Gas bill - budget plan?

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Triple digit golfer
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Gas bill - budget plan?

Post by Triple digit golfer »

My gas company at my new place, Nicor, gives the option to get on a budget plan where you pay an estimated cost per month to smooth the bill out over the year. The amount is re-evaluated every four months, and then once a year, the customer is billed or given a credit for the true-up.

The best part is that the service is free. I've never used it but I am thinking of getting on it.

However, they are showing my budget plan price at $35 per month. It seems low to me. My first month here, my gas bill was $58+. I know this is winter but it still seems like $35 may be a bit low. However I do have an electric stove and oven.

Does anybody use budget plans for utilities and if so, how accurate do you find them to be?
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gnosis
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Post by gnosis »

Big fan here! Budget billing is free peace of mind. It's very nice knowing I won't be surprised ever again with a bill that's $100 more than I was expecting. I use the budget plan for my combined gas and electric bill through PECO, in Pennsylvania. It's perfectly accurate, as far being "free from any errors" is concerned. My Budget bill has been between $183-$191 every month since I started over a year ago. Every bill provides me with all the numbers I need to stay up to date and stay on track with my future estimated budget billing figure. Here's exactly what my bill says this month:

Total current charges: $297.09
Current Budget Billing amount: 183.00
Current Budget Bill balance: 114.09
Last Month's Budget balance: -199.30
Total Budget balance: -$85.21
Last edited by gnosis on Sun Jan 16, 2011 11:37 am, edited 1 time in total.
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iceport
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Re: Gas bill - budget plan?

Post by iceport »

Hi Triple digit,

My only experience with a budget plan might not be directly applicable to your question. After being in our house a few years, I decided to lock in a price for heating oil which required using a 10-month budget plan. The unit price was perfectly accurate, because our oil company would lock in their price in April. The only unknown was what our usage would be, depending on the weather and the thermostat setting. But there was a history of usage for us by that time. Also, they allowed us to choose how many gallons we wanted to lock in the price for. I would generally err on the conservative side, and get a credit at the end of the heating season, rather than low-balling it and having to pay a lump at the end.

The key is having a few years of history from which to gage your usage. Your total annual consumption can then be divided by 12 months.

Sounds like your unit price will still fluctuate with the market rates? In that case, you have two variables to consider, price and usage. That would also mean your only benefit is the convenience of regular monthly bills; there would be no true cost savings.

Maybe you could wait until you get your first full year in before deciding to use the plan? Then again, if the amount is reevaluated quarterly, how far astray could you go?

(BTW, $58 in the winter sounds good to me. Last month, I spent $609.99 on 181.6 gallons of No. 2 heating oil -- payable within 5 days or the price jumps 6%. :annoyed I've learned to keep a big balance in the checking account through the winter months.)

--Pete
tomd37
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Post by tomd37 »

I have kept a simple Excel spreadsheet of my three utililty expenses (natural gas, electric, and water) over the fifteen years we have lived in this home. When my gas company offered equal billing in January of 2010 I took the offer. Their 12 prior month calculation was exactly the amount of $101 I had on my records. However, they reduced the equal payment amount in August 2010 to $60 which I went along with. At the end of the 12 month period they advised the new amount would be $75, however I did not accept that amount as I knew it would be too low considered December through April the cost is very high. They agreed to a new amount of $100 per month and that is what I started with this month and will continue with for all 12 months. I like the equal amount payment and have done the same for electric and water, even though they don't offer it. Levels out my payment schedule for this retired person, even if I carry a credit balance for some months.
Tom D.
infecto
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Re: Gas bill - budget plan?

Post by infecto »

Triple digit golfer wrote:My gas company at my new place, Nicor, gives the option to get on a budget plan where you pay an estimated cost per month to smooth the bill out over the year. The amount is re-evaluated every four months, and then once a year, the customer is billed or given a credit for the true-up.

The best part is that the service is free. I've never used it but I am thinking of getting on it.

However, they are showing my budget plan price at $35 per month. It seems low to me. My first month here, my gas bill was $58+. I know this is winter but it still seems like $35 may be a bit low. However I do have an electric stove and oven.

Does anybody use budget plans for utilities and if so, how accurate do you find them to be?
$35 makes sense. If you use 58 in the winter what are you going to use in the summer with probably only a gas water heater? A few bucks.
sport
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Post by sport »

In my experience, the gas company (natural gas) has always offered the "budget billing" option in the spring or summer when usage is low. The initial budget bills would be higher than the actual bills for that time of year. This means that the budget billing arrangement is a pre-payment arrangement for part of the gas bill. Another way of looking at this would be to consider it to be an interest-free loan to the gas company. Although the budget billing arrangement would be convenient, I prefer to receive interest whenever I lend money (such as money in a savings account or money market fund). Of course, right now, interest rates are so low that it makes little difference. In normal times, however, the interest is worth more to me than the convenience.

