Autopay Your Electricity Bills: Always a Good Idea?

Setting up autopayment for your power bills is becoming increasingly common in Texas, and is often a required feature for low cost offers from many Texas retail electric providers. REPs promise convenience and savings, but is it always a good idea?


Why Choose the Auto-Pay for Your Electricity Bills

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To be sure, there are a lot of good reasons to have auto-pay set up on your power account:

 Convenience

Once you've got it set up, there's nothing more that you need to do. Having to remember to pay your bill on time becomes a worry of the past, and you save yourself a bit of time from not having to make a payment every month.

 Improved Credit Rating

With auto-payment set up, your bills are paid in full and on time, which is something credit rating agencies like to see when evaluating your score. You might also have your security deposit requirements reduced or waived altogether if you set up auto-payment on your utility account.

 Go Green

When you choose the auto-payment option, your bills are no longer mailed to you, which saves paper and the energy required to mail your bills. Going paperless saves you from a bit of extra clutter in your home as well.

 Money Savings

Many of the lowest energy rates available are for online contracts, which often require auto-payment to be set up on your account. Even if your plan doesn't require setting up auto-pay, you avoid the possibility of incurring late payment fees by having auto-payment set up on your account. Not to mention the cost of envelopes and stamps should you choose to mail in your payments.

 Rewards

Depending on your plan you may be able to set up auto-payment to charge your travel rewards-earning credit card. This can lead to a steady source of air miles that can be used for your next holiday.

So, Why Wouldn't You Want to Choose Auto-Pay?

Well, it turns out that there are a few caveats for many of the advantages of auto-pay.

 Always Convenient?

Yes, having auto-pay set up on your account will save you time every month and give you peace of mind that your bill has been paid on time. But just watch out if you ever need to change your auto-pay banking details. Many negative supplier reviews mention problems relating to auto-pay being billed to the wrong account, which can lead to additional charges and even the possibility of disconnection. While we don't think that this is a widespread problem with auto-payment, it is something to be aware of should you ever need to change your auto-pay payment details.

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Another time auto-payment can lead to problems is if you ever have a disputed charge on your bill. Whether a mistake has been made, or there was a miscommunication with your retail provider, it is possible for an unexpected charge to appear on your bill. While you should always pay your energy charges on your bill, the PUC recommends not paying any unauthorized additional charges if they show up on your bill. However, if you have auto-pay set up on your account, it may be more difficult to dipute charges on your bill.  

 Overdraft

Because you know that your bills are being automatically paid, it can be easy to forget about them. This can be dangerous as your power consumption can change from month to month, meaning that your bill can increase or decrease on a monthly basis. This means that you may risk going into overdraft if the bank balance linked to your auto-pay account is ever close to zero, which will mean additional fees (most Texas REPs charge anywhere from $20 to $30 in overdraft/failed payment fees) and will hurt your credit score.

 Not So Green?

Switching to auto-pay saves a few trees, but according to a recent study published in The Review of Economics and Statistics, choosing auto-payment for your electricity bills can actually lead to increased power consumption. With bills "out of sight, out of mind", the study found that residential customers consumed on average 4% more electricity per month when on auto-payment (small businesses consumed as much as 8% more electricity per month).

 So How Much Do You Really Save?

Increased overall consumption makes for a larger carbon footprint and a larger monthly bill. In other words, the money you save with a lower power rate might be wiped out if you start consuming more electricity per month after starting auto-payment. Add on any overdraft charges if you haven't kept track of your bank balance, and suddenly auto-pay may not be delivering on promises of savings.

Our Recommendation: Use Auto-Pay, but Use it Wisely

Setting up auto-pay can be convenient, but it comes with the danger of going on auto-pilot. Here are a few tips for help you avoid running into any problems with auto-pay for your power bills.

read-your-bills

 Read Your Bills Every Month

It sounds obvious, but after choosing the auto-pay option it's easy to skim over or forget about your bill. Remember, auto-pay isn't a free pass to go on auto-pilot about your finances! Make sure to read your bill every month when you receive it. Check your overall consumption and make note of the balance due. This way you will keep track of how much power you're consuming in a month, and will know how much to expect to be debited from your account when your bill is paid. 

 Get Notified When Your Payment is Made

Many energy retailers will propose the option to be notified by text or email when the payment is about to go through. Choose this option! Notifications will help keep track of when and how much you are paying for your electricity, and could come in handy should you ever run into payment- or disconnection-related problems.  If your retail provider doesn't provide a notification option, mark the date in your calender so that you keep track yourself.

 Be Energy Efficient

The best way to keep yourself from upping your energy use while on auto-pay is to develop energy-efficient habits about the home. We've got lots of tips for saving energy about the house, including how to be energy smart with your appliance use, how to save money on energy in the summer, and general tips on how to save money on your energy bills

Do you have any advice or experience about auto-pay with your electricity bills? Let us know in the comments!

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