Saving on Electricity: Is Flat Billing Good or Bad for Your Budget?

Saving Money by Budgeting for Electricity

Saving Money by Budgeting for Electricity

Finding additional savings in our current budget is like finding a wad of cash in the pocket of freshly washed jeans! If you’re a wife or a mom, you know what I mean. Once in a while, right after doing a load of laundry, I’ll spot some “forgotten” cash, usually in my husband’s jean pocket, and I feel like Christmas came early!

I recently asked a coworker how much he paid for his electricity each month. He told me his family was on a “flat bill” plan of $200 a month. I gasped for a second since I knew his home was a single-story ranch that was barely 5 years old. As we started talking, I shared with him that our electric bill for a two story, older split-level home ranged between $100 – $180, depending on the season. As we continued our conversation, he did mention that although the flat bill kept going up each year, and even though it was convenient, his family was probably not paying as much attention to the usage because of the flat rate, knowing that whether he was careful or not, his bill would stay constant, at least for a season. By the time we ended our conversation, he was ready to take a second look at the way his family uses and pays for electricity.

For some of us, our electric bill can become that “unexpected” source of newly found cash, especially if you’re currently on a “flat billing” plan with your electric company. You may be, just like my coworker, less careful about your thermostat, simply because you don’t have to worry about the immediate rate increase.

Many love the convenience and consistency of paying the same price for 12 straight months, but without meaning to, that convenience may be costing them money.

Most electric and gas companies will offer flat billing as a helpful service that takes the “guesswork” out of the monthly electric bill game, but as you consider the convenience, please keep the following in mind:

– Depending on your electric company, this may be a great idea where you’ll get your money back if you use less electricity than what you paid for. In many cases, however, it’s a way for the electric company to charge you more money! So before you opt in, ask the necessary questions to understand refunds and usage policy.

– Don’t be deceived! Even though you’re on a flat rate plan, electric / gas companies set the rate assuming you will be using lots of electricity or gas during the summer or winter months.

– Check with someone who already has the flat bill rate and ask them what their monthly bill is and whether the rates have increased or decreased, year over year.

– Ask your electric and gas company about penalties for changing to a standard plan before your 12 month period expires. Also ask them about “administrative” fees associated with flat rate billing.

– Consider putting yourself on a “flat bill” budget. Simply assign a specific amount you’d like to spend on electricity every month, then monitor and adjust your usage to always come under that amount. Most likely, you will see that even though you may reach your maximum budget amount a few months out of the year, for the most part, because of being more careful about cooling and heating your home, you will have money to spare!

– Monitor your usage online by opening an account on your power company’s web site. This way, you can see your usage month over month, compare this year and last year’s usage, and have a full visibility as to all of the charges. The “out of sight, out of mind” mentality may be costing you unnecessary dollars.

So be smart, ask questions, and most importantly put yourself in the driver’s seat when it comes to electricity and gas usage–start controlling both your power consumption and your budget. If you’re not in the driver’s seat, somebody else will be, and it will most likely hurt your wallet!