# Utilities - Balanced Billing



## djs (Dec 31, 2009)

My Gas company (National Grid, I believe) offers what they call "Balanced Billing" where they bill you an equal amount every month for your gas service.  Presumably this is based on some formula where they determine your "presumed usage" and is also adjusted up or down as necessary at some point in time.  I've never taken advantage of this offer as I like to know what I'm using each month, and as much as I hate a $180 gas bill in January, I love having a $30 gas bill in July.

Does anyone here take advantage of such an offer?  If so, what are your reasons for doing it?

I guess if it were done in the winter one could say that they're getting an interest free loan, and in the summer they'd be giving the gas company an interest free loan.  After a year is up, I think it would all come out in the wash and there'd be no interest free loans for either party.


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## Passepartout (Dec 31, 2009)

There's no 'loaning' going on. They simply divide your annual (past) gas usage by 12 and bill you for that amount each month. Then once a year there's either a reduced amount if your consumption went down year over year, or you'd get a bigger bill if you use more. Our electric company will do the same. We don't do it, because we have large water & power bills in summer and low gas bills, and vice-versa in winter. It balances out all by itself. More or less.

Jim Ricks


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## MelBay (Dec 31, 2009)

We've taken advantage of this with both gas & electricity for probably a decade.  I also utilize (no pun intended) the automatic payment, so I know that each & every month on xx day, the light company will take out ~$200 and the gas company will take out ~$100.  Just helps me with budgeting - I have it set up in my Quicken bills.  I don't like surprises.  Haven't had a problem yet, and they've given me no reason to stop using it.  I'm a fan.


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## Luanne (Dec 31, 2009)

We do this.  I started it because I wanted to know the fixed amount each month that I was going to need to budget for utilities.


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## dougp26364 (Dec 31, 2009)

I've done level billing ever since it was first offered to us a couple of decades ago. It's easier for me to budget as the bill doesn't fluctuate by more than a couple of dollars depending on our usage. 

As mentioned they'll look at your usage over the last year and divide that by 12. If rates go up, they'll adjust your billing accordingly. If your typical usage goes up or down, they'll adjust the bill accordingly. When the winters aren't so cold and I don't use as much gas, my bill goes down a couple of dollars. If the summer is terribly hot and I use the AC more, my bill goes up a couple of dollars a month. No more huge bills when I can least afford them.

I don't know about your company but, I can still see how much I'm using with ours. In fact, they have a graph showing 13 months of usage and how whatever month I'm in right now compares to the same month last year. It even breaks it down into how much usage per day since there may be a couple of days difference in the billing cycle. 

As far as I'm concerned, this is one of the better budgeting tools offered by a utility. I've never understood why everyone doesn't use it.


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## Rose Pink (Dec 31, 2009)

dougp26364 said:


> ... I can still see how much I'm using with ours. In fact, they have a graph showing 13 months of usage and how whatever month I'm in right now compares to the same month last year. It even breaks it down into how much usage per day since there may be a couple of days difference in the billing cycle.


 
We use it for natural gas and for electricity.  Our bills are similar to Doug's in that we can see how much we use compared to each month in the previous year as well as the average daily use and average daily temp.  We still get a paper bill but I am going to switch to paperless.  I have not set up automatic payments as I prefer to initiate payment myself.


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## dioxide45 (Dec 31, 2009)

For us the only loaning involved is us giving the utility company an interest free loan. We signed up for this for electricity and natural gas. The electric company has been pretty dead on and we are rarely over or under actual usage. With gas rates dropping significantly over the past years, we have almost a $300 credit with the gas company. When they level up once a year they don't drop our monthly charge a lot, I guess so we won't see a huge increase when that credit is burned up.

We will continue to use level billing, though we aren't huge fans of lending interest free. It does help to budget. We do our own balanced billing on our water/sewer bill. We have two minimum estimated payments for two months and then a catch up month. We just send extra those first two months so there isn't so much pain on the third one.


