Budget Billing for Utilities: What the Levelled Payment Buys, and What It Costs, Against Smoothing the Bills Yourself

Utilities offer budget billing — a level monthly payment in place of seasonal bills — as a budgeting convenience. This paper asks what the convenience consists of, by simulating twenty-five years of seasonal utility costs (mean USD 118.02 a month, standard deviation USD 47.96, winter peaks to USD 230.49) under budget billing and under the do-it-yourself equivalent: paying the annual mean into a household smoothing pot and meeting each bill from it. The self-smoothed outlay has a standard deviation of USD 0.00 — zero by construction — and the pot it requires averages USD -32.18 and goes negative in 58.5% of months. Budget billing achieves a similar levelling (outlay standard deviation USD 4.37) but the float sits with the utility, averaging USD -32.03, and where a USD 2 monthly fee applies it totals USD 600 over twenty-five years. The service is real but replicable in an afternoon; its true product is not smoothing but the removal of the small discipline smoothing requires. The study is simulated, not measured. SIMULATED, NOT MEASURED.