What Is Budget Billing? How Is It Calculated?

How Does Budget Billing Work? 

Overall, budget billing can be a good idea for customers who prefer consistent payments and want to avoid large fluctuations in their monthly energy bills. It can also be helpful for customers on a fixed income or those who want to simplify their monthly budgeting process.

However, it's important to note that budget billing is not for everyone. Customers who use significantly more energy than they did in the previous year may end up owing a large amount of money at the end of the billing period. Additionally, if market prices for energy increase, customers on budget billing may end up paying more than they would have if they were paying for their actual energy usage each month.

If you decide that budget billing is not for you, you can typically unenroll from the program by contacting your utility company. Keep in mind that if you cancel budget billing, you will likely be responsible for paying any remaining balance on your account that is not covered by your monthly payments.

Budget billing is typically calculated by taking the average of a customer's energy usage over the past year and dividing it by 12 to get the monthly payment amount. This amount may be adjusted periodically based on changes in energy prices or usage. Some utility companies also offer online tools or mobile apps that allow customers to view and adjust their budget billing amounts as needed.