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## LAX Mom (Dec 31, 2009)

We use equal billing for our gas and electricity. I like it because the amount is the same every month regardless of the season. I didn't like getting larger bills around the holiday season when we have so many other expenses. We use more for heat (gas) and lights (electric) during the winter. In the summer our gas bill is almost nothing, but our electric bill gets pretty high (air conditioning). It's just nice to have them equal during the 12 month period.


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## UWSurfer (Jan 1, 2010)

As a few others have mentioned, we use the automatic bill pay to overpay the utilities a bit and build up a credit.   Effectively we're doing a level bill pay as it allows us to budget easier and cover the usage variations when they occur.

Some years we build enough of a credit to miss a payment over the holidays and have a little extra money for presents.


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## vacationhopeful (Jan 1, 2010)

Use the electric fixed billing for $2.46 each month and after 12 months, *the electric company in NJ (PSE&G) sends me a check.* It is so nice to know I can be warm in the winter and cold in the summer.

My check last year was about $260.


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## Gramma5 (Jan 1, 2010)

We also use  budget billing and like that we can set up a budget around it. I also have it deducted from my checking account monthly because we are gone all summer and do travel and this way there is never a late payment because a bill was received late in our forwarded mail. Works for us very well and we have done it for about 10 yrs.


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## 1950bing (Jan 1, 2010)

I would never sign up for this. I pay for what I have used not for what I might use. Why let someone use my money if I will not get a return on my money? The electric co. put me on this without me saying it was OK. It took a while to get off the stupid thing. I know what I spend on energy in all the past years. I budget my own money. I don't want anyone telling me what is best for me because I all ready know.


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## mo1950 (Jan 2, 2010)

Our house is all electric and we have this billing procedure and really like it.  Our bill is a little different each month (either up or down), but basically remains about the same.  Plus we have automatic bill pay.  It is so convenient, especially when we travel.  Never have to worry about it.  And, of course, we receive a statement a few weeks ahead of the automatic payment telling us what the amount is and when the money will be taken out of our account.  Varies about $5 or less each month.


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## Rose Pink (Jan 2, 2010)

I have automatic bill pay on the accounts that will allow me to use my credit card but rarely do I use automatic bill pay for bills that must come from checking.  That means I do not auto pay on gas and electric but I still use their equal billing plans.


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## Don (Jan 2, 2010)

I did it in VA for over 10 years and I'm doing it here in FL.  It makes it easier to budget when you pay approx. the same thing each month and there's no big surprises as the bills are leveled out over the course of the year. Commonwealth Gas (in VA) would under charge us during the year and hit us with a bigger bill in Aug.  I started paying $5.00 over the bill each month and ended up with a very small bill in July and Aug. was a free month.


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## JeffW (Jan 3, 2010)

I'm definitely one for consistency, so I also go for the 'budget billing'.  I wouldn't want a budget that has a $300 gas bill in the winter, then $30 during the summer.  In fact my electric company (PECO) just started allowing customers to prepay an extra 5% of their bill, to help offset the expected large increases when rate caps expire soon.

In terms of loaning the utility company money, that shouldn't always be the case.  If your billing cycle starts in the Fall, then you might be paying $100/month when your bills are $300+.  In that sense, the utility company is lending YOU money!

Along the lines of consistency, for some of my annual big-ticket expenses:
- home and auto insurance
- real estate taxes
- vacation expenses

I have specific amounts direct deposited from my paycheck into a separate bank account (money market fund).  That way, my checking/savings account, which I use for day to day / month to month expenses, doesn't get that big spike.

Jeff


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## laura1957 (Jan 3, 2010)

Have done this with our gas bill for years - I love it!  Know exactly what is coming out automatically each month.  Have choice to re-sign up each year and every bill tells exactly how much I owe them or they owe me.  Amount of monthly bill changes each year depending on our usage for the previous year.


