Utility Average Payments

[kork13]

Does anyone participate in your utility's average level payment plans? My understanding of them is that at some point during the year, they average out the last 12 months of your bills, and you pay that flat amount for the next 12 months, at which point it adjusts again.

I've never participated in them, because it always had the appearance/feeling of a marketing gimmick that inevitably makes the consumer the loser, costing you money while earning the company marginal extra dollars (times tens/hundreds of thousands of customers). Am I wrong? I've never figured out if this is actually a net-zero program, or if it does in fact only end up screwing the customer. (as you can tell, I have a fearfully low opinion of utility companies, or really any company that exercises an effective monopoly).

All of that said.... It really would be nice to have a little more predictability in my utility bills. I recognize that we're still relatively new to our house (moved in late July), so we haven't seen even a year's worth of bills as a reference point... But I'm just sorta craving some extra stability/predictability (2020 sucks....COVID too.... I'm just done with the continuous lunacy), and finances is obviously where my mind goes first.

(I'll also caveat that I'm very short on sleep the last few days due to a COVID-driven schedule change, now doing extended-hours partial workdays -- instead of 7:30a-4:30p for everyone, 6am-noon morning shift/noon-6pm afternoon shift, with the expectation of telework outside those hours...So I've been dragging myself out of bed at 4:30am, but my family life hasn't yet adjusted to allow me to get to bed before 10pm, let alone fall asleep. So in all, I'm a little peevish right now -- my apologies)

[HundredK]

My parents do, and it helps them with budgeting a standard amount. They still get statements showing exactly how much they are over/under paid and they can see what their actual bill is. Every time it readjusts it takes that into account. I think those programs are just designed to help people cope with fluctuating amounts.

[disneysteve]

We've done the Equal Payment Plan with PSEG for years (gas and electric). Even though we don't need to do it for financial reasons, I like the regularity of it. It doesn't cost the customer anything extra. Over the course of the year, you still pay exactly the same amount you would pay without the plan. It just gets evenly spread over the year instead of big heating bills in the winter and big cooling bills in the summer. Every month, the statement shows how much our actual charges are YTD and how much we've paid in so far, so we know if we're ahead or behind. That way, that final balance month isn't a huge surprise.

I'm pretty sure that they will also do a mid-year adjustment to your monthly charge if it looks like the initial amount is way off base. That prevents too large of a deficit the final month.

I really don't see any significant downside to it. Sure, I might lose a tiny bit of interest some months, but we're talking about pennies. I just looked at our most recent bill. Four months into the plan year, we've paid $18.89 more than we've used. But coming into winter, we'll make that up as heating bills rise.

[disneysteve]

I checked our July bill, which is our balance month. We were behind by $83.06 which wasn't bad at all. We've also had years where we ended up ahead and got a credit. It all depends on weather patterns and our travel plans (which have been non-existent the past 9 months of course so our bills are a little higher than usual).

[Jluke]

We pay the actual amount. For us it is just electric as we are now on propane for heat.

a few years ago our utility company screwed up the estimates and weren’t charging people enough. They ended up with a huge bill at the end of summer.

I was tracking ours and made note that the estimated amount was on the low side. I wasn’t surprised when a bigger bill arrived in September.

those who were on the equal payment plan were hit with a much larger bill and in shock

[disneysteve]

a few years ago our utility company screwed up the estimates and weren’t charging people enough. They ended up with a huge bill at the end of summer.

Do the statements show a YTD summary? Ours do so you always know how much you are ahead or behind.

[Jluke]

Do the statements show a YTD summary? Ours do so you always know how much you are ahead or behind.

No clue.

forgot to mention this was also before the meters could be read remotely. So the estimates were low compared to the actual. When the company came out to read the meters is when it all came to light that they screwed up.

[Like2Plan]

We also do the equal payment plan. It makes it more predictable when using the automatic payment feature which I like to do as well.

[disneysteve]

forgot to mention this was also before the meters could be read remotely. So the estimates were low compared to the actual. When the company came out to read the meters is when it all came to light that they screwed up.

Ah, if you're in an area where they still do manual readings, the budget plan is even better (normally) because you pay the same amount every month even if they miss getting your numbers one month, underestimate, and have to make it up the following month.

We now have remote readings but that's only been the past couple of years. When we still had in-person readings, we could go online and enter the reading ourselves if we knew we wouldn't be home on meter reading day. That helped prevent issues from underestimates too.

[MonkeyMama]

We started the balanced utility payments about 15 years ago? I *love* it. It just makes it so simple for monthly financial management. Between that and doing the "1/12 annual expenses into savings every month," it means very little thought is given to our bill paying or monthly budget. It's always going to be the same dollars every month. It makes the accountant in me happy. It's all about just smoothing everything into equal monthly payments. (& I just tolerate my one bi-monthly sewer bill).

I don't personally really care about the idea of settling up once or twice per year, but is the one big downside people always kind of throw out why they would never do this. We are very boring and consistent and so our annual spending is just kind of the same and this has been completely N/A for us. The exception might have been when we got an electric car and then we didn't have to pay for that (electricity) for like a year. Maybe that will go the opposite way when our kids go off to college. If our energy needs decrease and there is a year lag before we start paying smaller amounts. Most of the 15 years, it was moot and we just had the same monthly payment (with some minor inflation over time).

[disneysteve]

I don't personally really care about the idea of settling up once or twice per year, but is the one big downside people always kind of throw out why they would never do this.

If you run a really tight budget, having that one month where the bill is suddenly significantly higher could pose a problem. BUT if your budget is that tight, I would think it would be a much bigger problem to have a bill that varies from month to month and never know exactly what to expect. On the budget plan, our balance month is never as high as the costliest month of the year would be in actual charges.

[kork13]

Wow, okay. So I guess I'm just totally wrong, and I should actually look into it once we're eligible. The fact that they do a "true-up" is actually reassuring to me, because it means we really are paying the exact same amount over time, it's just alot more consistent except for those true-up months. My thought process is exactly like MM -- the consistency of something like that would be awesome. Well, I'm wrong today, nice to be kept humble. Thanks everybody!

[bjl584]

I used to do this with my gas bill at my old house.
I currently don't have this set up at my current home.

The only utility that I really have anymore is electric, and it tends to stay fairly consistent except a couple months in the summer when the AC is running.

[Like2Plan]

Our true up amounts have generally been in our favor. (So, a smaller payment one month for example). Our gas bill has been pretty steady in about the 80-85/month range. The electric has had the most variability. For example in 2012 it was $101/month. 2014, it was 93/month. Somewhere in there we bought new windows (and we have used more energy in the summer--which doesn't speak well for the new windows. But, it also could be the AC system is getting old. Our HVAC team nursed it along this past summer) Last year the electric level billing was $128/month and it recently was adjusted to 120/month (which is weird because it looked like we were using more electricity this past summer...)

One thing that I have noticed is that I don't study the electric/gas bills as much as I used to because it is all on "autopilot".

[disneysteve]

Somewhere in there we bought new windows

We've also run into this. One year we bought a new refrigerator partway into the year. It was way more efficient than the old one so our electricity usage dropped putting us ahead of the budget billing. Another year, we replaced the furnace and the hot water heater dropping our gas usage. We were also ahead of the curve during the years that DD was away at college, but bills climbed again when she came back home.

But again, that's what is nice about the equal payments. There's not big swings from month to month.