So while paying my utility bills this month, something I do online, I was for the first time nagged to sign up for their Budget Billing plan.

The idea is that your electric bill (or gas or water) will be the same amount every month so you can more easily budget.

Though it sounds like a relatively good idea, I’ve always had a negative connotation towards that sort of thing as if it’s for folks who are incapable of managing their money or for folks on welfare or something. I’m not sure why.

In short — it’s not for me.

But since both my electric supplier and my natural gas supplier (both actually the same company operating under different names) nagged me, twice even — or four times if you count the nagging on both sites while trying to pay my bills this morning, I decided to click on the little “more info” link for, well, more info.

Here’s the deal.

If I sign up for Budget Billing my monthly electric bill would be $133 and my monthly gas bill would be $132.

Taking into account that I was in the process of making payments of $183 and $301, respectively, it seemed like a pretty good sales pitch.

It was probably what triggered the nag screen to come up on both sites, actually.

But is it really a good deal?

I mean, why would they offer that?

What’s in it for them — besides a more reliable and steady revenue stream?

They’ve gotta be pocketing something along the way…

Unsure of where they reach their “budget” number, the “more info” link didn’t say, I have to assume that it has something to do with my usage history so I broke down the numbers by referring back to my most recent annual utility expense chart.

Crunching the numbers, in 2010, my average electric bill was $144 and my average natural gas bill was $133.

Wow.

I wasn’t expecting either number to be spot on but the gas bill pretty much was… Let’s ignore that one for now.

So, throughout 2010, I was paying an average of $144 per month for electricity.

Why on earth would they offer to “lower” my bill, upfront, by $11 dollars?

Sounds too good to be true, right?

Well, I’d bet that that’s why they’re offering it… There has to be a catch, right?

I thought about it some more…and then I remembered an article I’d read in the paper a few months ago…

Here’s an excerpt:

New electric rates that will result in lower monthly bills for residential customers of Connecticut Light & Power were approved Wednesday by the Department of Public Utility Control.

Under the new rates, which go into effect Jan. 1, CL&P residential customers will be charged 17.6 cents per kilowatt hour, down from 19.1 cents last year — the rate since 2009.

A typical CL&P residential customer using 700 kilowatt hours a month should save $10.41 a month. Next year’s average monthly bill should be $123.85 compared with $134.27 in January 2010, a 7.8 percent decrease.

Well, that explains it…

So I guess “Budget Billing” isn’t a scam and it isn’t a rip-off either.

Still, though, it’s not for me.

I’d much rather pay a $300 bill now and know that come August, that same bill will only be $30…

3 COMMENTS

  1. I agree. Most households can do the same thing that the ‘budget billing’ does pretty easily. I set aside pretty much the same amount every month to cover things like gas, electric, water, garbage, etc. Even though many of those costs fluctuate, the amount in the ‘fund’ has never been short. I prefer this because I have control. It’s the same reason I’m happy to control my own escrow account, because I feel I can manage it better (plus I have the funds in my account which is always better for me).

  2. The catch is that the cost of the budget payment is based upon what gas or electric is going for at the time the budget payment is set up. Therefore, they were trying to tie you in to a $0.191 cent budget calculation when they knew the rate was going down to $0.176. Budgets are only adjusted on an annual level, so if I can “lock you in” at a higher rate by getting you on budget (and calculating your energy cost for the next entire year by today’s higher rate), then in the next few months when the electric co is buying electricity at 17.6 cents/kw, and selling it to you on budget (at 19.1 cents/kw calculated before the drop in cost), that’s where they’re ripping you off. There’s a reason you were being bombarded by “Do ya wanna get on budget” requests. They knew the price drop was coming, and they were hoping to get you signed up for the next year calculated at “today’s” higher rate. As you suspected, there is a rip off there, it’s just very well hidden. Even to the point that you mention the amount you’re being ripped off on budget… $10.41 cents per month, and didn’t appear to notice it.

  3. One of my relatives who lives alone has her electric on budget billing. She recently went away for 6 weeks over the holidays to visit other relatives, and was billed $45 for one month when her actual electric usage was only about $19 for that month. She tells me her current balance is $40 credit, so that is how much she has overpaid to date while on the so called budget billing plan. Since she heats with natural gas, and our summers are not all that hot here (low A/C costs), I keep telling her that budget billing for her electric doesn’t make any sense whatsoever.

    My local gas utilty has a big drive every April to sign up their residential customers onto budget billing. By the time the heavy gas usage occurs several months later, the gas customer who has signed up for budget billing in the late spring has given the gas company an interest free loan to the tune of several hundred dollars by overpaying in the late spring, all summer and early fall. LOL, this must be the gas company’s April fools joke for the fools who sign up in April for budget billing.

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