What's the deal with ConEd's "Level Payment Plan"?
September 10, 2011 1:02 PM   Subscribe

Are utility company "level payment plans" worth it, or are they a scam?

Our electricity bill this past month came in pretty high—not too much of a surprise, since we've been running two air conditioners for most of the month. The bill is $178, which we can pay. However, the bill (from ConEd; we're in NYC) says that if we pay "the exact LEVEL PAYMENT AMOUNT of $66.00 this month instead of [the] TOTAL AMOUNT NOW DUE" they will automatically enroll us in the "level payment plan" in which payments are evened out over the year. Every four months they'll review our usage and adjust the rate.

Is this a good idea? Would our payments end up being roughly the same as they would otherwise, or will we end up cumulatively paying more than we would normally?

This month, I'm going to go ahead and pay the full amount, but I'd like to know more about this kind of plan (especially from those who've used it) before next month's bill rolls around.
posted by ocherdraco to Home & Garden (23 answers total) 2 users marked this as a favorite
You likely don't end up paying more, but you will pay ahead. They will in effect have you build a balance up that you draw down during months with high usage.
posted by gjc at 1:10 PM on September 10, 2011

I think you need to review the details of the "level payment plan". Is there a fee associated with it? A quick Google search indicates not. All you need to know other than that is if ConEd marks up the utility rates for the level payment plan, a detail I was not able to quickly determine.

FWIW, my local utility (Seattle City Light) offers a similar plan for no additional fee. It's just a different way of paying for your electricity.

I suggest talking to ConEd if you're looking for more detail... that's what they're for, and they certainly know more than anyone at AskMeFi.
posted by saeculorum at 1:11 PM on September 10, 2011

I did this in Florida, when electricity bills differed by literally $150/month between summer and winter. It worked fine for me.
posted by kavasa at 1:12 PM on September 10, 2011

If I understand your explanation, this is an option that I've always used in the UK, using "direct debit".

Basically they estimate how much electricity you'll use over the year, and divide the cost by 12, then you pay that amount every month. After 4 months if you are using a bit more than estimated, they up your monthly payments to compensate, and visa versa.

The advantage to this is that you don't have huge electricity and gas bills in the winter (lights on a lot more, heating on a lot more) and very low bills in the summer - and since it's all evened out it's easier to budget.

In fact if you pay by direct debit in the UK, the utility company often offers you a discount of £20-£40 a year if you spend an entire year paying by that method.
posted by EndsOfInvention at 1:13 PM on September 10, 2011

Not a scam at all, given that they really don't know any better than you do what the rates are going to be next month, never mind next year. There are so many better ways to screw you out of your money that this obvious one isn't worth the effort to game.
posted by Etrigan at 1:15 PM on September 10, 2011 [1 favorite]

Both American Electric Power and Colubmia Gas (Ohio, btw) calls their "budget payment plan". It's what the others upthread have inferred; they look at your yearly total, divide by 12, and there you go. So you pay the same amount per month, until the yearly review comes around and they either lower your budget because you used less this year, or sock you with the balance and then raise your budget. I've had both happen. I DO wish that when they sock it to you they'd let you know in advance so I could plan for it.
TL;DR - not a scam, can be very helpful, just poorly worded/phrased.
posted by Old'n'Busted at 1:19 PM on September 10, 2011

The only way this can bite you in the ass is if you change your behavior using your AC because you won't get the full impact of the bill right away. (Hey, why not set it lower and cool off since you can spread the payment over the whole year!). If you do that, you'll end up spending more over the year on utilities. If you still use electricity economically all year, it can help smooth out the payments each month so the summer bills aren't so high.

I used with APS when I lived in AZ to offset the $200+ extra/month running AC in summer had on my bill. What it did mean was in the winter I was still paying for the AC I was running in the summer, but it was less painful.
posted by birdherder at 1:21 PM on September 10, 2011

I did this when I lived in Atlanta and had summer electricity bills that were way, way higher than winter ones. Worked fine. I can't remember what happened when we moved, if we had a balance due or credit or what, but we were pretty poor then, so I would remember if it'd been scammy at all.
posted by MrMoonPie at 1:22 PM on September 10, 2011

Agreeing with kavasa that level payment utility plans are a God send to folks on fixed incomes in Florida. In past times, when savings accounts and money market funds payed real interest, there was a very slight benefit to saving yourself for future high usage months, but with savings rates essentially zero, and likely to remain so for years to come, there's no reason not to use level pay utility plans, if you monitor and compare your actual utility usage, month to month and year to year, to spot things like small water leaks and appliances (like refrigerators) going bad, creating otherwise unexplained energy use.
posted by paulsc at 1:26 PM on September 10, 2011

Not a scam. PG&E here in California offers a "Balanced Payment Plan." For those who have a low income and want to allocate a fixed X per month to utilities, and/or live in areas where your usage fluctuates a great deal due to hot summers and/or cold winters - balanced payment is great.

