How to Choose an Energy Supplier
If you live in one of the 15 states where energy is deregulated, you may be able to save upwards of 20% on your monthly electricity bill by switching energy providers.
The idea of switching energy providers can be potentially confusing if not downright intimidating. This guide makes it easy to get you up to speed. It will walk you through all the different variables you’ll want to consider when comparing different providers.
When selecting an energy provider (also called service provider, or simply “supplier”) there are three different factors you’ll want to look at: the supplier’s reputation, the rate, and the length of the plan.
There are hundreds of energy suppliers out there, and it can be overwhelming to select a one for the first time. That’s especially true since some energy providers engage in deceptive marketing tactics, offering super-low “teaser” rates that go up after a few months or by hiding significant fees or charges. Because energy deregulation is so new, shady operators have the opportunity to take advantage of consumer confusion.
Luckily for you, Choose Energy does all the vetting for you. We sift through each plan offered by each energy provider and only offer you ones without hidden teaser rates. We also make sure to clearly identify any additional charges or fees so that there won’t be any surprises later on down the line. Other Choose Energy users also provide ratings and reviews for different suppliers so you can see how responsive they are to their customers.
The second factor to consider in selection an energy provider is whether you want a variable of a fixed rate.
With a fixed rate, you’ll pay the same price for each kilowatt hour throughout the length of your plan. This is typically a better plan if you use the majority of your energy during “peak” (daytime) hours. With this kind of plan, you’ll have more stable bills, making it easier to predict your energy costs. Moreover, because the rate is locked in, you’ll be protected against any upswings in energy costs.
With a variable rate plan, your rate per kilowatt hour will change monthly according to the market price. While you could pay more for electricity if energy prices go up, you could also end up saving more if they go down. You can also save more with a variable rate plan if you use less energy during peak hours. Typically, large commercial customers who use a lot of energy opt for the variable rate plan because it allows them to schedule their greatest energy use for the times of day when energy is the cheapest.
The final differentiating factor in selecting an energy provider is the plan length. It can be intimidating trying to select a six-, 12-, or 24-month plan. Whether you choose a short- or long-term plan depends entirely on your appetite for risk.
Each time you sign up for a fixed-rate energy plan, you agree to pay the current market price for the length of the agreement. So, if prices have gone down, you can potentially save a lot of money over your previous plan and you’d likely want to get a longer-term plan. If prices have gone up, however, you’ll be paying significantly more for energy.
One thing to keep in mind, though, is that rates for shorter-term plans are slightly higher than rates for longer-term ones
To sum it up, the three factors to consider in choosing an energy plan are the supplier, fixed or variable rate plan, and the plan length. If you’re curious, check out our Energy Academy where we dig a bit deeper into these topics.