Budget Billing
When customers choose to have a "Budget BIlling" or "Levelized Payment" plan, the utility predicts what future bills will be, based on the prior year's bills and anticipated changes going forward (e.g., higher rates). The customer pays a level amount each month. If at the end of the budget year, the amount paid under a budget billing plan is more than actual charges, then the customer gets a credit. If the customer pays less than actual charges, the customer must make up the difference.
Budget Billing Does Not Affect Overall Utility Charges.
The level billing plans were intended mainly to level out swings in utility bills due to seasonal changes in customer consumption. For example, winter heating bills could be spread over the year by starting to pay on the plan before the season started, while consumption was low, paying less than the amount otherwise due in winter when more energy was used and again paying more than the amount otherwise due in springtime...
Budget Billing may affect eligibility for the federal Emergency Home Energy Assistance Program.
Some customers, particularly those on fixed incomes, may find budget billing plans helpful. Others may not, particularly if they might otherwise qualify for low income heating assistance under the emergency home energy assistance program. That program closed April 23, so a budget billing customer who now has a deficiency at the end of the budget period due to higher than predicted heating bills, and then has a threatened termination when he cannot pay that deficiency, will not obtain emergency HEAP to prevent the termination. A similarly situated neighbor not on budget billing, whose heat-related bill-payment crisis occurs during the winter time when HEAP is available, may qualify for several hundred dollars of federal aid. Other customers may be less trustful of utility billing and record keeping and may wish to remain on a pay-as-you-go basis. Thus, budget billing is not optimal for everyone and PULP recommends that customers take into account their individual circumstances before entering into a budget plan.
Budget Billing is not an adequate remedy for volatile utility rates based on wholesale spot markets.
Some utilities may argue that vulnerable customers can use budget billing plans to defend themselves from wholesale market price swings being passed through to customers without sufficient price hedging by the utility under monthly rate adjustment mechanisms approved by the PSC. The NYPSC, in its orders creating retail competition, adopted volatile pricing methodologies on the theory that if customers prefer stable utility rates, the competitive market will provide the stability desired by consumers. The NYPSC in some of its restructuring orders allowed utilities to pass through insufficiently hedged wholesale prices, with the result affected by the volatile NYISO spot markets. Electric customers in upstate New York generally do not have such pass throughs of volatile wholesale prices under their rate plans. Also, subsidiaries of O&R, Con Ed in PA and NJ have been criticized in those states as not having prudently hedged against the short term spot market prices.
Consumer Advocates have opposed the volatile pricing of service to residential customers.
"The Default Service Provider shall not simply pass through wholesale spot market rates for the energy or gas commodity portion of Default Service, and shall be required to take prudent measures to provide least cost service and assure long term rate stability, through various means including but not limited to competitive bid, bilateral contract, or provider-owned generation or supplies;
**** The rates for Default Service are not increased solely for the purpose of stimulating the development of competition;" http://www.nasuca.org/res/elect/elect200202.php
Resource Materials on Budget Billing
"Budget or levelized payment plans; quarterly billing.
1. Every utility corporation or municipality shall offer residential customers a budget billing plan or levelized payment plan for payment of charges for gas or electric service. Any such plans shall also be offered to customers who are condominium associations or cooperative housing corporations regardless of whether such associations or corporations are classified as residential or commercial customers.
2. Every utility corporation or municipality shall offer residential customers who are sixty-two years of age or older, as an alternative to monthly billing, a plan for payment on a quarterly basis of charges for gas and electric service rendered by such corporation or municipality, provided that such customer`s average annual billing is not more than one hundred fifty dollars.
3. The commission may establish such terms and conditions for plans required under this section as it deems necessary or
proper."
Utility Tariffs Also Provide Rules for Budget Billing.
For example, the Con Ed Tariff says:
"(S) Levelized Payment Plans: The Company shall offer a levelized payment plan to its Customers at least annually, except for the following non-residential Customers:
(1) those with less than 12 months of billing history at the premises or seasonal, short-term or temporary Customers;
(2) those in arrears or those who for any reason ceased being billed on a previous levelized payment plan before the end of the plan year in the past 24 months;
(3) interruptible Customers, or those whose pattern of consumption is not sufficiently predictable to be estimated on an annual basis with any reasonable degree of certainty.
The Company may only remove a non-residential Customer from its levelized payment plan if the Customer becomes ineligible under subparagraph (1), (2), or (3) of this paragraph. However, if delinquency is the cause of the ineligibility the Company must first give the Customer the opportunity to become current in payment, provided that such an opportunity need be given only once in any 12 month period. Each levelized bill shall clearly identify consumption and the amount that would be due without levelized billing." http://www.coned.com/documents/elec/043-059g.pdf (Tariff Leaf 57)
Articles and Other Materials
NYSEG Glitch Overbills Some Customers - Budgets Were up to $150 More, less than Expected - Press & Sun-Bulletin - 06-23-2006
Pages from PULP’s Brief Explaining Why Budget Billing Does Not Provide Protection Against Price Spikes - 05-10-2006
|
