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April 5, 2010 12:52 PM   Subscribe

I have Duke Energy for my electric utility. They offer "budget billing". Is it worth it?

Duke Energy offers "budget billing" where they average your electric bill for a year, and instead of paying a fluctuating amount, one pays a flat rate each month based on their average. I am wondering if anyone has done this (with Duke or another provider) and if it is worth it, or does one get screwed over? According to the information that was sent to me, there is no "settling up" at the end of the 12 months. It seems simple, but I just want to make sure I'm not missing something. Anyone have any experience with this?
posted by bolognius maximus to Home & Garden (11 answers total)
We have Duke as well and have received this notice. They pitch it as hedging against rate increases, I think. This is different than the Equal Payment Plan, which we use. We pay the same amount every month throughout the year, so we don't have big spikes during AC season, and settle up at the end of the year if we've gone over (or under) their estimate. Not sure why anyone would do the other plan, to be honest.
posted by Sweetie Darling at 12:55 PM on April 5, 2010

We've always done budget billing, no matter what energy company we are with. It makes the month-to-month household budgeting easier. I'm pretty sure we DO have a settling-up month, though.
posted by Thorzdad at 12:57 PM on April 5, 2010

I had "budget billing" from Duke for almost two years, until I recently canceled it when I read all five pages of my bill (front and back) and saw that I had a credit of almost $850, but since I was set up on automatic monthly payments of $60, I never paid attention to my bill. So, I canceled the budget billing and am now enjoying a blissful year of not having to pay for gas/electric.
posted by banannafish at 1:07 PM on April 5, 2010

Without listing your state, no one can answer this question. Utility rules vary widely by area. Going from your location in your profile, it sounds like you're out of luck.

However, I just did a quick google, and everything I've read says duke does an analysis every 6 months, and settles up every 12, or something along those lines. I doubt that any utility company would not bill you for actual usage. If something seems too good to be true, I think it's a reasonable assumption to say that you're missing something.
posted by Geckwoistmeinauto at 1:08 PM on April 5, 2010

I got Duke's "budget billing" pitch last year, and because it had no settling-up provision -- only an annual recalculation of your average -- the chances were pretty good that I'd end up paying for more electricity than I actually used. No thanks. I think they're pushing it more this year because of the unusually cold winter (at least where I live): the average heating cost for the last 6 months is going to be pretty high, and chances are that it will NOT be that cold next winter, so the utility will come out ahead if people pay based on this year's usage.

I guess I have never had a problem budgeting for cooling during the hot season and for heat during the cold season. They happen every year.
posted by philokalia at 1:15 PM on April 5, 2010

I'm not sure if it's the exact same thing, but I have budget billing with Alabama Power where there is no settling-up (until you move) -- but they also recalculate it multiple times per year so that they can use small adjustments to keep your deficit or surplus (which they track on your bill as well so you can see how it's going up or down) from getting too big. That sort of budget billing I highly recommend -- takes the sting out of summer and winter bills while still accounting for everything I've paid.
posted by robt at 1:20 PM on April 5, 2010

I swear I received this mailing as well, a few years ago; as I recall, the offer was that I would pay them a certain amount of money every month (10% more than my previous year's average?), and I would help them maintain a predictable cash flow.

I said no. Strangely, there doesn't seem to be an option for that online anymore.
posted by Comrade_robot at 1:27 PM on April 5, 2010

UK utilites use something similar to this. You make regular monthly payments rather than have the ups and downs with your use. The typical result is that the consumer ends up paying ahead, ie, you are always in credit. The utilities raise the monthly amount if there is any danger of you not being in credit. Basically it means that the utility has your money, rather than you owing them money, which will tend to be to their advantage and not yours, though it may help you with managing bills. There have been a lot of press reports where consumers have built up large credit balances.
posted by biffa at 1:34 PM on April 5, 2010

I find it's easier just to do the average myself and factor it into my budget and set up autopays accordingly. so, I get a utility bill at the beginning of the month, I autopay the full amount from a separate account and then shove a fixed amount per month that is the average utility cost I usually see into that account. if my average is $200, the utility company always gets paid in full, I always put in $200 into the account, and it works itself out. I might have a $300 bill come December or something, but the few months of $90 bills in the spring/summer even it out. you just have to be mindful of making sure there's enough in there to cover the spikes (personally, I use a credit card solely for this purpose - it has a limit higher than any bill I'd ever get, unless something ridiculous happened, and it earns points.) this tends to work out better than just paying the utility company because you can potentially earn interest (however small that might be) on the excess you accumulate. my utility company offers a similar program now, but I'm intending on sticking with my current strategy.
posted by mrg at 2:34 PM on April 5, 2010

BC Hydro offers this. They settle up periodically, afaik, but I hate leaving things up to the company. I never auto-pay anything because your creditors are far more willing to deal with their own errors when you have their money than when they have yours.
posted by klanawa at 2:55 PM on April 5, 2010

I'm on Rochester General Electric's budget billing plan. Takes away the OMGHELPHUGEFUELBILL issues during the winter. They also settle up every twelve months, which in practice means that they just don't bill you for X amount of time. If you don't mind giving them extra $, it's a convenient way to go.
posted by thomas j wise at 4:59 PM on April 5, 2010

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