as a refrigerator is generally plugged in and running all the time -- no matter how many people are in the household.

If you're not sure but still want a ballpark figure of overall consumption numbers, the US Department of Energy also has some methods of calculating electricity consumption and costs, if you feel like doing some rough math. 

Energy Star certification

Energy Star is not the same as EnergyGuide. Energy Star is a federal program aimed at promoting energy efficiency.

If an appliance is Energy Star-certified, you'll see the Energy Star logo in the bottom right corner of the label. If the label is there, it means that the product is highly efficient and is included to make it easy for consumers to find the most energy-efficient products on the market. 

Additional information

Depending on the specific appliance, there may be some additional information included on the label. Near the bottom, you're likely to see bullet points. There'll probably be a website listed for more information, and some qualifying information related to how the estimates for costs and energy usage were attained.

Near the top of the label, you'll also see information related to the specific make and model of the appliance, which should match the individual appliance you're looking at. If not, then it's been mislabeled, so double-check that everything matches up.

How to save on energy at home

Buying more efficient appliances is one way to save on energy and cut electricity or gas costs. And that can be a great way to start making your home more energy efficient. But there are other things you can do too if you're really trying to blunt your energy bill.

Getting an idea of what is using the most energy in your home can be helpful too to figure out which appliances or electronics may be worth replacing or shutting down and which aren't. "Heating and cooling and water-heating comprise around 90% of most homes' energy use. Lighting, small appliances, charging devices and other similar devices make up the final 10%," Lake said. "Switching to technologies like heat pumps for heating and cooling and heat pump water heaters to heat your water can reduce the 'primary' energy use in your home because of their ability to extract energy from the air, rather than burning stuff to create energy."

Installing heat pumps or making other big changes and upgrades to a home may be expensive, so some homeowners may want to look for less intense ways to reduce their bills. Installing a smart thermostat could reduce your energy costs. Utilizing dimmers and smart plugs can also cut electricity use. You can also look for areas of your home that need to be sealed or insulated to make it more energy efficient.

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