Automated electricity bill payments cause people to consume more energy

electricity bill
CC BY-SA 2.0 brendan.wood

A new study from Duke University's Sanford School of Public Policy says that something as simple as how we pay our electricity bills is causing Americans to use more electricity and, in turn, increasing our carbon emissions.

Published in the journal “Review of Economics and Statistics," the study of 16 years worth of billing records from Santee Cooper, a publicly owned South Carolina utility, showed that residential customers that used automated bill pay consumed 4 to 6 percent more electricity than those who didn't and that commercial customers used 8 percent more. The most disheartening statistic was that low-income people who had enrolled in an automated budgeting program that helped spread the cost of their electricity use throughout the year, used 7 percent more electricity, meaning they spent even more than they would have if they had stuck with a typical billing program.

Autopay programs are convenient, they ensure that you never miss a payment and they save the utilities money too, but they also cause what the authors are calling "reduced salience" of electricity costs. Customers aren't paying attention to the cost of the electricity they use every month, so they're far less mindful of their energy use and end up consuming more.

While it may seem like a small increase for this sample of South Carolinians, it's highly likely that studies of utilities around the country would have the same results. Two-thirds of U.S. consumers with recurring bills use automatic payment option and the scary thing is that if this holds true for the whole country, increased power consumption from auto-paying would be 15.8 billion kilowatt hours, equal to the annual electricity use of 1.5 million typical American homes.

The extra emissions from burning more fossil fuels would have created an estimated 8.6 million tons of carbon dioxide emissions in 2010, the last year of the study, and basically negated any energy savings that demand-reduction programs have been seeing.

"Autopay programs are likely to have a similar effect on water consumption," said study author Steven Sexton, assistant professor of public policy and economics. "Perhaps an increase in price awareness could contribute to solving California's water shortage. Many economists have noted that the prices California charges for water are too low, but higher prices won't induce conservation if consumers are ignoring them."

The one good bit of news is that this problem is easily solvable. If customers enrolled in autopay programs had to click a "confirm payment" button or at least click a link in an email every month that made them quickly view their bill before the transaction was processed, it could raise awareness of how they were using energy and the associated costs.

“It still doesn’t require very much attention or time from the consumer but could increase price salience,” Sexton said.

This goes to show that mindfulness in all things in life, even how we pay our utilities, always results in better outcomes.

Automated electricity bill payments cause people to consume more energy
A new study says it's a case of out of sight, out of mind, but it has serious consequences.

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