Unexpected price spikes in home energy bills have been a focus for legislators this session, but a new study says even programs designed to lessen the impact of your monthly bill could still be impacting your wallet.
This week the state senate voted to ban variable rate electricity contracts, which entice customers with low introductory costs only to jack up the price months later. But it's not just variable rates that could be separating you from your money.
Steven Sexton is an assistant professor at Duke University, and the author of a new study examining budget billing: a voluntary program offered by both Eversource and United Illuminating that spreads your bill over the course of a year through a flat monthly rate based on recent usage and bills.
"Households that enroll in these programs, which are designed for low-income households, it ends up causing them to increase their electricity consumption," Sexton said.
For his study, Sexton looked at a South Carolina utility, examining bills over a 16-year period for hundreds of thousands of customers. He found that on average, enrollment in budget billing caused a 6.73 percent rise in electricity consumption for residential accounts.
"The programs might still be providing a benefit to these low-income households by allowing them to smooth their consumption, so that they don't have, for instance, trouble making a payment in a month where they have really high electricity consumption," Sexton said. "But it has this perverse effect of also causing them to consume more electricity."
That's because of something Sexton calls price salience. "When customers aren't confronted with the prices of the products they consume, those prices sort of recede from their attention. They become less prominent in their decision making," he said. "As a consequence, consumers will tend to increase their consumption."
Here in Connecticut, about five percent Eversource's customers are enrolled in budget billing. For United Illuminating, that number is about four percent.
The takeaways, Sexton said, are buyer beware and always pay close attention to your monthly bill.
