How to shop for an electricity supplier
If you live in a state where electricity is deregulated and competitive, get started by researching your options.
- Calculate your current energy use. Look at two or three of your most recent energy bills and average out your use by energy unit — per kilowatt-hour (kWh) for electricity. This information will help you shop for similar or cheaper rates on the market.
- Shop by ZIP code. Enter your ZIP code and select Get Quotes to see energy rates for trusted providers near you.
- Compare energy providers and plans. Weigh kilowatt-hour rates, contract terms and potential for savings to narrow down the best provider for your needs.
How to compare electricity plans
Depending on the state you live in, you may have one or a handful of independent electricity suppliers to choose from, each offering different rates and energy plans. Factors to weigh when researching your options come down to rates and the type of plan that fits your electricity needs and budget.
Fixed, variable and hybrid rates
Providers in your state or city may offer the option to choose between a fixed, variable or hybrid kWh rate:
- Fixed rates. Fixed rates allow you to lock in a rate for an established contract term. These plans protect your budget from surprise rate spikes, though they can keep you from more easily switching providers with lower rates if the market dips.
- Variable rates. Variable rates allow you to purchase energy without a contract. These plans give you the flexibility to jump to a different provider at any point, though you can expect to pay increased rates when demand is high, such as during colder weather months.
- Hybrid rates. Fixed and floating options split your contract into a fixed rate for part of your term and a variable rate for another.
For variable rates, ask your potential provider if it limits how much rates can fluctuate, which can help you keep costs manageable.
Introductory rates and signup bonuses
Many suppliers and providers offer lower advertised rates or bonuses to entice new customers. These bonuses can be reflected as a lump-sum savings or percentage knocked off the standard rate.
Introductory rates can last the first quarter of your contract, for six months or even the full term. Read the fine print of any offer to understand the rate you’ll pay after the bonus and avoid overpaying for your energy in the long term.
Contract terms and details
Understand the contract system of any supplier you’re interested in. Look at available terms, how the supplier handles renewals and whether you can cancel before your contract ends.
- Contract terms. Contracts can range from three months to a year or more. Longer terms can be easier to manage, while shorter terms allow the flexibility to leverage market dips.
- Contract renewal. Some providers require you to renew a contract term, allowing you to review or change the details of your rate schedule, while others automatically renew your terms unless you tell them not to.
- Contract cancellation. Markets being what they are, you may find lower rates so enticing, you’re willing to pay a termination fee to end your contract early. Understand the penalties you face so that you can factor them into any future decisions to switch providers.
- Late fees and grace periods. Ask potential providers about late fees and how many days after the due date you can make a payment without paying a penalty.
Energy and transmission costs
Your electricity bills include home energy costs that can vary by utility provider or supplier.
- Unit or consumption charges. Energy costs are expressed as kWh for electricity and therms for natural gas, with variances among residential, commercial and industrial customers.
- Delivery and transmission costs. This is the cost a utility company charges to cover moving energy from power plants, across power lines and pipelines and to your meter.
- Capacity or demand fee. Some electric companies charge a fee to cover the cost of ensuring enough electricity or gas when demand peaks.
- Ratchet charges. Also related to demand, these are periodic fees charged by utilities to recoup costs related to surges in use.
- Taxes. Most suppliers include tax costs in pricing schedules. Ask your supplier about taxes if you don’t see them clearly listed in your bill.
- Other costs and fees. Some states and local governments charge fees that fund public policy programs related to such causes as energy conservation or support for vulnerable communities.
Many suppliers offer alternative energy options, like wind, hydro or solar energy. Your energy bill may include fees associated with the renewables you choose.
How to switch electricity suppliers
After you’ve found an electricity provider that fits your energy needs, gather up a current monthly bill and get ready for the big switch.
- Call your new energy supplier. Confirm the details of your energy plan and ask any remaining questions. You may need to provide information from your current utility company to transfer your account. Ask how long it takes to complete the changeover.
- Call your old provider. Your new supplier will notify your old supplier, but it’s helpful to confirm the process directly with your current company.
- Review your first bill. Make sure the details of your new bill match your contract or agreement and flag any issues as soon as possible for a fix.
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