How do savvy buyers shop for deregulated electricity?

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By Arthur Murray April 16th, 2018
For business

Deregulated electricity sounds complicated. But it really isn’t. Energy deregulation really means energy choice. In this case, it means you no longer must buy the electricity you use from the utility that serves your area.

What deregulation doesn’t mean is that you need a new meter, wires, poles or anything else. Put simply, the electricity you buy will continue to be delivered by the same utility you already have, running through the same wires into the same meter. The only thing that changes is the company selling you the electricity you use – it no longer will be your utility.

How do I look for an electricity supplier?

In most areas that have energy choice, a number of providers – including your utility – will be glad to sell you electricity or natural gas. You can search each through the Internet, and you’ll be bombarded with prices (all expressed in cents per kilowatt hour). Some plans are for a specific number of months; others are month-to-month. Some have fixed rates throughout that term; others can vary from month-to-month. Some use electricity derived from renewable sources; others, not so much.

All that information makes comparing plans difficult. Unless you use sites such as ChooseEnergy.com. Here’s the drill:

  1. Enter your ZIP code to see plans specific to your area. Suppliers charge different rates in different states. Added benefit of using ChooseEnergy.com: We work only with trusted providers.
  2. Use our filters to decide which factors are most important to you: Price, plan term, brand, green energy mix, etc.
  3. Compare plans in one spot, make a decision, and start the enrollment process – we call it a process, but it only takes minutes.
  4. Your new provider will contact your old one to inform it of the switch and make things go smoothly.
  5. Enjoy continued service with no interruption.

But how do I choose among providers?

That’s up to you. You might like the name of the provider, or see a low rate, or find a plan that uses 100% renewable energy. Those are all valid reasons – even the name one. That’s the beauty of energy choice – it’s your decision for your reasons, not anyone else’s.

But we have a little advice we can offer:

  • Price. Seems like a no-brainer, right? Pick the lowest price. Sign up. Forget it. And that’s the problem. The lowest prices often pair with six-month plans. Which is fine as long as you’re prepared to shop again in six months. Because if you don’t, your provider likely will enroll you again at its default rate, which will likely be higher than the one you signed up for.

No one is trying to trick you – you’ll get notice that your six-month plan is running out. But it’s up to you to be responsible at that point. If that’s not your strong suit, or if you don’t want to be constantly shopping for the best rates, approach this one with caution.

  • Get your fix. Fixed rate, that is. Your utility sells power at a variable rate. Prices are tied to the market, which can be affected by any number of factors. Remember, for example, what happens to gasoline prices when hurricanes disrupt pipelines. Spikes are great for volleyball, not so much for energy prices and budgets. That’s why suppliers offer fixed-rate plans – ranging from six months (see above for why these might not be right for you) to three years, sometimes even longer.

The idea is to lock in your electricity supply rate; then, any variations in your monthly bills will come from changes in how much electricity you use (which you can control) and how much your utility charges to deliver it (which you can’t control).

  • Term. If you really like the set it and forget it option, look at a 24- or 36-month plan. It’s like buying insurance against one of those price spikes we just mentioned. Electricity is a volatile commodity – market prices can change daily. A 24- or 36-month plan gives you protection against this volatility.

Now let’s be fully transparent: These plans usually include early termination fees if you try to get out of the contract before the term is up. Read the fine print – your terms and conditions – carefully.

So what happens if you move before your plan term is up?

Again, read the fine print carefully before you sign up. But if your supplier offers service at your new address, you may be able take your plan with you – no harm done. And if your supplier doesn’t offer service at your new address, the early termination fee could be waived. Once again, with feeling: Read the fine print carefully and ask questions.

Which strategy is best for you? That depends on you and how comfortable you feel with shopping and risk. But set it and forget it (at least for two years) sounds like a good, low-hassle option for most customers.

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