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## Talent312 (Jan 3, 2010)

When I started budget billing and automatic payment, the utilitie's software set our payments way too low. Within a few months, we were so far behind that I called and asked them to bump up our payments. They set an amount that would pay off the deficiency over 18 months (based on average use). Their "loan" to us actually took two years to cover. Now that we're in the black, they said that if our credit exceeds one-month's payment, they'll adjust our payments down.

I like having nearly all my monthly bills paid automatically, either by charge to a CC or by draft from checking. The only bills that I actually need to address month-to-month, are CC's


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## dioxide45 (Jan 3, 2010)

We had two bills setup for automatic draft. We recently had one removed from that. I don't want to authorize any company to draft my account or credit card if I can avoid it. If you provide that authorization you lose the fraud protection. If for some reason the company accidentally drafts out a double payment, your bank won't help you. You have to work directly with the company that made the mistake and get them to fix it. I don't trust them that much any more. I would rather go in a few days a month to our banks on-line bill pay and set the bill to be paid a few days before it is due.


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## BarCol (Jan 3, 2010)

FWIW - we use it for gas, water/sewer/electricity and property taxes (however they are a bit different in that it's over 9 months, with the 10th month (October) for any additional amount owing based on the actual municpal budget and mil rate passed and nothing in Novemebr or December..yippee) I love equal billing then I can know for certain how much $$ is going out very month.


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## Talent312 (Jan 3, 2010)

dioxide45 said:


> I would rather go in a few days a month to our banks on-line bill pay and set the bill to be paid a few days before it is due.



My issue with using a bank's bill payer service vs. going to each creditor's online "pay bill" feature is that the bank deducts the $$ from your account immediately and it takes a few days for the payee show it as paid; whereas, using the payee's website shows it as paid one to four days before it gets to your bank. It may not matter in the long run, but I like having the float more in my favor than in the bank's.

As for giving a creditor access to my CC or bank account... I only do that for creditors with whom I have regular monthly payments, a lengthy relationship and online control over my participation, such as banks, brokerages, insurance companies, and local utilities.


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## dioxide45 (Jan 3, 2010)

Talent312 said:


> My issue with using a bank's bill payer service vs. going to each creditor's on-line "pay bill" feature is that the bank deducts the $$ from your account immediately and it takes a few days for the payee show it as paid; whereas, using the payee's website shows it as paid one to four days before it gets to your bank. It may not matter in the long run, but I like having the float more in my favor than in the bank's.



I think this depends on the bank. There are two models usually used. A good funds model and the opposite. It seems your bank uses the good funds model, meaning they take the money out of your account when you make the payment even though it will take a couple of days to get post to the account you are paying. The other model has a processing date and a delivery date. The bank actually sends the payment on the processing date but the money stays in your account until the payment delivery date.

Our bank used to use a good funds model. I found this easier to manage since the money would be gone anyway. The banks found it as a boone for extra fees in overdraft to use the secone model. Say one makes a payment of $100 to their CC, that money stays in the account for two days until it reaches the credit card company, but I could go and also withdrawal $100 from an ATM in between the payment date and the delivery date. The bank would then happily charge an overdraft protection fee. You have to be real careful making payments with this model.

A good funds model is actually more consumer friendly, sure the banks could earn money on that float, but I am thinking the money they make on the other fees using the second model proves more profitable.


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## JeffW (Jan 3, 2010)

Seems like a bill payer service just adds an extra layer to .  If I schedule a payment with a merchant/utility directly, that's the payment date, regardless of when they actually pull the money.  With a bill payer, you need to distinguish between when they make the payment, and the merchant actually receives it.

Also, in terms of the monthly budget being off sometimes, one of my utilities does adjustments I think at least 2x a year, maybe more often.  I guess there estimation isn't that good either, and they don't want to wait that long before starting to play catch-up.

Jeff


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## Sthack (Jan 3, 2010)

Yes, this is a great service to take advantage, especially if you're budgeting.  I've been using this service for the past 7 or so years.  

