One of the places I don’t like surprises in my life is in my utility bills. Every month, it feels like the city is judging me based on how many resources I’ve used. I don’t always do as well as I would like. Then, to really drive the point home, they charge me for my gluttonous use of their water and electricity. I realise that I have to pay for what I use, but when bills can vary as much as $70 from month to month, I don’t like the kick in the gut I get from receiving a higher-than-average bill. The solution: sign up for an Equalized Payment Plan.
Equalized Payment Plan – what is isn’t, and what is it
First of all, an Equalized Payment Plan will definitely not save you money. You will still be billed for all of the water and power you use, the distribution costs, as well as mysterious “administration charges” and riders that the company adds on to your bill with disconcerting regularity. (Which, by the way, is one of the reasons to own utilities in your stock portfolio – how many industries can pass all their problems, mistakes, and inefficiencies 100% to the end-consumer? Not a lot, but utilities can — and do! The result is very reliable dividends.) So, no, this bill-paying arrangement will not put money in your pocket.
The benefit of Equalized Payment Plans is that they make your utility bills predictable from month to month. The company takes your total use over the past year and averages it out, so that you pay an equal amount every month for the upcoming year. You will still have monthly bills to pay, but you will know the amount of those bills in advance. At the end of the year, there is a single “settle up” bill, where you will be either credited the difference if you have reduced your overall use, or charged the difference if your usage has gone up. Of course, if your bills trend up from one year to the next, you may be in for a shock when you get the settle-up bill, so you could argue that this is just a case of picking your poison: twelve little snowballs through the year, or standing at the bottom of an avalanche once every 12 months. Still, choice is nice.
Where there is a definite advantage with an Equalized Payment Plan is when the company makes a mistake with your bill. A few years ago, our power bill inexplicably tripled. (Power bills that spike, so I am given to understand, is one way that police locate grow-ops, so I was ticked off on more than one level!) I called the company, and the woman asked me to go outside and read the meter to her, which I did. She recorded the information, and agreed that it was unlikely that our power use had actually gone up so much, but she asked me to pay the whole bill anyway. I was in a position to do that, so I did, without too much griping. The bill I got the following month was just a fraction of what the normal bill was, so it took me two months to get this worked out. If we had had a Equalized Payment Plan at the time, their little mistake wouldn’t have had any effect on my monthly cashflows at all.
On a related topic, this little “our mistake, your problem” scenario is a very good illustration of why I will never subscribe to a plan where withdrawals are made automatically from any of my accounts.
Now, turn off the lights and stop wasting water! (Starred panties optional.)