What is "energy"? Where does it come from? And how do we pay for it? When you learn the answers to these questions, you can also learn how to live more efficiently in your home. In this article, we'll discuss how to be smart about how you use energy, how to know when to turn electrical power on and off, and how to use natural gas, propane, and fuel oil in the most effective way.

Basic Concepts of Energy Efficiency

You can make a lot of progress toward improving the energy efficiency in your home by simply plugging the many places through which air can get in or get out. Plugging your home is called "air sealing," and it is one of the most important first steps to take when weatherizing your house to increase its energy efficiency.

Increasing the amount of insulation in various places in your home should be a high priority. Insulation, in its many forms, helps stop the transfer of heat from one place to another. A good example of this is the insulation in your attic. A thick layer of insulation helps stop heat flow from the house to the attic during the winter. In the summer, that same insulation helps stop heat transfer from the hot attic to the rooms below.

But while better air sealing and insulation in your home can do a lot to reduce your utility bill, that's not where the story on energy efficiency starts and ends. There are many other ways to conserve, some of which require only simple changes of habit or lifestyle.

Electricity powers lights, appliances, and electronic devices in your home. It also runs air conditioners, heats water, cooks food, dries laundry, and in some cases is used for space heating. Natural gas, propane, and oil are mostly burned to provide space heating and hot water; and secondary uses for these gases include cooking, clothes drying, and fireplace fuel.

­Electricity: Electricity enters a home through a service-entry cable either above or below ground. From there it passes through a main electrical service panel containing fuses or breakers and is distributed throughout the house through wires, receptacles, and switches. Electricity is billed to the consumer by the kilowatt-hour (kWH). Each kWH costs approximately 8 to 15 cents, depending on where you live and your utility company's fees.

One kilowatt-hour equals 1,000 watts of electricity used for an hour. To understand how kilowatts are calculated, picture a 100-watt lightbulb. Burning that bulb for one hour uses 100 watts of electricity. If it burns for 10 hours, that equals one kilowatt (100 watts 3 10 hours = 1,000 watts, or one kilowatt). And burning that one bulb for those 10 hours costs between 8 and 15 cents.

Natural gas: Natural gas is delivered to homes through a network of underground pipes. After natural gas passes through a meter outside of a house, the gas is piped to where it is needed inside -- to a furnace or boiler, water heater, or gas fireplace -- through a series of smaller metal pipes. Natural gas is billed to the consumer by the cubic foot of gas used.

Propane: Propane, or liquefied petroleum gas (LPG), is transported by truck from a utility or gas company to a storage tank on a homeowner's property outside the home. From there it enters the house through a pipe and is distributed via a system similar to that used for natural gas. Propane is billed by the gallon.

Oil: Fuel oil is also transported by truck, is pumped into a storage tank either inside or outside the house, and is piped to the appliances where it is needed. Fuel oil is billed by the gallon as well.

So that's how energy arrives at your house and how it is billed. What happens after that -- how you use these energy supplies -- has everything to do with how large your utility bill is at the end of the month. Every time you turn on a light or a TV, use hot water, or switch on the air conditioner or furnace, you consume energy.

Watch the Thermostat

Dialing down: In 1977, President Jimmy Carter appeared on national television for the first of what were later dubbed "energy speeches." The country was going through an oil crisis, and Carter advised us to "dial down" our thermostats. His line of reasoning was that, by reducing the temperature in our homes, we could conserve heating fuel.

President Carter's words of nearly 30 years ago still ring true today: The best way to conserve energy is to not use so much of it. And one of the best ways of reducing the use of heating fuel in the home is to simply turn down the thermostat.

Because space heating constitutes the largest energy expenditure in many homes, even a little conservation of heating fuel goes a long way toward achieving a lower utility bill. Dialing down the thermostat one degree during the winter can result in about 1 to 3 percent less fuel use, and a similar reduction in your heating bill.

A furnace or boiler has to maintain a differential in temperature between the inside of the house and the outdoors in order for the house to feel comfortable. On cold days that difference can be as much as 50 to 60 degrees (say, 20 outside and 70 inside). Any time the differential can be reduced, even by a degree or two, the heating system comes on less often, less fuel is burned, and savings result. The downside of turning down a thermostat, of course, is that the house is cooler. But Carter had a solution for that -- simply slip on a sweater. That makes sense, too. Instead of turning up the heat to increase the overall warmth in the huge volume of space inside the house, you can simply increase your personal insulation to help retain body heat.

Though dialing down might seem a hardship at first, after a while your body will adjust to the "new normal" house temperature and wearing sweaters and socks inside will become a part of everyday life.

Dialing up: The concept of dialing down can be reversed for energy savings during the warm months. "Dialing up" is an effective method of reducing the cost of cooling a house with room or central air-conditioning.

The same principles apply: The less the temperature differential the air-conditioning system has to maintain between the inside and outside, the less often the compressor comes on, the less electricity is consumed, and the lower the utility bill.

Instead of setting the thermostat to the point that the air-conditioning system makes the house cold, try dialing it up a few degrees and adjusting your clothing to deal with the slightly warmer temperature. Chances are you'll never notice the difference. And, as is the case with heating, dialing the thermostat up when you're away from the house results in lower energy consumption.

Close Empty Rooms

If there are rooms in your house that aren't being used, shutting the doors to those rooms results in an overall reduction in the amount of area that the heating and air-conditioning systems have to heat and cool. When a child moves away from home to go to college, or when parts of the basement aren't being used, isolating those areas from the rest of the house means less demand in terms of heating and cooling, and a lower energy bill. The less space you need to supply with conditioned air, the less often the heating, ventilation, and air-conditioning (HVAC) systems will need to operate.

Stay Under the Covers

Many people prefer to "sleep cold," and they don't mind turning down the thermostat into the low 60s or mid-50s at night. Some even like to turn off the heat entirely in the bedroom and sleep with a window open. Those who are comfortable dialing back this dramatically are able to reduce their heating fuel consumption substantially at night, as the heating system does not have to maintain a large temperature differential between the inside and outside.

For those not so inclined, there are means available to stay warm under the covers, even while dialing back the thermostat. Down or synthetic-filled comforters provide insulation with little weight. And electric blankets generate warmth at a small cost in electrical energy.

The winter months can bring with them high heating bills, even for those who like to keep their homes on the cool side. In the summer, air conditioning can make those energy bills skyrocket. In the next section, we'll take a look at how to keep heating costs down in all seasons.