I find it's not as big a benefit in places like the San Francisco Bay Area which has a more even climate, but YMMV on this. I haven't signed up for it yet because where I live I don't pay wildly differing amounts per month on gas/electric.
posted by Rosie M. Banks at 1:31 PM on September 10, 2011

After being hesitant for a while for similar reasons, I recently switched to using the "Equal Payment Plan" that my provider, PSE&G, provides. I haven't so far had any issues with it and it has made bill paying that much more simple. If I end up with a big balance at the end of the year, I'll switch off of it.
posted by InsanePenguin at 1:34 PM on September 10, 2011

This is common in the UK, however, there have been issues with payments going up to a higher level in the winter (peak demand in the UK) and not really going down again, so that customers end up running a fairly substantial credit. If you go down this route then keep an eye on your balance and be sure to challenge the company about the level of payments if you are building up a surplus over time.
posted by biffa at 1:39 PM on September 10, 2011

Not a scam. I've always used the budget pay/level pay plan for all my utilities. Sure, summer gas bills are much higher than the meter reading is, but it sure is nice to not get a $250 gas bill in January. (Our monthly payment is 1/11 of our average yearly usage, and the 12th month is settlement month.) It makes budgeting a lot easier, and we wind up paying exactly the same as we would have if we paid the balance every month. (It also makes the utilities' budgeting easier, as it evens out *their* income.)

As long as you get a statement every month that shows your actual usage so that you can still track spikes and drops, there's really no reason to not go for it. (Back in the day, when banks paid noticable interest, you might lose a little bit on the interest, but that's hardly a consideration anymore. Then again, when banks paid real interest, any balance in your account accrued interest, albeit at a lower rate.)
posted by jlkr at 1:41 PM on September 10, 2011

You don't end up paying more or less because they'll periodically check your usage against payments and give you a credit or charge you extra. It's just a budgeting option.
posted by Salamandrous at 1:48 PM on September 10, 2011

Response by poster: Thanks, guys. I'll enroll next month.
posted by ocherdraco at 1:59 PM on September 10, 2011

It's not a scam at all, or at least not in principle.

As others have said, it's very common in the UK. However, you do need to watch to make sure you're not overpaying. My account ended up with a substantial credit with one supplier; I was overpaying by about 70% every month through the winter. I tried to get them to lower my monthly payment, but they insisted that I had to wait for them to review my payments in several months time. When they finally did the review, they refunded the £500 or so of credit and then upped my monthly payment rather than reducing it. I still have no idea why; I just switched to a different supplier, with whom I've had no such trouble.
posted by le morte de bea arthur at 2:04 PM on September 10, 2011 [1 favorite]

It's definitely not a scam, but if you are a renter and you are more conservative with utilities than most, you may end up overpaying. I had this plan as a renter with my gas bill, but I always kept the heat at 60 and almost never used the oven. They calculated my monthly average based on the history of use of the house over the years with other tenants. I *did* get my money back by calling them and explaining that I needed to use up any credit I had accumulated before my lease was up.

In short, I liked just paying what I actually owed at the end of the month better, but if you are on a tight budget or don't have much savings to cover a high month, it could be for you. Just call to check your balance before your lease is up if you are renting so you don't end up overpaying.
posted by shortyJBot at 2:46 PM on September 10, 2011

I used to do the gas company's Budget Plan. Now, I roll my own. No, really. For gas and electric (heating and AC), I pay them the average of the past 12 months' charges (tracked on a spreadsheet). This keeps the budget fairly steady throughout the year (with minor variations from month to month) and avoids the possibility of an annual "reset" shortfall payment.
posted by bentley at 4:32 PM on September 10, 2011

The program is called "Average Billing" here in Louisiana. I've been enrolled for years and love the fact that my utility bill varies about $20 per month. Our gas and electric company uses a rolling 12 month average, so no big settlement in December.
posted by JujuB at 4:47 PM on September 10, 2011

I pay that way here in Florida and like it a lot. The rolling average thing is no scam, it just smooths out the bill month to month.
posted by fivesavagepalms at 5:13 PM on September 10, 2011

I've used a program like this in the past, but I wonder if by spreading out the payment for high energy use it removes some of the short-term incentive for efficiency. I like getting a month to month bill now because I get more immediate and meaningful feedback on our efforts to reduce our electricity usage.
posted by itstheclamsname at 12:52 AM on September 11, 2011

We've been on the Budget Plan for electric for ages. Works great. You pay an average based on your previous year's usage. At the end of the year, you and the utility settle-up. Either you owe a bit more, because you used more juice than last year, or you get pro-rated into the new year because you used less (and your monthly amount is also adjusted up or down, based on your usage.) It's a great way to maintain a more manageable household budget.
posted by Thorzdad at 8:46 AM on September 11, 2011

I'd like to reiterate what Old'n'Busted said. Keep track of when your year is up (or whatever the cycle for review is), because ComEd (in Chicago) wants to end the year at $0, so if you've been using more than usual for the year, you may suddenly find that your $75 "budget" amount is suddenly $150 one month, and nothing on your bill indicates that the next month is when you're going to get smacked.
posted by Morydd at 10:22 AM on September 12, 2011

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