Jeff
exigent
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Post by exigent »

We have our electric bill auto-debited, but not on a budget plan. For water, they don't do auto-debit (or auto-charge to credit card) so I just set up a recurring payment for a bit more than our typical bill. That way I don't even have to think about it, and the credit that we build up will cover a periodic higher-than-expected bill.
Tom_T
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Re: Gas bill - budget plan?

Post by Tom_T »

Triple digit golfer wrote:However, they are showing my budget plan price at $35 per month. It seems low to me. My first month here, my gas bill was $58+. I know this is winter but it still seems like $35 may be a bit low. However I do have an electric stove and oven.
I have gas heat and a gas stove. I use budget billing. Looking at my billing history, my actual gas usage in the summer is under $30/month. In the winter, it can shoot up to $200+.

So, I doubt that $35 is too low. Give it a year to see how your consumption, and therefore your budget amount, changes.

I like budget billing because I avoid the "sticker-shock" bills after a hot summer month (thanks to central air) or a cold winter month (thanks to gas heating.) I'd rather keep my monthly expenses as predictable as possible. And, it's not like I could otherwise stash my money in a savings account earning 5.25 percent.
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Ted Valentine
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Post by Ted Valentine »

I love these budget plans or equal payment plans. I use them for any and all utilities, and have for almost 5 years. It makes my monthly budgeting a snap and allows me to sign up for automatic draft without worry. One less thing to worry about.
Although our intellect always longs for clarity and certainty, our nature often finds uncertainty fascinating.
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touchdowntodd
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Post by touchdowntodd »

budget plans are awesome ... go for it, the numbers sound right! youre EASILY using 3-4 times the gas you would in the summer
Carl53
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Post by Carl53 »

While convenient, you generally are giving the gas/utility company an interest free loan. I guess I prefer to feel the pain of a large utility bill as it gives me more incentive to economize. If it were not for the large bill, the thermostat might still be set on 72 degrees. My gas bill is high in the winter - hot water and heat, while the electric is high in the summer due to AC and pool pump. It kind of averages out with the spring and fall being cheaper.
mikep
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Post by mikep »

The 4 months adjustment is a nuisance but otherwise ok.

For example, my electric bill is cheaper until the fall where they raise it due to high summer use from the AC and pool, then reduces again in the spring.
Then my gas bill is cheaper until the spring where it adjusts up due to higher use in winter then reduces again in the fall just in time for it to go up again.

They really should just cycle it based on 12 months instead of 4, but I guess they don't want people to fall too far behind. Just structure it so you get an interest free loan from them rather than the other way around, so now is a good time to sign up for your gas bill then sign up for the electric bill around April-May. :)
tomd37
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Post by tomd37 »

Some of the responders may be on fixed incomes and the amount they pay out for utility bills each month may be of importance to them. Therefore an equal amount each month may dictate whether or not they are loaning the utility money. :evil: Each to his own decision please.
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Triple digit golfer
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Post by Triple digit golfer »

touchdowntodd wrote:budget plans are awesome ... go for it, the numbers sound right! youre EASILY using 3-4 times the gas you would in the summer
Theoretically I should be using infinitely more gas now than in the summer. The only thing electric in this whole place is the furnace.

Electric stove, oven, water heater, and washer/dryer.

So I should have no consumption once the spring rolls around, I turn off the furnace, and turn off the gas!
calminvestor
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+1 Carl53

Post by calminvestor »

+1 Carl53 - a little pain when paying your unbudgeted (and high) gas bill causes one to attempt to economize a bit. I bet Carl53 spends less on his gas bill each year than those on a budget plan through the gas company. You don't think they sign people up on these (free) plans to keep you from trying to economize do you? Surely not. Just a thought...I realize that the budget plan does eliminate the gas bill from blindsiding you during the winter.
mainiac
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Post by mainiac »

I auto pay a set amount each month based on my own calculations.
I don't use the company's estimate and I don't allow the company access to my checking account.

Some months I have a credit. Some months, I may have to pay an extra $5 or $10, but no huge swings in my monthly bills!
maxinout
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Post by maxinout »

I never saw what people loved so much about the budgeting. We just have it set to auto-pay whatever we've used. Sure, it's higher in the summer or winter, but then it's lower in the other months. It's not like we don't have the money in our checking account.

Then again, we're in an apartment, so on the low end we're looking at $90 and on the high end, $180.

