Q: My sometimes-steep utility bills always throw my budget for a loop. Should I sign up for budget billing?

A: Budget billing can simplify your utility payments, but it’s important to understand all the facts of this option before signing up. We have answered all your questions on budget billing.

What is budget billing?

When you sign up for budget billing, the utility company will total up your last year’s payments, add a small percentage for inflation and then divide it by 12 for your monthly bill. This way, you pay a fixed amount for your bill throughout the year.

What happens if I use more or less energy than the company estimated?

If your energy usage exceeds the company’s estimate, you’ll need to pay the difference at the end of the year.

If you use less energy than was estimated, the company may give you a credit toward next year’s bills or issue you a refund.

Is there a fee for this service?

Some companies offer this service free of charge. Many will collect a negligible fee, but some ask for $3 or more a month just to work out a budget for you.

What are some pros of budget billing?

The main benefit of a fixed monthly utility bill is easier budgeting. Budget billing also helps offset the high costs of summer and winter bills by averaging the energy costs of the entire year and spreading it over 12 months.

What are some cons of budget billing?

Many people who sign up for budget billing end up using more energy than they did when they paid for each month’s usage. Also, it can be difficult to cover the balloon payment at the end of the year.

How can I create a budget-billing plan myself?

Start your own budget during off-peak seasons, like autumn or spring. To get your number, total up last year’s bills, add .03% for inflation and divide by 12.  Work this fixed amount into your monthly budget. During cheaper months, set aside the extra money to cover your higher bills in extreme-weather seasons.

How can I save on my energy bills?

• Only use LED bulbs. They use 75% less energy than traditional bulbs and have a lifespan that is 25 times longer.
• Get rid of air leaks. Seal all drafty areas to keep the heat in and the cold out.
• Adjust your thermostat. Changing your thermostat by just a few degrees can save you 1-3% off your monthly utility bills.
• Keep your units well-maintained. Replace your filters as necessary, keep your units clean, and consider calling in an expert at the start of each season to confirm that everything is in working order.

Your Turn: Are you signed up for budget billing? How is it working out for you? Tell us all about it in the comments.