Covington utility customers could soon be able to pay a set monthly utility bill and avoid the cost fluctuations that often come during bouts of extreme weather.
The Covington City Council voted Monday to offer a levelized utility billing, or budget billing, system and hopes to institute the program by July 1.
Any customer, even one with past due bills, who has been in his home for at least 12 months would likely be eligible for the program.
Here’s how the program would work: the last 12 months of a customer’s utility payments would be averaged. The customer would then be charged that average payment each month for the next 12 months.
However, if the customer’s true cost in the next year was higher than what he paid through levelized billing, the customer could then have to pay a balloon payment at the end of the year to make up the difference. Conversely, the city would owe the customer if the customer actually racked up less in utility costs than what he paid.
In order to reduce the potential of a balloon payment, the city will likely charge a 10 percent monthly overage on top of the levelized amount. For example, if a customer’s monthly bill was $400, they would actually pay $440 per month.
This not only protects against a customer using more energy in the next year, but also protects against the price of electricity or gas increasing.
City Manager Steve Horton said the city is still exploring what percentage the “hedge number” will be, but it will likely be 10 percent or less.
The city may also decide to simply roll the balloon payment over into the next year’s average, if the customer again chooses to use levelized billing.
Chance for past due customer to catch up
Another benefit for customers who are past due is that under levelized billing their balance would be rolled into their average monthly payment. Of course, the payment would be higher than normal, but this would allow the customer to catch up on a past due amount with having to pay additional late penalties.
However, if a customer with a past due balance misses a payment under levelized billing, they would likely be kicked out of the program.
Mayor Ronnie Johnston has been heavily promoting levelized billing because he saw many people in the city during his campaign trail who live on a fixed income. Levelized billing is also called budget billing, presumably because it allows a person to accurately budget their monthly utility expenses.
Johnston said he hoped the program would actually help the city collect more of its past due balances than it otherwise might.
The city has previously considered levelized utility billing in the past, but the old billing system was not able to handle the payment system.