Key Takeaways
- Average billing evens out costs by calculating your 12-month electricity usage, dividing it by the number of months, and charging a consistent monthly amount instead of fluctuating bills.
- Deferred balances track differences between what you pay and what you use, with adjustments made monthly and a final credit or charge at the end of your contract.
- Predictable payments aid budgeting since average billing smooths seasonal spikes caused by Texas weather, helping you plan expenses without surprise high bills.
- Average billing does not cut total costs because you still pay for every kilowatt-hour used, but it spreads payments evenly for stability.
- Enrollment is simple through your provider and usually free, though you must settle any deferred balances before switching plans or providers.
Ever opened your electricity bill and thought, wait… how is it this high? You’re not alone. Living in Texas means dealing with wild weather swings—triple-digit summers, surprise cold snaps, and everything in between. And with those changes, your energy bill can be just as unpredictable.
That’s why some Texans turn to average billing. But what does that really mean? How does it work with your electricity provider? And most importantly—will it actually help you avoid those shocking bills? Let’s break it down in a way that makes sense, so you can decide if it’s the right fit for you.
What is Average Billing?
Average billing helps you keep your monthly electricity costs more predictable by spreading out your payments over time. Instead of facing steep bills during high-usage months and lower ones when you use less, this option calculates an average based on your usage history. That way, you pay a more consistent amount each month, making it easier to budget and avoid seasonal bill spikes.
How Does Average Billing Work?
Ever wish your electricity bill wasn’t such a rollercoaster? Average billing can help smooth out the highs and lows, making your monthly payments more predictable. Here’s how it works:
- Your electricity provider calculates your average monthly usage based on past bills.
- Instead of paying for exactly what you use each month, you pay a steady amount.
- A deferred balance keeps track of any differences, adjusting your bill over time.
Now, let’s break it down.
Your Retail Electricity Provider (REP) looks at your electricity usage over the past 12 months—or however much history they have. They add up those bills and divide by the number of months to find your average usage in kilowatt-hours (kWh). If they only have six months of data, they divide by six instead.
Once they have that average, they multiply it by your current electricity rate (in cents per kWh). That number becomes your new monthly bill, helping you avoid big seasonal spikes.
But here’s the thing—your actual electricity use still varies. Some months, you’ll use more than your average; other months, you’ll use less. That’s where your deferred balance comes in.
Each month, your REP tracks the difference between your average bill and your actual usage. To keep things fair, they adjust your bill by adding or subtracting 1/12th of that balance each month.
At the end of your contract:
✅ If you’ve overpaid, your REP credits your account.
❌ If you’ve used more electricity than you paid for, you’ll owe the difference.
Average billing won’t save you money, but it can make budgeting easier by keeping your bills steady. If you prefer predictability over surprise charges, it might be a good option for you!
Is Average Monthly Billing a Good Idea?
Texas weather can be unpredictable—scorching summers, chilly winters, and everything in between. That means your electricity bill can jump up and down, too. If you’re looking for a way to keep your monthly bill more steady, average billing might help. But is it right for you? Here are a few things to think about:
- Easier Budgeting – Average billing spreads out your energy costs over the year, so you don’t get hit with big spikes during extreme weather.
- No Extra Fees – Many Texas electricity providers offer this option for free, so you won’t have to pay to enroll.
- Fewer Surprises – Instead of worrying about high bills during the hottest or coldest months, you’ll have a more predictable payment each month.
Keep in mind that average billing doesn’t lower your overall costs—it just evens them out. Some providers may also adjust your bill later if your actual usage is higher than expected. Before signing up, check with your provider to understand the details.
Average Billing vs. Regular Billing: What’s the Difference?
When it comes to paying for electricity, Texans typically have two options:
- Regular billing – Your bill changes every month based on how much electricity you use. That means higher bills in the summer when your AC is working overtime and lower bills in milder months.
- Average billing – Instead of those ups and downs, your provider calculates an average based on your past energy usage, giving you a more predictable monthly bill.
Sounds simple, right? But there’s a key detail to keep in mind—average billing doesn’t reduce your overall electricity costs. You’re still paying for every kilowatt-hour you use; the difference is that the cost is spread out more evenly over time. This can make budgeting easier, especially during peak seasons when electricity demand (and prices) tend to spike.
Is average billing the right fit for you? That depends on your energy habits and whether you prefer predictable payments over month-to-month fluctuations.
Thinking About Switching to Average Billing? Here’s How
If average billing sounds like a good fit, making the switch is pretty straightforward. The first step? Reach out to your electricity provider and ask to enroll in their average billing program. Most providers offer this option, but the details can vary, so it’s always good to double-check.
One thing to keep in mind—if you have a deferred balance (meaning you’ve been carrying over unpaid charges from previous bills), you may need to pay that off before switching. Your provider can walk you through what to expect and how the transition will work for your account.
What Happens at the End of My Contract with Average Billing?
The end of your average billing contract can go one of two ways—you either get a little extra money back or a final bill to settle. Here’s what to expect:
- If your provider owes you money (negative balance): That’s a win! You can apply the credit to future bills if you stay with the same provider, or you can request a refund. If you switch providers, your current provider is required to pay you what they owe.
- If you owe your provider money (positive balance): This is where it can get tricky. If you decide to switch, you’ll need to pay off the remaining balance first. Some providers may offer a payment plan, even if you leave, or they might roll your balance into a new average billing plan if you stick with them.
Why this matters: A large unpaid balance can limit your choices when shopping for a new electricity plan. Keeping track of your deferred balance throughout your contract can help you avoid surprises.
Take Control of Your Electric Bills with Shop Texas Electricity
Keeping up with your electricity bill shouldn’t feel like a rollercoaster. Average billing can help smooth out the highs and lows, but it’s not the only way to take control of your energy costs. The real game-changer? Finding the right electricity plan that fits your lifestyle—and that’s exactly what Shop Texas Electricity helps you do.
- Browse and compare electricity plans from trusted providers, so you get the best deal for your needs.
- Say goodbye to hidden fees and confusing rates—everything is upfront and easy to understand.
- Take charge of your energy bill with a plan that works for you, not against you.
Ready to find a plan that makes sense? Start comparing today and make those electricity bills a little more predictable!
