Average Billing for Your Electric Bill

Many electric companies in Texas offer some sort of average billing program.  Consumers like average billing because it allows them to smooth out their energy bills and have a more predictable payment every month.  To know if your light company offers average billing, refer to their terms of service document.  The programs go by many names.  They include: “average billing”, “balanced billing”, “budget billing”, “level billing”, “levelized billing”.  While there might be slight variations from company to company, most average billing plans are pretty much the same.  Here we will take a closer look at the options offered by Reliant, and TXU since they are two of the largest electricity providers in Texas.

Reliant Energy Average Billing

As with all average billing, your electric bill will not be exactly the same every month.  But it does help smooth out the ups and downs of your bill.  Here is how it works.

For the first month of average billing

Your current month’s bill will be averaged with the actual amounts of your previous eleven months of bills.  The means that the total amount of all 12 months of bills is added up then divided by 12.  This average amount is what you will pay for the month.  The amount you will pay could be higher or lower than your actual bill.  Any difference between what you pay and what your average bill is will be added to a “Deferred Balance”

For each month after the first

Beginning with your second month of average billing, you will repeat the process described above.  However, Reliant will then add 1/12th of the Deferred Balance carried forward from the prior month.  This could increase or decrease your total bill slightly depending on whether your deferred balance is positive or negative.

Reliant Energy Balanced Billing

Balanced billing is another option by Reliant designed to help customers manage their electricity budget.  With balanced billing, the bill you pay will be exactly the same each month.  Periodically this amount will be adjusted to bring it inline with your actual billed amounts. Here is how it works.

When you begin the balanced billing option, your average bill for the previous 12 months will be calculated.  This is the amount you will pay each month for the first 6 month.  After the first 6 months, there will be an adjustment if your actual bills were more than 10% different than the past average.

After the end of the first 12 months, you have options.  If your actual bills for the month were higher than the amount you paid, you can either pay off the balance or roll it into the calculation of your balanced bill for the next 12 months.  This will make your bill go up for the next 12 months.

If you paid more than the actual bill amounts for the previous year you can have that credited to your bill.

TXU Average Billing

TXU’s average billing option is very much like that of Reliant.  Each month TXU may adjust your average billing payment by as much as 10% of the cumulative balance carried forward from previous month.  This works out to be about the same as the 1/12th calculation used by Reliant.

If you are behind on your payments with TXU, you may still be able to enter their average billing program. You will be asked to pay up to half of the delinquent amount upfront to get into the average billing program.  They will ask you to pay the remaining balance in 5 installments or they will add it into your average billing calculation to be paid off over time.

If you owe TXU for delinquent past payments, they may place your address on a switch hold. This prevents you from switching to another electricity provider while you still owe money.

TXU does not have a balanced billing payment option like Reliant does.

Important notes about average billing

Average billing doesn’t affect how much you ultimately pay for your electricity.  It simply smooths out your bills making them a little more predictable.  This can make budgeting easier.

If you don’t have 11 months of history for the address when you start the average billing program, the electric company will use historical usage at the service address to calculate your average billing.

If your contract ends, you switch providers, or your power is disconnected, you will still be responsible for paying any remaining balance in your deferred balance.

When would I not be eligible for average billing?

If you are enrolled in an electric plan that supports a solar buy back plan, you are probably not eligible for average billing.  Again, check the terms of service for your electric company.

Prepaid electricity companies don’t generally offer average billing programs since you have to pay for your power in advance.

If you are behind on your payments, you may be ineligible for average billing.  Like the TXU example, however, some companies may allow you to enroll in average billing if you make arrangements to get the delinquent amount paid off.

Average Billing Example

Here is an example of what your monthly electricity bill might look like under an average billing program.

Average Billing
A sample of what your monthly bills might look like with average billing.

Bill Amount
Billing Amount
For the sake of the calculation, we have assumed the previous 12 months of actual bills were the same as those used in the example.