Q: How do you feel about “budget” programs with utilities?
“Our home primarily uses natural gas for everything: cooking, water heating, the dryer and the boiler for our heat are all run on gas. In the winter our bill is about $300 a month for gas because of the cost of heating the house. In the summer we shut off the boiler, and the gas line leading to it, so our bill is about $20-$25 in the summer.
Our electric is opposite. The boiler uses very little electricity to run in the winter, but to keep the bedrooms cool we have to keep the air conditioning running pretty constantly, which makes our electric bills around $200 in the summer.
Because of these crazy patterns we have our bills on a budget plan where both bills run $85 a month all year round. Is this a sensible thing to do?”
A: The budget plan for utilities can be a good idea as long as the utility company shows your actual usage and adjusts your bill at the end of the year if you have paid more than you used.
Another option is to budget for utilities yourself. For example, our highest electric bill is $250 during the summer. We budget $300 for utilities all year round and put that money into our second checking account (read more here). When the bill is lower during the winter months, instead of spending that money on other things we save it for the higher summer months.
If you have a difficult time saving money, the budget plan can be a good idea.
Do you use a budget plan for utilities? How does it work for you? Leave a comment.
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We use the budget plan. I find it easier to plan for a fixed amount monthly rather than set extra money aside for the higher usage months. Now, I also review our usage every couple of months to make sure we are not being over charged. Lastly, I also am on a time of use plan for our electric. The plan charges less for electric use during certain times of the day. This is great for us on the weekends when everyone is home watching TV, working on the computers, playing video games and doing laundry.
Wow – these plans are so different from the one we have in my midwest city! We are on budget billing and the billing is reviewed two times a year for accuracy. Typically we see an increase for one and then a decrease on the next one. We are NEVER asked to make a up a difference during the year. The only time you will pay up is when you shut off service at the location – such as moving. I don’t think the deficit was over more then $100.
We see actual usage and year over year comparisions on the website and have made it our goal to use less and try to keep the bill at the lower rate all year. One thing that really made a difference too was a top notch programmable thermostat. I won’t sugar coat it – the Nest we purchased was $250 but it is saving us a ton as it “learns” your home along with working off your schedule and shuts things off or lets the temps get a bit warmer just by simply seeing you are away or learning that you have been turning the heat down each night when a warm front blows through.
We wouldn’t use this. Too easy for us to not pay attention. As it is now, we try to beat the number from our previous year (our bill shows month by month usage for the previous 13 months). It’s sort of a game to save money. If the bill was the same, I’m not sure we would be as diligent.
Jennifer Bowyer says
We’ve been on budget billing for our electric for over a year now, and each quarter the amount was raised after they reviewed our usage. Then, 2.5 months ago we also started doing a “time of use” plan, where 3 hours each day are considered “on peak” hours and we turn almost everything OFF to save usage/money. We saw that it was really saving us money compared to the same months last year! BUT, the account was reviewed and they STILL raised our budget billing amount. We decided it was more worth it to save that money during the winter and spring months, so we shut off the budget billing. We decided that since we have seen how we can truly save money just by time of usage and on peak hours, the budget billing was just not going to save us money. Plus, then our bill is lower during the holidays when we can really use that money for gifts and such.
I also don’t like the utility budget programs. My husband is paid by commision and usually makes more in the summer months which offsets the higher water and ulitity bills. And I agree with Bethany that it helps you to conserve when you get a large electric bill. Plus in the winter months, when utlilities are lower for me, I’m usually spending money on holiday items.
Bethany Olson says
I actually don’t do the budget plan specifically so that I am more motivated to conserve. I (somehow) get excited when I get the email that my bill is posted because I want to see the progress I’m making. I look at the previous years in that month and am delighted to see how my efforts are paying off. I don’t love having it inconsistent month to month but I set up my budget a year in advance and put it the estimate from the previous year to get an idea of what it will be that month. I like the instant gratification from seeing my conservation efforts each month versus at the end of the year 🙂
I love knowing what it is each month. My companies do actual readings and usage and then we havea “reconcile” month where they figure out if we have over or under paid.
Our gas bill for July was zero and then very little in August. I keep the money in that account just in case something happens but it is nice to have built a lilttle savings.
I have been on the budget plan for years and have never had a problem. My utility company does show actual usage and makes adjustments accordingly. It is easier for me to budget because I know exactly how much I have to pay each month, also I don’t have extremely high bills in the summer which would blow my budget.
sheri a. says
I like using the budget billing. I know exactly how much I am going to pay for utilities each month, no surprises. Ours is adjusted if there becomes to big of a credit or deficit.
Vanilla Bean Girls says
I was SOOOOO burned on one of those programs for our electricity! I signed up for their “level pay plan” one year and paid about 165 a month all year. (We’re in So. Cal. and it’s triple digits about 3 months solid and our electric bill gets close to 500!) However, at the end of the year, they sent me my bill and it was close to $1,000! I called them up sure that something went wrong and they said no….I had to pay it all because they average our usage and that’s what they have us pay each month, but then at the end of the year we have to make up any overages! What the heck?! I just started doing my own “level plan” that consisted of budgeting higher for electricity every month and putting it in savings so that we have it when summer hits! I guess I should have read the fine print before! 🙁
We firmly believe the budget it a great idea for everyone. It is convenient to know exactly how much you will be paying each month whether you are a good saver or not. American Electric Power uses the previous year’;s usage to determine your monthly cost. Each November, the cost is recalculated. If we have overpaid for the year, we may even get a freebie month as the overage is applied to our bill. If we have used more, we must settle up this month. All figures appear on your monthly statement so you always know where you stand. You don’t lose $$ and you don’t gain $$. ( Well, I guess you do lose the few pennies of interest you may have earned if this money was in savings.)
I have to agree – the budget plan makes sense if the utility company shows actual (not estimated) usage on the bill, and adjusts the bill if an overage was paid. A word of caution though – in my area, the utility companies offer budget programs based on the houshold’s annual gross income regardless of actual usage. For example, the electric company’s budget plan is 6% of income, so a houshold with a gross income of $30,000 per year would pay $1800 per year in electricity costs, which breaks down to $150 per month. Because the companies in my area don’t take actual usage into account (this may not be the same nation-wide), it is possible that the utility consumer would be overpaying over the course of a year without even realizing it. Just be careful to make sure that you don’t pay more in the long run, even it it saves you money during some months!
Thanks Bethany. That is exactly why it’s a good think to check the specifics of your plan. 🙂