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:
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.