Budget Billing Plans in Alberta

To help customers handle the higher costs of winter months, many energy retailers in Alberta offer “budget billing” or “equal payment” plans. These plans take the customer’s estimated annual energy costs and average them out into equal monthly payments. Is a budget billing plan right for you? Find out more

Why Choose the Budget Billing Option

Energy prices tend to rise in times of high demand, such as extreme hot or cold weather periods. Some customers may find it difficult to manage big changes in their bills, or may simply prefer to pay a set amount every month for household budgeting purposes.

How Budget Billing Works

Through budget billing (or "equal payment") plans a customer's estimated total annual energy costs are averaged over the year. Depending on the retailer, the budget billing payment structure may take one of two forms:

• 11 equal monthly payments with the 12th month used to settle any differences between actual and estimated costs, or
• 12 equal monthly payments, with any overconsumption (actual consumption is greater than estimated) rolled over and factored into the next year's bills

Some energy retailers propose a third option for budget billing, in which customers pay a flat monthly fee as long as their annual consumption doesn't go over a certain limit. This is a slightly different system that requires different considerations

Most energy retailers base the estimated annual costs on the following factors:

• Previous consumption, either for the site or the customer. Some retailers therefore require a certain amount of previous history (at least three months, for example) before allowing customers to switch to budget billing plans. Other retailers do not require this, and will base previous average usage estimates on the size and number of appliances in the house, or on historical records for the address if accessible.
• Average historical distribution charges. These are regulated, and usually do not change dramatically year-by-year
• Forecasted energy (gas and/or electricity) prices for the next 12 months
• Historical weather (temperature) for the area. Residential energy usage is closely tied to weather conditions (especially gas), with large spikes in temperature leading to greater consumption

Most energy retailers set a specific date for the start and end of the budget billing period, though usually customers can start at any time in the year. Customers who start on a date other than the predefined start date will have their billing plan in less than a year, at the same time as all customers on the budget billing plan.

What Changes With Budget Billing?

Customers enrolled in a budget billing plan will continue to have their meter read by their local utility. As prices and consumptions are based on predictions of volumes and prices, customer energy costs will be measured and compared with what was estimated. Some energy retailers may even make adjustments in monthly amounts partway through the year if there is a large difference between estimated and average costs.

What if There is a Large Credit or Balance Owing?

Customers with a large balance owing or credit to their bill (three times or more than the budget amount) should contact their energy retailer to see if the monthly amount can be adjusted. Customers with a large credit may be able to skip a payment, for example. Customers with a large amount owing will likely want to have their monthly amount increased, in order to avoid a large settlement payment at the end of the year.

Is Budget Billing Right for Me?

There are a few factors to consider before signing up for a budget billing plan. First, as many retailers use automated billing systems for budget billing, monthly payments are always necessary, even with a credit. Not paying a bill might lead to the retailer starting collection actions (such as late payment fees or disconnection notices) even if there is credit on the account. Customers must therefore always pay the requested amount, and contact their retailer if they have a problem with their bill. Customers who do not pay their monthly amount may be removed from the budget plan and required to settle their account.

Second, customers who leave the budget plan partway through the year (whether by choice or as a result of not paying their monthly bill) will have to settle their account. Depending on the time of year, and whether they are running a credit or a debit, customers may have a considerable amount owing on their account. In some cases retailers will make payment arrangements, if the amount owing is very large and the customer has contacted them directly.

Third, customers should understand how their budget bill information is presented on their bill. No regulations exist on how budget bill information is presented, and each retailer presents it differently. Customers should contact their energy retailer for explanations if they do not understand

Other Budget Plans

Some energy retailers offer a slightly different budget billing plan, in which customers pay an equal amount per month for all consumption up to a certain annual limit. This option requires slightly different considerations, and interested customers should find answers to the following questions before signing up:

1. What is the annual limit for consumption, and how much is charged for overconsumption?
   The average Alberta household uses about 600 GJ gas per month, or approximately 120 GJ per year, and approximately 7000 kWh electricity per year. However, the amount that an individual household may be considerably more or less than this amount, depending on the number of people in the household, the number of energy-using products and appliances they use, and their energy efficiency. Customers enrolled in a budget plan that allows up to a certain limit annual consumption won't receive a credit for consumption under the annual allowance, but will have to pay for whatever energy they consume over the limit. Interested customers whould therefore be aware of what the annual limit is, and how much they will be charged for any energy consumption above the annual amount.
2. What are the administration fees for this plan?
   This type of budget plan is not offered by any of the regulated rate companies. Administration fees are therefore not regulated by the Alberta Utilities Commission, and may be higher or lower than the competition.
3. Are there early exit fees?
   For this type of budget plan the customer is typically locked in to the contract for 12 months, and leaving early may involve early exit fees. If customers have consumed over their annual limit they will also pay for whatever additional energy they've used. Customers who are interested in this type of budget billing plan should be sure that they will not be moving out of the area within the next year.