How Average Billing Works

Have you ever been surprised by an unexpectedly high electricity bill?

It’s a common experience for many Texas residents, given the state’s extreme weather fluctuations.

But what if there was a way to make your electricity bills more predictable? That’s where average billing comes in.

TL;DR: Average billing is a system that calculates your average energy usage over the past 12 months and charges you that amount each month. It’s designed to smooth out the peaks and valleys in your energy bills, making them more predictable. However, it’s not a one-size-fits-all solution.

What is Average Billing?

Average billing is a billing method designed to keep your electricity bills consistent, regardless of the season.

Instead of paying for the exact amount of electricity you use each month, which can vary significantly, average billing calculates your average usage over the past 12 months and charges you that amount.

This method helps to even out your energy costs, making budgeting easier.

How Does Average Billing Work?

The process of average billing involves calculating the average energy usage over the past 12 months.

This average is then billed to the customer each month. If a customer uses more energy than the average in a given month, the difference is added to a deferred balance.

Conversely, if a customer uses less energy than the average, the difference is subtracted from the deferred balance.

This balance is periodically reviewed and adjusted to ensure that it doesn’t become too large.

Average Billing vs Regular Billing

Regular billing can be unpredictable, with your bill going up and down each month based on your actual usage.

On the other hand, average billing provides a more consistent monthly bill.

However, it’s important to note that with average billing, you’re still responsible for all the electricity you use - it just spreads the cost out more evenly.

The Pros and Cons of Average Billing

Average billing offers several benefits, including predictable bills that make budgeting easier.

However, it also has its drawbacks. For instance, you could end up with a deferred balance if you consistently use more energy than your average.

And if you decide to stop average billing, you’ll need to pay off that balance.

Alternatives to Average Billing

While average billing can be a great tool for managing your electricity costs, it’s not the only option.

You could also consider creating your own average billing plan by setting aside money during months of low usage to cover higher bills during months of high usage.

Another option is to look into plans that use bill credits to help offset the cost of higher usage.

Is Average Billing Worth It?

Whether average billing is worth it or not depends on your individual circumstances.

If you value predictability and ease of budgeting, average billing could be a great fit.

But if you’re a low-energy user, or if you’re not keen on tracking a deferred balance, you might prefer regular billing.

How to Switch to Average Billing

If you decide that average billing is for you, the next step is to make the switch.

This usually involves contacting your electricity provider directly and requesting to switch to average billing.

Keep in mind that you’ll need to pay off any deferred balance when you switch.

Why Choose ComparePower?

ComparePower is here to make your electricity shopping experience as straightforward as possible.

We help you compare plans from different providers, so you can find the one that best fits your needs.

And if you have questions about average billing or anything else, our friendly, Texas-based team is always ready to help.

Historical Usage Shopping

At ComparePower, we also offer the option of shopping with your home’s historical usage profile. This can help you compare energy plans more accurately and find the best deal for your specific usage patterns.

Take Control of Your Electricity Bills with ComparePower

Average billing can be a useful tool for managing your electricity costs, but it’s not the only option.

Whether you choose average billing or regular billing, ComparePower is here to help you find the best electricity plan for your needs.

Start comparing plans today and take control of your electricity bills.

Average Billing FAQs

Does average billing save you money? 

Are you wondering if average billing is worth it?

The unfortunate side of average billing is that you don’t end up saving any money at all. Each month your electricity provider adjusts your bill to smooth out any spikes in usage. 

Say it’s March, and you get surprised with some great weather. The clouds blow away, and you wear shorts and t-shirts for a week, so you crank up the air conditioning. 

You enjoyed the sun, got a tan, and now you have extra electricity charges you haven’t paid for. The difference between your average bill and your actual charges is set aside in a deferred balance. 

Your provider is happy to keep track of anything you owe them and ensure you don’t underpay, regardless of the difference. 

If you use less electricity, you can end up with a negative balance or a credit on your account. When your contract ends, your provider will apply for any credit on your account to your last bill. 

At the end of the year, you’ve still paid for all of your electricity usage and haven’t saved a dime.

Is average billing right for me? 

Average billing is a great option for someone looking for a stable electricity bill throughout the year and isn’t afraid of keeping an eye on it. 

If you have a good understanding of your usage and are stable in your home, keeping an eye on your deferred balance should be easy to avoid surprises at the end of your contract. 

You’ll have an easier time planning out your monthly finances without worrying about what the weather is doing. 

Stable electric bills could also be great for someone on a fixed income. You’ll have more consistent bills and won’t have to guess when planning your finances. 

Considering a new pool or maybe an electric vehicle in the future? You’ll want to wait on average billing if you think your usage patterns will change. 

A big change in your usage can lead to underpayment on your bill and a big deferred balance. You could be stuck with a massive bill to settle anything you owe to your provider at the end of your contract.