Standard Billing and Payment

The standard for many years for calculating energy bills is to charge the customer for the amount of energy consumed in the billing period. Consequently, energy bills are usually very high for the coldest month of the year and, for those customers with air conditioning, very high during the summer months. If the utility meter is not read each month (and this is typically the case), then the energy consumption will be estimated based on past usage patterns and the weather.

The standard practice for paying bills is to either pay by check and mail to the utility company or pay in person (by check or cash) at one of the utility company’s designated payment centers. In recent years, utility companies have decreased the number of payment centers and some utility companies have, in fact, completely eliminated payment centers.

Utility companies offer a number of options in terms of how the monthly energy bills are calculated and options for paying the bills. Whenever an option is selected, the customer is never committed to continuing with that option for either bill calculation or bill payment. A customer can always choose to revert to the standard or select a different option at any time.

The specific options for bill calculations and bill payment vary from one utility company to another. Contact your electricity and gas utility companies to inquire of the options available to you and the specific details of each option. Some utility companies require that your existing account must be paid in full before you can select a different billing or payment option.

Residential customers have the option of contacting their electricity and natural gas companies at any time to request budget billing. With budget billing, each month’s bill will be the same and surprises of really high bills in the winter or summer are eliminated. The amount paid each month is based upon the average electricity and gas consumption during the prior 12-month budget cycle when enrollment began in the program.

The company may adjust the utility bill four times per year — up or down — depending on the customer’s use. At the end of 12 months, there is a "true up" charge or credit applied to your account. Customers will be charged if they have used more than what they have paid for with the monthly bills. They will receive credits if they have used less than what was paid.

The concept of budget billing is like an escrow account on a home mortgage for paying taxes and insurance. Budget billing is a free service provided by some utility companies.

Average Payment Plan

Average Payment Plan is very similar to budget billing, although each monthly bill is not exactly the same. Instead, each monthly bill is based on the average of the actual amount of electricity or gas used during the past 12 months. Each time a new bill is prepared, the monthly amount is updated based on the average consumption of the most recent 12-month period. The amount of the monthly payments will vary slightly from month to month, but there will be no significant changes associated with peak heating and cooling months. The monthly bills are representative of actual energy consumption so there is no need for a "true up" charge or credit each year as required with Budget Billing.

Average Payment Plan is also a free service of some utility companies. The customer pays only for the energy used.

Direct Payment

Utility companies offer a free service to allow customers to have automatic direct withdrawals from the designated bank account to pay the utility bills. Each customer will continue to receive the regular monthly statement from the utility company on the normal billing date.

The advantages of Direct Payment are obvious with respect to eliminating expenses for the costs of checks and postage. Furthermore, customers do not need to spend time writing and mailing checks or waiting in line at a payment center. In addition, direct payment eliminates late payment charges as well as the stress of worrying whether each utility bill will be paid on time each month, even when away from home. Direct payment can be used in conjunction with Budget Billing and Average Payment plans.

Although direct payment is a free service provided by utility companies, be sure to inquire whether the bank will assess any service charges, either for initialing setting up the direct payment arrangement or for processing each monthly withdrawal.

Internet Billing

If internet billing is selected, the utility company will send an e-mail providing the energy consumption during the billing period, the amount due, and the date the payment is due. With the click of a mouse, the customer can charge the monthly energy bills to the designated bank account. There are no checks to write, no stamps to purchase, and no trips to the mailbox or post office. The utility company will send an additional e-mail confirming that the payment has been received. Registering for internet billing can be done on-line by providing the utility account number, the bank account number, and the bank routing number.

Telephone Payment

An additional payment option for paying electricity and gas bills is to charge the bills to a credit card. Utility companies participating in telephone payment plans specify which credit cards they will accept; generally utility companies accept most major credit cards such as VISA, Master Card, and Discover. The typical arrangement for telephone payment is to call a designated phone number, then enter the utility account number, the amount to be charged to the credit card, and the number and expiration date of the credit card. Telephone payment can be used in conjunction with Budget Billing and Average Payment Plan.

CAUTION - Transactions fees for telephone billing often are charged and the fees can be as high as $5.95 per transaction. Furthermore, loading many charges on a credit card may be unwise because the interest rates charged by credit card companies on unpaid balances can be as high as 25% per year!

Third Party Designation

A customer can designate a "third-party" person or organization to receive utility bills and termination notices from a utility company. It is important to emphasize that the "third-party" person or organization is not responsible for paying the utility bills or taking action on the termination notices. However, the "third-person" may be able to assist with making payments and to identify community resources to assist with payments and to ensure that no person will be left in the cold. This program is especially beneficial for consumers who are frequently away from home, incapacitated, forgetful, or unable to understand the details of billing information and termination notices received from the utility companies.