Utilities often offer some sort of equal billing plan that allows customers to pay fixed payments each month. This requires the utility to guess each customer’s consumption for the year. Any estimation error gets corrected at the end of the billing year. But, what effect does equal billing have on consumption?
Ellen Roseman reported that natural gas utility Enbridge underestimated customer consumption over the past year by a wide margin. This has led to a predictable outcry from customers unhappy with the large bill they received to cover actual gas consumption. Lost in the discussion of whether Enbridge should have done a better job is the negative effects of equal billing (called the Budget Billing Plan by Enbridge).
In general, people like predictability in the costs they face. It’s easier to plan exactly how much money will be left out of every pay cheque if all monthly costs stay constant. However, for many people, once a monthly amount is set, the mental link between consumption and having to pay for that consumption is severed.
It becomes far too easy to nudge the thermostat up another degree in the winter if you won’t have to pay the added cost until the next summer. When monthly billing is based on actual consumption, the delay from setting the thermostat to seeing the higher cost is only a month or less. The shorter this delay is, the better most people are able to control their consumption.
The hue and cry over the large Enbridge bills is evidence of consumers’ ignorance of their gas costs. If these people had faced unpleasantly high bills sooner, some may have chosen to reduce their use of natural gas sooner.