I just like being able to know exactly what our bill is by looking at my checking account balance.
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OAG
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Post by OAG »

We use on-line level payment plans (automatic debits to checking account) for both Gas and Electric. Gas (Heating and Hot Water) has been very accurate in their monthly amounts. Electric has not been very accurate in that there is usually a big "catch up" payment once a year for the electric. However Natural Gas prices have fallen over the past 5 years where Electric prices have risen - which may be part of the reason for the erratic electric rates. Does not make much of a difference as we get the on-line bill each month and can see if we are "ahead" or "behind" and know what to look for in the "adjustment month". IMO it is a great free program as you can travel and forget about the monthly bills (just keep the checking account loaded up). We use these free automatic bill (ACH PULLS) for everything we can (Cable Bill, Condo Fee, HOA, etc.,)-write virtually zero checks and pay postage for almost no bills.
OAG=Old Army Guy. Retired CW4 USA (US Army) in 1979 21 years of service @ 38.
Wizze
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Post by Wizze »

I know the original post was for gas, but I use a budget plan for electric use. However, my budget plan is a revolving budget, it changes on a monthly basis and takes the average of the last 12 months. The variability of each bill in small, but I do like that the revolving calendar is used.

My parents are also on the same type budget system. Their primary complaint is when they travel to their winter home in Florida, the primary residence does vary slightly each month and they were caught off-guard with a late penalty due to making the previous month payment (when in fact they should have paid approximately $4 more for the current month).
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OAG
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Post by OAG »

"My parents are also on the same type budget system. Their primary complaint is when they travel to their winter home in Florida, the primary residence does vary slightly each month and they were caught off-guard with a late penalty due to making the previous month payment (when in fact they should have paid approximately $4 more for the current month)."

They should look into setting up a "direct debit" (ACH) program with the electric company. Or alternatively, if the electric company allows it, just make a large overpayment and carry a credit balance with the electric company. Late penalties just make my blood boil - no pun intended. :D
OAG=Old Army Guy. Retired CW4 USA (US Army) in 1979 21 years of service @ 38.
guitarguy
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Post by guitarguy »

I have to throw my vote against the budget billing. I'd rather just pay as I go...personal preference. Plus you get the nice perk of tiny bills in the summer, when we usually end up spending a bit extra on little landscaping stuff anyways.

Plus with some common sense, the high bills in the winter aren't really a surprise. After a year or 2 living in your home you should know whereabouts the bill will be for the given time of year. It's not that hard to estimate IMO.
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Post by Tom_T »

darga19 wrote:Plus with some common sense, the high bills in the winter aren't really a surprise. After a year or 2 living in your home you should know whereabouts the bill will be for the given time of year. It's not that hard to estimate IMO.
Well, it's not really a surprise. I just prefer to pay $100 in August and $100 in January, rather than $30 in August and $250 in January. As someone said, to each his/her own.
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ryuns
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Post by ryuns »

Carl53 wrote:I guess I prefer to feel the pain of a large utility bill as it gives me more incentive to economize.
+1. My thought as well. Anything that's a regular cost, not normally associated with consumption, like 6 month car insurance, I'd prefer them to prorate if it's free. But if utilities are tied closely to usage, I'd prefer to pay the bill every month.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
guitarguy
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Post by guitarguy »

Tom_T wrote:
darga19 wrote:Plus with some common sense, the high bills in the winter aren't really a surprise. After a year or 2 living in your home you should know whereabouts the bill will be for the given time of year. It's not that hard to estimate IMO.
Well, it's not really a surprise. I just prefer to pay $100 in August and $100 in January, rather than $30 in August and $250 in January. As someone said, to each his/her own.
Yeah...exactly what I said...just my personal opinion. Others commented on the 'surprise' of the larger bills in winter and what not.

Plus my bills typically range from $25 to about $130...so the range isn't quite that extreme for me.
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gnosis
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Post by gnosis »

ryuns wrote:
Carl53 wrote:I guess I prefer to feel the pain of a large utility bill as it gives me more incentive to economize.
+1. My thought as well. Anything that's a regular cost, not normally associated with consumption, like 6 month car insurance, I'd prefer them to prorate if it's free. But if utilities are tied closely to usage, I'd prefer to pay the bill every month.
Umm, my credit card bills already do that for me. They make my utility bills seem like spare change. That reminds me, my utility bills are all auto-paid to my credit cards. There's another reason why I like to Budget Bill the utilities, so my credit card bills don't make me throw up in my mouth.

Wouldn't it be great if credit cards offered interest-free Budget Billing, just like with utilities?
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