Pros and Cons of Electric Budget Billing


Budget billing might sound like an oxymoron, but many utility companies are now offering budget billing to homeowners. While the “budget” part in budget billing sounds appealing, you may be wondering if you can actually save money or if it is just too good to be true. Here’s everything you need to know about budget billing and its pros and cons.

What is Budget Billing Anyway?

Budget billing is basically a set amount that you pay each month for your utility bill, whether it’s your electric bill or something else. Your power or gas company for example, will look at the amount of money you spent on your utilities the year prior. They will add an additional percentage to this number to cover inflation and then divide the total number by 12 months. The number you’re left with is what you will pay each month.


  • Since your utility bill will be the same each month, it may be easier for you to budget the rest of your money.
  • You won’t pay steep increases during the warmest or coldest months when you use more power.
  • You could potentially save money on your utility bills.


  • You may end up with a large sum of money due at the end of the year if your rates or usage increases.
  • If you’re trying to lower your electricity bill, it will be difficult to know if you are succeeding because you won’t know the savings until the end of the year.
  • Some companies have steep administration fees and cancellation policies.
  • Some companies will charge you extra if you use more electricity, but won’t refund you when you use less.
  • Many people don’t pay attention to their utility usage when they are using budget billing—this means if your bill increases, you might not realize it until the end of the year.

Other Considerations

Administration fees: One important consideration is administration fees. Many companies will charge a monthly fee which will vary depending on the business. While administration fees are often inevitable, don’t pay more than a couple dollars a month!

Refund policies: It’s a good idea to find out if you’ll have to pay more money if you use more power than the company planned for. While paying more for extra usage is normal, some companies won’t refund your money if you spend less.

Know what you’re signing: As with any contract, know what you’re signing! It’s important to know how long you are contractually bound, especially if you have plans to relocate in the future as some companies may charge extra to break a contract.

Budget billing isn’t for everyone, but it can help those who struggle when creating a monthly budget. With Florida temperatures peaking during summer, it’s common to see a rise in your monthly utility bill, but with budget billing, your payments won’t spike during these months. Whatever your preference is, One Hour Heating & Air Conditioning® of Largo wants to help you stay comfortable year-round. To learn more about other topics like budget billing, click here or visit One Hour Heating & Air Conditioning® of Largo.