Consolidated Billing.

Utility consolidated billing (UCB), also known as single billing, is a billing scenario where the local utility company displays retail energy supplier charges on the utility bill.

How Does It Work?

When a customer elects to sign up with a retail energy supplier for electricity or natural gas supply, then the supply portion of their total energy bill is handled by the new provider. In many states, retail providers are electronically integrated with local utilities so that the utility can post the supplier charges directly on the customer’s utility bill.

When a single bill is issued by the utility company, the utility collects both the distribution and supply charges from the customer. The utility, then, in turn, sends the retail supplier its portion of the total bill.

Why Would Utilities Handle Billing For Suppliers?

Great question! Utility companies offer consolidated billing for a fee to suppliers. That fee can range anywhere from 1-3% of the total supply charges on the invoice.

Many suppliers elect for UCB since it makes things easier for the customer to receive a single bill. In fact, with UCB customers still, simply pay one bill each month to their local utility companies.

Industry Insider Fact: Did you know that in some states, utility companies even offer a program called Purchase of Receivables (POR) for utility consolidated customers? In this setup, utilities actually purchase the receivable from the supplier for the customer’s supply charges at a discounted rate. The utility then collects the total amount from the customer on the single, UCB bill.

This is a great advantage to suppliers since they do not have to worry about collecting money from customers that become past due.

Pros & Cons

There are pros and cons to utility consolidated billing for energy customers:

Pro Con
One bill to pay Rates are higher
Simple accounting Shut off notice for unpaid bill

Although UCB makes accounting easier for customers, there are some downsides to this billing option. First, supplier UCB rate quotes tend to be slightly higher considering the utility company’s fee to offer a single bill and collect the receivable. Next, if the customer becomes delinquent on its utility bill, the local utility company reserves the right to shut off energy supply to their customer’s building.

Dual Billing.

This is an alternative billing option offered by suppliers where the provider will issue its own bill for energy supply charges. In a dual billing scenario, the customer receives two energy bills each period: (1)a bill from the local utility for delivery charges, and (2) a bill from the provider for supply charges.

Why Dual Billing?

Suppliers began to offer customers dual billing options so they could avoid utility single billing fees and pass the savings to the customer. In addition, dual billing allows the supplier to negotiate more flexible payment terms with the customer. Dual billing is often seen with larger commercial and industrial customers.

Pro’s & Con’s

There are several pro’s and con’s to dual billing for commercial energy customers:

Pro Con
Special payment terms Can be confusing
Avoid utility shutoffs for late payments More complex accounting

 

Larger customers sometimes elect for dual billing for cash flow reasons. Since the supply portion of the utility bill is usually the largest, larger companies can get better payment terms with suppliers than what the local utility might offer on a UCB scenario. Also, the supplier cannot shut off a customer’s energy supply for late payment of a supplier bill.

Want To Learn More?

Interested in learning more about how to structure billing for your customers? Our team of energy experts helps guide our sales partners on the best way to structure deals. Contact us today to learn more about growing your energy broker career!

Contact Us Today

Become an Energy Partner.

Book an appointment to discuss your future in the energy business.

Contact Us
(201) 374-9641

Related Posts

Get in touch with us today.

  • Hidden
  • This field is for validation purposes and should be left unchanged.