For many years, the standard for calculating energy bills is to charge the customer for the amount of energy consumed in the billing period. Consequently, energy bills are usually very high for the coldest month of the year and, for those customers with air conditioning, very high during the summer months. If the utility meter is not read each month, as is typically the case, the energy consumption will be estimated based on past usage patterns and the weather.
The standard practice for paying bills is to either pay by check and mail to the utility company or pay in person (by check or cash) at one of the utility company's designated payment centers. In recent years, many utility companies have decreased the number of payment centers; some utility companies have completely eliminated payment centers.
Utility companies offer a number of options for calculating monthly energy bills and for paying the bills. Whenever an option is selected, the customer is never committed to continuing with that option for either bill calculation or bill payment. A customer can always choose to revert to the standard or select a different option at any time.
The specific options for bill calculations and bill payment vary from one utility company to another. Contact your electricity and gas utility companies to inquire of the options available to you and the specific details of each option. Some utility companies require that your existing account must be paid in full before you can select a different billing or payment option.
Residential customers have the option of contacting their electricity and natural gas companies at any time to request budget billing. With budget billing, each month's bill will be the same and surprises of really high bills in the winter or summer are eliminated. The amount paid each month is based on the average electricity and gas consumption during the prior 12-month budget cycle when enrollment began in the program.
The company may adjust the utility bill four times per year, up or down, depending on the customer's use. At the end of 12 months, there is a "true up" charge or credit applied to your account. Customers will be charged if they have used more than what they have paid for with the monthly bills. They will receive credits if they have used less than what was paid.
The concept of budget billing is like an escrow account on a home mortgage for paying taxes and insurance. Budget billing is a free service provided by some utility companies.
Average Payment Plan
The average payment plan is very similar to budget billing, although each monthly bill is not exactly the same. Instead, each monthly bill is based on the average of the actual amount of electricity or gas used during the past 12 months. Each time a new bill is prepared, the monthly amount is updated based on the average consumption of the most recent 12-month period.
The amount of the monthly payments will vary slightly from month to month, but there will be no significant changes associated with peak heating and cooling months. The monthly bills are representative of actual energy consumption so there is no need for a "true up" charge or credit each year as required with budget billing.
Average payment plans are also a free service of some utility companies. The customer pays only for the energy used.