We moved into a new home last year, so they based my new budget amount  ($25) on the previous 12 months usage (which the house was vacant during most of that time).  I continued to pay what my budget was from our old home.  If I hadn't, our balloon payment would have been out of this world!!!  

At the end of your budget period (usually 12 months) you have to be current or they will kick you off the program.  A lot of people don't realize that, so it's a good idea to monitoring your actual usage verses what your budget payments are.


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## suzanne (Jan 3, 2010)

We use it here in SE Florida and it works well as we usually have to run the AC pretty much year round, with the heat just a few days a year. It beats getting hit with $300 a month power bill during the hot dog days of Summer. Our bill is around $165 a month year round. Our house is all electric with central AC/Heat.

Suzanne


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## pjrose (Jan 3, 2010)

We don't do it, though not for any particular reason.  What I don't like is on occasions when they can't get to our meter (i.e. a lot of snow), sometimes for two months in a row(!) they send us an estimated bill, and their estimate is always way high.

Our electric company has recently been advertising that if you overpay now, in anticipation of the rate increases, they'll add 7.5% interest to the overpayments.  

http://www.scribd.com/doc/6237399/MetEd-and-Penelec-News-Release


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## Miss Marty (Jan 3, 2010)

*BGE*

*
One-Time Bill Credit for BGE Residential Customers in Maryland*

 Each residential customer with an active account on February 1, 2010 
will automatically receive a one-time $100 credit on their account. 

Information from bge .com

http://www.bge.com/portal/site/bge/menuitem.f581296fe607ed3af8330e10016176a0/


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## Rose Pink (Jan 3, 2010)

pjrose said:


> Our electric company has recently been advertising that if you overpay now, in anticipation of the rate increases, they'll add 7.5% interest to the overpayments.
> 
> http://www.scribd.com/doc/6237399/MetEd-and-Penelec-News-Release


 
Compared to what my 401k earns, that sounds like a good rate.  I wonder how many people will overpay in anticipation of great rewards.  How can the utility make that kind of offer unless they are earning far more than that?


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## JeffW (Jan 4, 2010)

In my area (Phila), our utility company is offering 6% interest for prepaying future amounts.  I don't know if they can actually earn that rate of return, or if maybe they'll take a loss of a few percent if it helps reduce the complaining when rates go up (predictions are as much as 30%).

Also, in terms of:

_At the end of your budget period (usually 12 months) you have to be current or they will kick you off the program._

Do you you have monitor your bill yourself?  For one of my utilities, I think if your payments come up short at the end of the cycle, they bill you the full difference as a catch-up, in addition to your new (probably higher) monthly budge rate.  

While a constant fixed amount is nice, I'd be okay with an incremental increase per month (say 5%) if it helped them keep your monthly payments more on track, if it helped avoid a big balloon payment at the end.

Jeff


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## UWSurfer (Jan 4, 2010)

Rates of return, giving the utility use of my money and the other arguements against overpaying are valid...BUT...we're really talking about very small amounts for which the peace of mind and ease of budgeting makes it worthwhile in my home.

I'd rather look for and visit gas stations with the least expensive gas than worry about the utility having use of my $30 - $60 credit I float each month.

To each their own.


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## dioxide45 (Jan 4, 2010)

JeffW said:


> Also, in terms of:
> 
> _At the end of your budget period (usually 12 months) you have to be current or they will kick you off the program._



In our case our normally $88 electric bill had a $125 payment due at the catch up cycle. They didn't kick us out as long as we paid that catch up amount. Our gas bill works differently. If we are short at catch up time, they just divide that amount by 12 and add the amount to the next 12 months bills. We don't have to monitor our bills to make sure we are always carrying a credit or balanced each month and at the 12 month mark.


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## geekette (Jan 5, 2010)

yes, we are on "the budget plan."  we're all elec and were just adjusted downward.  mild 2009 weather contributed to that!!  

meter readings are always on the bill - you can always see your usage or call to find out.


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