Annual Utility Savings Hunt – Electricity

It’s that time again. Time to go hunt for utility deals. I know most people think there are no deals to be had, but a lot of your utilities can be negotiated, depending on where you live.

In Connecticut, we have the choice of electricity suppliers. That doesn’t mean that I get two bills or that I have to change electric companies. The only thing that changes on my bill is the name of my electricity supplier and the amount I pay each month.

I received a call last week from one of the electricity suppliers. Usually they go into a big sales pitch explaining what supplier choice is and how things won’t change. I, generally and as politely as possible, interrupt them and just ask for their rate. My former rate was 10.7 cents per kwh. The rate for my electric company is over 12 cents. This company offered me a rate of less than 9 cents with no contract. They also offered me $100 if I stay with them for 2 months and 5% back at the end of 12 months if I stay with them. Ding, ding, ding. We have a winner. I switched. There is no fee to switch and no fees if there is no contract.

The only thing that annoyed me about the process was having to talk to a third-party, independent verification service to make sure I understood what I was doing. I wonder how much that adds to the cost of electricity, especially with people changing suppliers every time someone calls with a better offer.

I figured out that on last month’s bill, I would have saved about $50. I wish I would have reviewed my options sooner. If you live in Connecticut, you can visit this site to see all the companies that provide electricity to Connecticut consumers. I got this link from the Department of Energy and Environmental Protection. If you live outside Connecticut, contact your Department of Public Utilities or your electric company to see if you can pick your supplier.

The Pros and Cons of Utility Budget Plans

The weather in Connecticut has been pretty nice over the past few days. I’ve turned off the heat and opened the windows. Spring is on the way and with it, lower gas bills. Spikes in utility bills can make budgeting really tough, but is a budget plan through your utility companies the right move for you?

A budget plan allows you to pay the same amount each month based on your prior 12 months of usage. The utility company charges you the same amount each month and at the end of the year, reconciles your account. At that time, you’ll either receive a bill for the additional amount or receive a credit for the overpayment.

The positives:

  1. It’s easier to budget since your bill will be the same amount each month.
  2. You avoid the large upswings in your electricity and gas bills due to heating and air conditioning buy paying an equal amount each month.

The negatives:

  1. If your bill changes because of increased rates or usage, you’ll end up with a large amount due at the end of the year.
  2. If you have electricity for your air conditioning and oil heat, you’ll still have large oil bills in the winter and have larger electricity bills at the same time because of the payment plan on your electricity bills.
  3. If you are working to cut your electricity or gas bills, you won’t realize the savings until the end of the year.
  4. Most people pay less attention to their utility usage when on a payment plan. When I see my electric bill increase, I start searching for ways to cut the bill.
  5. When you are prepaying your bills to build up for the big usage months, you don’t have access to that money. You also aren’t earning interest on that money.

I, personally, don’t use a utility budget plan. My gas bill is highest in the winter, with my electricity bill highest in the summer. My maximum utility bills are about $350 a month during the winter, which usually lasts about two months. In the summer, my bill peaks at about $300 a month. That, too lasts about two months. My lowest months, in the spring and fall, are generally about $150 a month. I budget $350 a month all year long. When my utilities are lowest, I’ve got an extra $200 to throw at debt or savings. When they are highest, I’ve got the money budgeted so we are fine.

If you are struggling to make your payments and an equal payment would help you budget, the plan might be right for you. I think the plan only works if you have heat and air conditioning that you can put on the plan. If you have oil heat and cannot put that on a payment plan, it’s going to be even harder to make those payments if your electricity is on a budget plan.

You have to look at your own situation and see what works best for you.