Utility Budget Billing: How Averaged Winter Bills Work and the True-Up to Plan For
- How it works
- The true-up
- When it helps and when it doesn’t
- Lower the number being averaged
- Free tools
Winter heating bills can be two or three times a mild month’s bill. Many utilities offer “budget billing” or “level pay”, which spreads your expected yearly cost into equal monthly payments. It does not make energy cheaper, but it can make a monthly budget much easier to keep.
How it works
The utility looks at roughly the last 12 months of your usage, divides the total by 12, and bills that amount each month. Most plans review the account every few months and adjust the payment if your usage or prices change.
Example: monthly bills over a year of $90, $85, $80, $95, $120, $140, $130, $110, $95, $160, $230, $245 total $1,580. Budget billing would charge about $132 a month instead of a $245 January.
The true-up
Once a year (or when you leave the plan or move), the utility compares what you paid with what you actually used:
- Used more than you paid: you owe the difference, sometimes in one bill.
- Used less: you get a credit.
A cold winter or a price rise can leave a true-up of a few hundred dollars. Put a small monthly amount in a sinking fund for it, for example 5 to 10% of the level payment.
When it helps and when it doesn’t
- Helps if your income is steady and your bills swing a lot by season.
- Less useful if you already keep an energy sinking fund; you can do the same averaging yourself and keep the interest.
- Watch the adjustment letters. If the level payment keeps rising, your usage or the rate is climbing, and that is worth looking at directly.
Lower the number being averaged
The averaged bill is still your full usage. Work out what your biggest appliances cost per month (heating, water heating, dryer, space heaters) and start with the largest line.
Free tools
- Electricity cost calculator: https://smartbudgetsheets.surge.sh/calculators/electricity-cost-calculator/?utm_source=nostr
- Sinking funds calculator: https://smartbudgetsheets.surge.sh/calculators/sinking-funds-calculator/?utm_source=nostr
- Debt Payoff Planner, up to 8 debts (Payhip): https://payhip.com/b/PtBLU?utm_source=nostr
- 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=nostr
General information, not financial advice. Figures are rounded examples.
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