What you need to know before switching energy providers.
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By Thad Warren
If you have been shocked by increases in your electric bill, you're not alone. Electricity rates have been increasing at an alarming pace.
For example, Texas electric rates have increased significantly. Other states are also experiencing similar price hikes.
Most people don’t think about their electric bills, but when you pair other increased costs with skyrocketing electric bills you feel it where it hurts. Your wallet.
So what can you do about it?
If you’re in a regulated state or use an electric co-op your only real choice is to reduce your usage and make your home more energy efficient.
If you’re in a deregulated state like Texas or Pennsylvania you can switch providers or plans to find a more cost-effective rate. Careful though. If you signed up for a plan a year ago it may be hard to beat your old rate since the market is now much higher.
If your plan is expiring and you are forced to shop for a new plan you may end up paying more than your old rate. But if you shop carefully you can still save some cash by choosing the best plan for your home.
Read on to learn everything you need to know before you switch electricity providers.
If your home or business is in one of the 13 deregulated electricity states you may be able to shop for an electricity plan. There are some caveats though. Some areas may be serviced by co-ops or municipalities. For example, Texas is widely deregulated but the city of Austin is not.
Additionally, some areas allow businesses to shop or plan, but not homeowners.
If you’re not sure if your home or business is in a deregulated area enter your zip code here.
Switching electricity suppliers is simple in theory. You find a supplier with a good rate and you sign up. Boom! Lower electric bills right?!
In some cases YES! In others not so much. Here’s what you need to do to switch providers.
If you’re currently enrolled in a plan you need to check to see if you have an early termination fee. This varies depending on the company and plan. Sometimes there isn’t a cancellation fee. Sometimes it can be several hundred dollars or more.
If you’re not sure about the language in your plan you can call your supplier to check exactly what it will take to cancel.
If your plan is expiring then you will choose the start date to align with your expiring plan. So if your plan expires on August 31, you would choose a start date of September 1.
Your energy usage is the biggest factor that will affect your rate. This is also where people tend to make the most mistakes.
Many plans will advertise a rate that’s for a very specific (usually small) amount of energy usage. In reality, the rate is much higher for the average home.
You can find your usage in two ways. The easiest way is to enter your zip code here. Our system will connect to your utility and pull your historical usage.
If you’re not in an area that’s covered by our system, you can find past kWh usage on your electric bill. Use this to dDetermine an average monthly usage and use that when you’re shopping.
You’re ready to find your new plan. So just pick the plan with the lowest price per kWh, right? Not quite.
There are a lot of options and gimmicks suppliers like to use that are not always in your best interest.
Free nights and weekends, variable rates, and incredibly high termination fees just to name a few. Sometimes these plans make sense to the right person, other times they don’t.
Let’s talk about free nights and weekend plans as an example. These plans sound enticing but they usually have a significantly higher rate during non-free hours. Instead of paying 13 cents all the time, you might pay 24 cents during the day.
If you’re cranking your AC and running various appliances throughout the day you may come out behind. But, if you don’t run the AC or appliances during the day and make an effort to use energy during your free hours, you could save.
We’ve spent the last 6 years demystifying this process. Our marketplace is free of tricky plans and gimmicks. If you’re still not sure, our team of non-salespeople can help point you in the right direction.
Once you have found a new shiny electricity plan that checks all the boxes, it is time to switch. All you need to do is enroll with the new energy supplier. Your old electricity supplier will be alerted that you have switched energy suppliers.
Behind the scenes, your new energy supplier will change your energy supply to their services. You can expect to get notifications when your power is switched to the new plan and when you should expect your new bill.
Utility companies, also known as Transmission & Distribution Service Providers (TDSPs) or Electric Distribution Utilities (EDUs), physically deliver gas and electricity to your home or business. These utility companies own and operate the utility poles and power lines that facilitate the distribution and transmission of energy, and are responsible for managing emergency power restorations and repairs.
On your electric bill these charges are set by your utility. Even in deregulated markets, you can’t lower these rates.
Electric suppliers, or Retail Electric Providers (REPs) as they’re known in Texas, serve as a middlemen between the TDSPs and the end consumers.
Energy providers purchase large volumes of electricity at wholesale value and set the terms and rates for customer use. It’s the electric suppliers that typically provide customer service and billing.
These rates are the rates that you can shop for and compare.
While there may be early termination fees associated with ending a contract with an energy supplier, it’s the right of the consumer to switch energy providers at any time.
Typically it makes sense to switch if the market rates are lower than what's on your current contract — as long as your early termination doesn’t offset the savings.
Review your current contract to better understand your existing rates, terms, and penalties before you find a new supplier. It tends to be better for your wallet if you stick with your current power supplier through the end of the contract before making the switch.
If your reasons for switching warrant a breach of contract, ask your new electric company if they can assist with any related fees — or waive upfront costs.
At the end of the day, the most important thing to consider when you’re switching energy suppliers is the potential for savings.
At EnergyBot, we analyze and track energy rates in competitive energy markets to help you find the best value for your home or business. If you find the right provider that delivers the value you need, we suggest securing their services and reaping the benefits right away.
Switching energy providers only takes a few minutes. After you enroll with your new provider the actual switch of energy supply happens behind the scenes on your set start date.
You will not have any power disruptions or outages. The only thing you will notice is the difference in the company billing you.
Switching energy providers is simple. Having a recent electric bill is handy to know what you’re currently paying. Other than that, you just need to set aside a few minutes to compare rates.
If the rates you see are higher than your current plan and you’re not in a hurry to switch, just wait.
*Pro tip: Energy Bot offers rate alerts. When prices drop we’ll remind you to come see if switching is right for you. Sign up for rate alerts here.
Safeguard your home or business against unforeseen costs by checking for contract stipulations that may be associated with the following:
We have helped thousands of businesses and homeowners seamlessly switch energy providers. For most people, the process takes about 5 minutes. We partner with only the most trusted energy providers and filter out all the tricky plans.
That’s why we have hundreds of 5-star reviews. If you need some help, our team is standing by. Get started by plugging in your zip code here.
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