I’m debating the merits of my electric company’s “equalizer” plan.
The system takes a look at your usage over the past year, and then provides you with set amount to be paid each and every month. (Any underpayment or overpayment is calculated once a year. For a few months thereafter, your bill increases or decreases accordingly.)
On the one hand, it’d be nice to not dread seeing the monthly bill — especially now that summer is coming ’round. On the other hand, it means I’m overpaying a goodly chunk of the year.
Here are the (rounded) figures I’m considering:
My monthly amount would be $240. (We’ve really got to get double pane windows! Maybe if I get a bonus next year.)
Just because the universe likes to keep things tidy, exactly half of the last 12 months were over $240 and half were under. That might seem to settle the matter. Clearly, it’s 50/50 and I should just go with it.
The six lower bills ranged from $87 to $143. So half the year, we’d be paying $97-153 more than we’d actually use. Ouch.
Of the remaining six, two of them were $285 and $298. Yes, that’s a big jump from the smaller amounts. But the point of averaging is to avoid the painfully high spikes. With these two bills, the $240 payment only “saves” $45 and $58, compared to a minimum $97 overpayment half of the year.
So far, I’m not really feelin’ the savings.
The key, of course, is in the remaining four months. Those bills range from $335 to $473. Compared to that, $240 seems like a pretty good deal.
So the year breaks down as follows:
6 months: overpay by $97-153
6 months: underpay by $45-233
Of course, it works out (more or less). It’s what averages do. Looking at the numbers this way, the math seems to win out over knee-jerk, frugal-bastard syndrome.
Then again, if you’re going purely on numbers, overpaying never makes sense. A dollar now is worth more than a dollar later, so pay what you owe as you owe it, and sock away money in the cheaper months.
The equalizer plan isn’t really about pure math. It’s about budgeting — something far easier to do without a question mark looming over you each month. The stability certainly appeals to me.
But for me, a lot of this is psychology.
Having been scarred by the summer months, I find the rest of the year’s bills pretty easy to swallow. In a way, those really bad months provide me equanimity the rest of the year.
But during the bad months, I get a knot in my stomach when I see that the electric bill has come. When I actually open the bill, I’m hit with pretty severe sticker shock.
In the end, I’ll probably opt for the stability of a single, reliable number (and the subsequent lack of stomach knots) each month. Expect some grumbling, though.
What’s your take: reliability or part-time savings?