Question on "balance billing"

[jog58]

Hi everybody,

We are shortly going to have to start paying for our own heat [it used to be included in our rent] I was reading on the gas company's website that they provide balance billing. It says:


"Our Balanced Billing plan spreads your total annual gas cost into 12 balanced" monthly payments. You'll still pay for the exact amount of gas that you use each year, but you'll pay a balanced amount every month, which makes things much easier on your monthly household budget.

If you did not pay enough over the plan year to cover the actual cost of your electric and/or gas service, that balance will be divided by 12 and included in your new budget amount for the new budget year. For example, if you owed $48 at the time of your Settlement Month, your next year's proposed budget amount would increase by $4."

Has anyone ever done something like this? If so can you tell me about the pros and cons of it?

 

[PixiePlanner]

Years ago, I did something like this. We ended up having an unseasonably warm winter and I paid nothing for two months and the end of my 12 month period.

 

[Bildmouse]

We've done this for years. It's a lot easier to know what the payment is every month then to try to come up with $200 more for one very cold month. Our budget plan have been very close. This year we had almost a two month overage which was a nice surprise.

 

[HamTown]

We have this for our electric bill and have used it for propane previously.

I love it because I would much rather have a fixed expense each month for budgeting purposes than having a fluctuating amount each month. With our propane tank at our last house, we got hit with a $800 bill due Jan. 3rd. That's not the kind of expense we needed a week after Christmas!

I think our power company reassesses every 6 months instead of 12 but it has worked very well for us.

 

[mickeyboat]

I have done this in the past and ended up with a credit on the next year's budget plan. It was nice to have the bill be a constant every month.

 

[4boys531]

We just finished our first year on budget billing. They estimated high so we had a credit over the summer and didn't pay for the last 3 months. They adjusted the amount down that we will pay now to try and get it to work out closer to the actual. I thought it was really nice and makes paying the bill easier because you know what it is every month.

 

[Darcy03231]

We do this with our gas bill and have for the last 10 years. I really like it as its much easier to pay the same amount year round.

 

[Disnydad]

We do this with our electric/gas bill. They refigure the amount every September, and this month our bill was 0. Next month it starts up again, but $40 less (per month) than the past year.

 

[ccgirl]

I am also a big fan of this. I live in the Northeast. During the summer months, my gas bill could be as low as $50 a month. But, in the winter it could also be as high as $500 a month. Trying to come up with an "unexpected" $500 was rough. I signed up for balanced billing and I now pay $140 a month over 12 months. I love having the fixed expense. As a PP stated, I also had a credit after last year so my balanced billing actually went down this year by $15 a month.

 

[mamilovesdisney]

We just started the plan this month. I am hoping it will work out. Our fixed bill is $58 dollars but we used $90 dollars worth. We have had a few heat waves in San Diego so hopefully it will even out. I do like being able to budget. Last winter in Virginia, it was impossible with the fluctuating bills in the hundreds because of the overactive heat pump. We will see

 

[robinb]

THey call it a "budget plan" around here and we have been doing it for years. They divide our previous year's bill by 11 (not 12) and then we have a "catch-up" month where we either pay a bit more or a bit less depending on actual usage.

 

[DisneyMomma81]

I plan to do this as soon as I can ~ we moved into our home late July and I was told I have to wait a year before switching to this payment plan ~ they want to see how much we'll use I guess ~ can't they look at the previous homeowners usage and guess, if I need to pay more fine, if I'd deserve a credit great!

 

[cheerforchelsea]

I do this for both my electricity and natural gas - and I LOVE IT. You know what your bill is going to be and anytime that they have had to adjust for usage (about 2 times a year) my bill has alwasy gone down.

 

[meriface11]

we do this too and it's much easier to just pay the same amount every month instead of paying a lot in the winter and a little in the summer.

that being said, so 2 winters are alike, so while a lot of the PPs said that they overbudgeted and had a credit at the end of their budget year, it's also possible that you might have a colder winter than last year, use more heating fuel, and then owe money at the end of the budget year. you pay for what you actual use, so it's not like if this happens you are in any worse of a situation than if you weren't on the budget plan, but just wanted to throw it out there that it's a possibility. I have been in situations where I both owed and had a credit at the end of the year.

 

[Poohbug]

I get offered a plan similar to this every year. I never sign up for it and never will. Make sure you read the fine print. Around here it will cost you 7% of your costs just to average out your payments for a year. I am not going to pay an extra 7% when I don't have to. Sure the bill is high in the winter but nothing that we can't handle.

Just watch the fine print and make sure you are not paying extra for this "benefit".

 

[kacaju]

we do it and I love it. They have the actual amount on my bill so I can see month to month if my balance is over or under what I pay. this way come March, I will already know if I have to pay extra or get a credit.

My only advice, if you have two different bills for utilities (we have gas and electric with two companies) don't sign up for the balance billing at the same time. I did that so if I owe on both, I will owe all that money at the same time. If I had thought to sign up for one ad then two months later sign up for the other it would spread out the money you owe.

 

[jog58]

Thank you everyone. Your responses were super helpful.

 

[minnie1928]

I get offered a plan similar to this every year. I never sign up for it and never will. Make sure you read the fine print. Around here it will cost you 7% of your costs just to average out your payments for a year. I am not going to pay an extra 7% when I don't have to. Sure the bill is high in the winter but nothing that we can't handle.

Just watch the fine print and make sure you are not paying extra for this "benefit".

I decided to do my own budget billing. After 12 months I went to the utility company's websites and found out what my balanced billing amount would be each month. I now take that amount out of my budget every month and allocate it towards utilities. Then when the actual bill comes, I pay it out of my utility budget. This way I have a balanced bill, but instead of the utility company holding my extra money and earning interest...I am.

 

[Blue.Fairy2]

Do you get a accounting of your actual usage each month?

Our Electric company does this and have been considering it.

 

[DISdreamin']

I decided to do my own budget billing. After 12 months I went to the utility company's websites and found out what my balanced billing amount would be each month. I now take that amount out of my budget every month and allocate it towards utilities. Then when the actual bill comes, I pay it out of my utility budget. This way I have a balanced bill, but instead of the utility company holding my extra money and earning interest...I am.

The irony of the above is that when you do it in a cold climate and start your budget billing in October, you get to use their money until about the following September. Each month I watch the amount I owe them climb and climb until around April or May when it starts to fall - by the end of the 12 month cycle, we're back to even, but there are times I have owed them in the neighborhood of $500 or $600 in the dead of winter when the heat bills are through the roof!

So, moral is to set the budget billing up at the right time of year and your scenario above works in reverse.