How Does an Electric Budget Plan Work?

A budget payment plan allows customers to pay a set amount on their electric bills each month for 12 months. To determine the payment amount, the electric company totals up the customer's electric bill for the previous year and averages it out into 12 monthly payments. At the end of the 12 months, the electric company compares the payments to actual usage and gives the customer a bill or a credit for the difference.

Customers with their accounts paid up and in good standing are usually able to get onto an electric budget plan. The customer should contact customer service at the electric company and ask about getting enrolled in the plan. Some companies also have websites where customers can log in and enroll in the plan. The company will require a short time to estimate payments for the budget plan and contact the customer with approval. The customer's next bill should reflect the payment plan.

At the end of the budget plan or when a customer chooses to go off of the plan, the electric company compares usage to payments. During the course of the payment plan, the meter reader will continue to check the customer's meter each month. This information allows the company to provide the customer with an accurate bill or credit in the final month of the plan. Some electric companies also check electric usage against the estimated usage amount for the plan every few months. If average electric usage goes up or down significantly, the company will adjust the payments accordingly and notify the customer. This prevents a large bill at the end of the year.

Some electric companies also provide customers with alternative payment plans for accounts in arrears or for customers with low incomes. A percentage of income payment plan allows customers to pay a percentage of their income towards the electric bill each month without it being shut off. A military deferred payment plan, offered to families of those serving in the military, allows the family to defer paying all or part of their bill until the until the service member returns home. An extended payment plan for accounts in the arrears allows customers to break up that past-due bill into smaller monthly payments for three, six or nine months, depending on the company. This payment is added onto their regular bill during those months.