Insulation, Radiant and Vapor Barriers - Additional Basement Insulation Needed?

I recently bought a home with a finished basement. However, the only insulation is that which came with the home. It covers only the above-ground portion of the foundation. The underground portion is uninsulated. I was installing some additional wall receptacles the other weekend, and noticed quite a bit of cool air coming out of the hole I cut for the receptacle box (12" off of floor). Should the entire wall have been insulated prior to finishing off the basement? If so, why wasn't the below-ground portion insulated to begin with when the home was built. I am trying to determine why my electric bills have been over $300 the past two months, and think the basement may be the culprit (heat constantly running).

This will get you started, I'll check back.

Bud
http://www.eere.energy.gov/buildings/building_america/pdfs/db/35017.pdf

Thanks Bud. That is a very informative article. My basement currently has the blanket insulation with impermeable aluminum foil covering only the top half of the foundation. I haven't read the entire article, but it appears that there are guidelines towards the end of the article that describe the best method for insulating my basement. Is this something I can do myself for a relatively low cost? I would want to go with the interior insulating option only.

Insulating a basement is a good DIY project, however, as the article explains, careful consideration of the moisture issues is a must. A dry basement is never dry, unless you live in a desert or your foundation was encapsulated during construction. For the rest of us we must manage the moisture and give it a place to go, drain or evaporate. The days when we could just add heat and let our homes breathe are gone and in their place is a host of problems that the industry is still trying to understand and react to. That confusion is why you will find so many opinions on "how to" when dealing with moisture issues.

Good luck
Bud

House is 26 years old and hasn't had any moisture problems that I can see. There are corrugated pipes layed around the foundation to drain rain water. Towards the end of the article, it suggests using foam insulation board and placing it directly against the foundation wall. That may work for my basement.