Why I don't do budget billing.
Whenever I've talked about my utility bills and how we deal with them, someone usually mentions Budget Billing and asks if I've considered using that service. So, I thought maybe I should explain why I choose not to do that.
First, for those of you who are new, here's what we do. We budget $200 a month for our electric bill(we have high electric rates here). When the bill is lower than $200, we put the extra money into an ING savings account. When the bill is higher than $200, we take money out of the ING account to cover it. Basically, this means that we can count on a predictable budget amount for our electric bill no matter what time of year it is.
This is similar to the way Budget Billing works, except that with Budget Billing, the electric company takes the budgeted amount per month(they come to this number by averaging your last year's bills) and saves the excess from the cheaper months to use during the more expensive months. If there's extra left at the end of the year, the electric company just sends you a check for the balance.
The method I'm using is almost exactly the same as Budget Billing, but it has one distinct advantage. Right now, we have $452 sitting in our electric savings account earning interest for us. If I were using Budget Billing, my $452 would be earning interest for my electric company instead. And I am not at all interested in giving them any more of my money than I have to!
Obviously, the method we use will only work if you are disciplined about setting aside the money each month. If you have trouble doing that, the Budget Billing plan could very well be the best choice for you. However, I take great delight in putting money into our electricity savings account, and there's little chance that I'll be tempted to go shopping with the money instead of saving it.
That definitely makes sense. And it sounds like you've developed a system that works well for you!
This is a very good method. I'll make this change very, very soon.
Same with tax refunds-- The thrill of receiving your own money back from the government escapes me. Fortunately, my husband is a finance guy and enjoys tweaking our W-2 so that it's break-even at tax time.
I have the exact same budget plan in my house, down to the exact same monthly budgeted amount, $200! I love plunking the money into my own savings account too. Do you at any time take any amount of that savings and put it in your own savings? Like after a year, take 2/3 of it or anything like that?
Just wanted to point out, that I work for a public utility company and we give any interest we earn back to the customer. However, I'm sure you are earning higher interst in your ING account. If this system works for you, keep doing it!
We do something similar - but the main reason we avoid budget billing is this.
We heat our house with our woodstove - the gas company wants us on a $240 a month budget. The perky little thing on the phone trilled "Oh! But you'll get all the money you don't use back at the end of the billing year! Why not just save effort and sign up?"
Because our gas bill is $50 a month or less.... and I don't have an extra couple of hundred a month to let someone else play with.
If I sound a little bitter, its because I've had to fight them putting us on repeatedly and once they tried charging us a $150 cancellation of budget billing fee.
Jenna,
Just curious what happened with the $150 cancellation fee. We just sold our house and they did the same thing to us on the final bill. Never knew there was a cancellation fee for budget billing. What a rip-off. Were you able to get them to remove the charge?
But isnt the interest rate pretty low these days? Like less than 1%?
Hey, I thought of this lovely blog yesterday when I got our astronomical heating bill. This past month apparently averaged 15 degrees cooler than last and our bill jumbed over $70. We are keeping our heat at 65 already and have 20 month old boys so I am not comfortable going any lower. What other tips for saving on heat/electric costs can you through my way? Thanks!!!
Oops! I just checked out your handy little catergories and found my answer.
Very well said Kristen!!!
Great Idea...that would work well for us as I set aside money for other things, but never thought of this!
I enrolled in Budget Billing last year and it was a total nightmare. Very disasterous.. My normal bill ran approximately 170/mo during the winter months. summer months i would average normally 250/mo. my budget billing was 155/mo. i thought that sounded perfect considering the amount i normally paid. after only 3 months on budget billing, the electric company uped my bb to 231/mo and me not understanding my bill continued paying the 155/mo. after noticing huge balances i started paying more monthly on my own anywhere from 180 - 250/mo. i called them asking about bill and was informed about my bb increase and before i knew it i was somehow 900 in arrear on payment and rec'd shut off notices every month. i was sickened.. reviewing my yearly payments with them i estimated sending them (for over a year) $274/mo when in reality my bill normally ran under 200/mo. I finally paid off the 900 and immediately requested to be removed from bb. i ask for any final amount that were owed. i owed an additional $85.77 prior to being allowed to be removed from bb. i paid this immediatly and just rec'd my first "normal" bill.... the normal bill is 166.24/for the month.. back to normal; however, bge charged me again, another 85.77. i did call and they did credit but had i not called they would have rec'd an additioanl 85 from me. they are crooked!!!!! paying 274/mo for one year on bb and average less than 200/mo not being on bb.... hm, which road shall i choose? never again.... beware!!!!!!!!
