How Does an Electric Budget Plan Work?

A budget billing plan helps keep heating and cooling costs consistent throughout the year.
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Rather than worry about a high bill because of record hot or cold stretches in your weather, enroll in your provider's budget billing plan to help keep monthly payments uniform throughout the year. A budget plan, which is based on your own household's electricity use, averages out your bills to prevent busting your budget to pay your electric bill.

Setting the Budget

Your electricity provider will evaluate past bills, usually for the last 12 months, and then figure out the budget amount by averaging the charges throughout that period. This causes low-use months to even out with higher usage periods. The new payment will be the average of those past bills. Many electric companies begin the budget billing plan in the fall, and the budget will run for the year. However, customers can begin at any time in most cases.

Enrolling in the Budget Plan

In many areas, you can enroll online. However, you can also talk to a customer service representative by telephone or, in some areas, visit the company's local office. One stipulation for beginning the budget plan is that you are up-to-date with payments, as the electricity provider will typically not average a past-due balance into the budget. The enrollment process consists of verifying your contact information, the address for which the budget will be used and agreement on the monthly payment amount. You may also have the option to enroll in automatic payments that the provider can withdraw from a bank account each month.

Periodic Reviews

Some electric providers automatically do periodic reviews, usually either quarterly or at the six-month mark in the budget year. This will assure both the company and the customer that the budget payments are in line with the average usage throughout that particular period. You may be required to increase payments, or given the option to do so, after such a review.

The End of the Budget Period

At the end of the budget period, your budget will be reviewed. You may receive a bill to cover overage costs that may have been caused by extreme weather, or you may receive a refund check or a credit amount toward your next bill. The next year's budget will be presented in a letter or on your billing statement, which you can accept, or you can choose to go off the budget plan.

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