What is Budget Billing?

Many electric and gas companies are now offering Budget Billing as a way to get rid of uncertainty and equalize bill payments over the duration of your contract.

How does it work? Your energy provider will look at your last year's worth of consumption, estimate the same usage for the next year, and increase the bill slightly to account for inflation, and then divide the amount over twelve months. At the end of the year, you may owe your provider an additional payment for energy consumed beyond their estimation. 

Budget billing may be helpful for some customers, and might be a good way to even out your monthly bills over the course of a year, but you should keep a few things in mind first, before signing a budget billing agreement. 

 Will you get refunded if you consume less energy than planned?
Most companies will charge you extra if you consume more energy than originally estimated, but not all of them will offer you a refund if you consume less. Also, be aware of the extra money you need to set aside to pay any unexpected additional charges at the end of your annual billing cycle. 

 Are there any fees associated with budget billing?
Some providers may attempt to charge you a monthly fee in order to level your monthly bills. We think that any fee is too much to pay, because you can easily recreate budget billing all by yourself. (See number 3). And while you're at it, stay mindful of the contract that you have signed--if you move before the end, budget billing could complicate the terms on which you end your contract. 

 Finally, if you really want to do budget billing, it's not that difficult to do by yourself:

 Estimate your own year's worth of energy consumption
 Divide by twelve
 Put leftover money from months when your bill is lower into an account, and then draw from it to pay the bill during the months when it is higher.