You are right on the money and it's even worse than what you experienced. Yes you can get a cut off notice for the non payment of a budget billing account even if you have a credit outstanding. But there are other interesting actions that Baltimore Gas and Electric excels in:
1) The final payoff amount only accrues when you go off BB(Budget Billing) , so if you never go off the credit amount may just keep growing forever.
2) The BB payment amount is "adjusted" 4 times a year. SO it is not something you can budget afterall. Rather than run the risk of being owed money at the end of the year they have 4 opportunities to raise (or lower) the BB amount. The declines are much less than the increases. And how are you supposed to budget for that.
3) The customer can no longer go in person to BGE with issues and challenges to their version of what you owe or don't owe. It all has to be done over the phone and you might as well "pound sand." They are often wrong and will never admit when they are. Meanwhile your BB credit amount is growing by leaps and bounds until you cancel it.
4) BGE takes all the credit funds from all their BB customers and buys commercial paper yielding 4-6% short term returns for their coffers. The customers get none of that.
5) and last but not least, if you are a energy assistance customer you are forced to enroll in BB. Its a beautiful set up for BGE and means that from year to year the funds you don't contribute to satisfy you BB agreement is paid by the State of Maryland.
I had a BB account the amount I was to pay wasn't too much different from the full bill so I paid the Full Bill,and have been for 'bout 3years.Then I noticed after All this time they are adding my BB amount to my Bill!! What can I do/talk to?
example:$90.BB amount
Gas $24.
Elec.$90.
total:114.
BB:$90.
Pay thus amount:$204.
You see what I'm talking 'bout !
I know what you are saying Sheila. I just got my BGE bill today. I used 107.52 in electricity and with all their crap charges, my bill is 172.15. My bill is 552.13. If I do not pay, I get a turn off notice. I called BGE several times to get out of this BB rip-off and they keep telling me the same crap. I have 815.49 left to go on BB and I will never get back on it. If I am charged 3 times the amount of the electric I use, where is all that money going? I have never gotten a refund check from BGE. I am expecting not to see an electric bill for 2 years!!!
I know this thread is a few years old but I was wondering if you were paying a third party supplier for your gas and electric? Because it's been my experience that you pay the third party and still pay BG&e for a distributing the gas and electric in which case you would pay the electric bill amount the gas bill amount plus the budget billing amount. If it were BG&e supplying the gas and electric, you would just pay the bb amount which may be higher or lower than your actual usage. This could be a different thread altogether with more concerns and complaints, but I have been enrolled in third party suppliers without my knowledge two different times within the last 6 months. I finally was able to get a block on my BGE account saying that at no time shall a third party supplier be approved. At least that's what a representative from PG&e told me we put on my account. It could be an outright lie. It wouldn't be the first time. But back to the billing concerns at hand. Budget billing is not the way to go as there is no way to budget for a bill that fluctuates so often. Right now my budget billing is $60 more than the amount of gas and electric I actually used. Actually I only used $30 worth of electricity however my electricity bill alone is $59 when you add in all of the fees and charges tacked on by BG&e. My gas usage only adds up to $8. However my total bill is $37 after fees and charges. It is outrageous!
It depends on which utility you are talking about. For heat, the utility company is the one giving the customer the interest free loan, not the other way around. That's because winter happens to be at the beginning of the year. They allow you to pay way less during the first part of the year and then gradually pay them back over the rest of the year. In that case, budget billing gives you the most investment cash at any given moment.
Except that most gas companies begin their budget year in May (not January) when the gas prices are starting out low in the Spring. Therefore, they are not giving any free loans.
Interesting. I didn't know that.
Another thought: What happens when you first sign up for budget billing (it's been a while, so I forgot)? If you sign up in the fall when it starts to get cold out, will your bill be lowered immediately? If so, then you're getting that free loan. Or will they just keep sending you regular bills until May?
where in the heck can you get an interest rate worth a poop on $450?
Hi Ive been looking at my bill I have budget billing on there which is $64 a month. And below that is the bill for that month which is $235. And they are making me pay the budget billing and the $235 . So my bill this month is a total of $299. Why?