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Utility companies: How do I set up my new home?

Peter Miller
The Mortgage Reports contributor

In this article:

Wondering how you get utility companies to transfer services to your new home?

When you buy a home, you also buy a package of monthly bills, and you’ll want them in your name. These include:

  1. Gas, electricity, or some alternative like propane
  2. Water
  3. Trash collection

You may also need things like satellite television and Internet, depending on your equipment and needs.

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Utility companies are a big part of real estate, they literally make our modern conveniences possible. Without them, we’d all be living off the grid. That’s a prospect which most of us would find unappealing and impractical.

Utility companies are monopolies because there are some situations where competition does not make a lot of sense. Imagine a community with two sets of water pipes. The maintenance costs and monthly charges would be huge. And because utilities are monopolies there are public service commissions. In the best cases, they exist to hold down rates and push for better service.

Utility companies and ownership

You can owe money to both investor-owned utilities and community-owned utilities. The big difference between the two is this: Don’t pay your bill and a private company is likely to cut off your service. When you get a bill from a government-owned utility it’s actually a lien against your home. Don’t pay and you might face legal bills and potentially even foreclosure.

Utility monopolies are now facing competitive pressures. There used to be one phone company for each jurisdiction but with cell phones, such monopolies are effectively dead. Cable companies face competition from satellite firms. Solar and wind power are reducing the need for electric utilities.

Regardless, as a homeowner, you still need to interact with local utilities. There is the monthly bill to pay but in addition, there is also the need to set up and close accounts. While bill paying has largely evolved – you can pay bills online in most cases – the process of opening and closing accounts seems unchanged since the days of Thomas Edison and Alexander Graham Bell.

Utility companies and selling a home

If you currently own a home and are about to sell then it makes sense to review monthly bills and sort out the invoices for electric, gas, water, cable, trash and internet service. Each will have contact information and account numbers.

The usual practice is to arrange for utility services to be transferred on the day of settlement. This good intention turns into a merry adventure if closing is delayed. The solution is to call the utility and hope that re-starting service does not involve either fees or 12 trucks in the front yard.

Real estate brokers can be very helpful with such transfers because they likely have utility contact information. Also, they know how utility transfers are handled locally.

Long, long ago when you first ordered utilities there is a very good chance that you had to pay a deposit. Since your service is ending ask for the return of your money.

The closing agent will order an end to any government-owned utilities. At the same time, money from the proceeds of the sale will be held in an escrow (trust) account to assure that the bill is paid. Any left-over money will be sent to you after closing.

Utility companies and buying

As a purchaser, the odds are good that your need for utilities is fairly simple. In those cases where a local utility is a monopoly, you have no choice. Contact each one and set up service to take place the day of closing. They will check to assure that your order jibes with the current owner’s termination request.

Where you likely have a choice involves such non-local services as Internet and cable. Ask what services the sellers are now using. What have been their experiences? What about costs? Break-downs? Quality?

The special world of trash

Trash removal is generally considered a municipal function but how to pay for it varies. In some cases, garbage collecting is a cost paid for by property taxes, which come automatically with property ownership.

However, trash collecting is often separate from property taxes. It’s a line item on tax bills in addition to property taxes. Sometimes it’s actually a separate monthly bill. Politicians use this system because they can raise trash collection fees and then brag that they have “not increased property taxes.” When trash removal services are billed monthly you will likely have to sign up for the service.

What if you’re off the grid?

If you’re really off the grid, not using any utilities or local services, you probably won’t need to pay for shareholder-owned services. However, you’ll get billed (taxed) for services provided by state and local governments. The logic is that everyone should chip in for general services, just as individuals without children must still pay for schools.