Most of us are used to receiving energy bills issued by our retailers each month or quarter, detailing the energy consumed over each billing period and the price charged for that consumption.
It's now becoming more common that energy retailers will offer bill smoothing or other forms of scheduled payment or pre-payment plans, where you'll pay a set price per week or fortnight and receive monthly statements, which may well be in credit, rather than the standard bills that we're all more familiar with.
Billing period vs payment cycle
Whether you pre-pay or post-pay, there will be a regular cadence to your billing period, where meter readings are taken on a regular schedule, determining what you will be charged for your energy consumption.
Historically, the billing period for electricity has been quarterly, and bi-monthly for gas. With the introduction of smart meters that can be read remotely, monthly billing cycles are becoming increasingly common for electricity and gas.
It's also becoming more common for retailers to offer bill smoothing and other forms of scheduled payment plans, where the payment cycle can be separate to the billing period.
It can be confusing for energy consumers to understand how these two separate cycles interact.
Scheduled payment plans are usually designed to deliver pre-payment of the energy bills so that energy consumers on these kinds of plans may have a credit balance at the start of each billing period, and if the scheduled payment plan has not been carefully calibrated, that credit balance can grow over time. If there is a debit balance, the retailers will generally be quick to increase the scheduled payments to ensure that the costs associated with your energy consumption are fully covered and paid for in each billing period.
This can result in seemingly low final billed amounts because scheduled prepayments are present.
No matter what is your payment cycle, and no matter if you have accrued a debit or credit balance at the start of each billing period, Bill Hero system focuses on the actual costs associated with your energy consumption in each billing period, and will compare your current plan, using those costs, to see if there is any alternative plans available to you at a lower price.
This is an example of bill price vs comparison price, which we cover separately in this Knowledgebase.