Budget-plan math

The prospect of paying for this winter’s heat next August is kind of a drag. But it’s a drag that can help make ends meet now if your budget is stretched to the limit.

Allow us to crunch the numbers:

  • If you heat with oil and pay as you go during the five-month Philly heating season (roughly November through March), your monthly bill could average about $495 — the $2,475 projected average for the winter, divided by 5.
  • If you sign up for a budget billing plan from your oil company to stretch the costs over 12 months, you’d pay $206.25 a month ($2,475 divided by 12), freeing up nearly $300 a month during the winter months to meet other household expenses.
  • If you pay as you go for natural gas during the five winter months, the monthly bill to heat the typical house in Philly would be about $394 — the $1,970 projected cost for this winter, divided by 5.
  • With a budget plan that spreads gas payments over 12 months, the monthly tab would be $164.17 ($1,970 divided by 12), freeing up about $230 a month this winter to pay other bills.

Budget plans make sense for consumers whose top priority is a stable monthly payment and for those with no financial cushion, said Nils Frederiksen, a spokesman for the Pennsylvania Attorney General’s office. “There may be financial situations where you just can’t absorb a sudden surge in bills over the winter.”

If you can handle the surges or save in advance for your winter heat — earning interest on the money you’re saving — it probably makes more sense to pay as you go instead of stretching things out, he said.

To set up a budget plan with PGW, call 215-235-1000. To set one up with PECO, call 1-800-494-4000.

If you heat with oil, call your supplier to ask about budget billing. Frederiksen said a few small suppliers went out of business during last year’s oil-market gyrations, leaving customers in the lurch. It’s possible that market swings and the credit crunch could threaten others this year, so consider the company’s stability before you sign a contract.

Suppliers that have oil-storage facilities and those affiliated with a chain may be able to weather bad times better, he said. A long, stable history would be another feather in their cap.*