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More than 25 states currently offer deregulation for natural gas, electricity or both. If you’re a resident of a deregulated state, you have the freedom to choose your energy supplier. Learn how to switch to a new provider that best suits your electrical or natural gas needs.
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How to choose an electricity or natural gas supplier
The first step in changing energy providers is learning whether you have a choice in who supplies your energy. Once you’ve determined that you live in a state offering deregulated energy and a competitive market, research your options following these steps.
Determine what type of energy you need. Do you use electricity, natural gas or a mix of both to power your home? Is renewable energy — solar, wind, geothermal — an available and realistic option? Research all the possibilities open to you.
Calculate your current energy use. Use three or more of your monthly statements from your current provider to average out your monthly costs per energy unit. Electricity is measured in kilowatt hours (KwH), whereas therms measure out natural gas use. Once you know the amount you typically spend monthly, compare it against other providers.
Shop providers using your ZIP code on an energy marketplace. Online marketplaces can help you compare energy rates and plans with your home’s best interests in mind. EnergyBot is one such marketplace that uses your ZIP code to find a provider to best meet your needs.
How to find the best energy rate
Choose from as many providers available to you, depending on your location. First consider the type of plan that best fits your energy demand and budget when searching for the best utility plan. Typically, there are three plans available to consumers.
Fixed rate. Fixed-rate plans let you lock in a rate for the duration of your contract term. Set rates are beneficial for customers who want steady, reliable rates that are protected against sudden price hikes. On the flip side, if prices fall, you’ll be stuck paying more than the going rate. And fixed-rate plans have less flexibility to switch providers again if you find a more suitable plan elsewhere.
Variable rate. A variable-rate plan is a good choice for customers who want their energy delivered without a contract. The open nature of this agreement allows you to jump over to another provider if you find a plan you can’t live without. Consider that monthly bill amounts will be higher when temperatures spike or plummet, whereas you’ll pay less during off-peak periods, making monthly bill amounts unpredictable.
Hybrid rate. Split your plan between a fixed rate for one portion of your contract and variable rates for the other. Hybrid plans may also allow for delivery through eco-friendly energy sources alongside traditional means. Check your specific provider for more details.
Regardless of the plans presented to you, remember to factor in cost per KwH or therm, bonus or introductory rates, fees, taxes and potential penalties when deciding.
Great news — you found a new electricity or natural gas plan that can lower your monthly energy costs. Once you’re ready to switch, take these steps.
Contact your new provider. Review your new utility plan in detail and ask any relevant questions. Have a current energy bill with your account information on hand to transfer to the new company. Ask when you can expect the transfer to finalize.
Call your old company. It’s common for new providers to contact your current company to make the switch, but it could make the process more efficient if you give an initial heads-up.
Carefully review your first invoice. Look at your billing details and confirm they match your new contract. Flag any issues you find and raise them with the company for clarification or a fix.
What you need to provide
When switching to a new energy provider, get ready to share your:
Full name, phone number and email.
Service address for the home or business you wish to connect.
Service start date.
Driver’s license or other government-issued ID.
Some retailers require direct withdrawal from a bank account or credit card as a method of payment to set up your account. The time it takes to process your account to a new utility varies, anywhere from a few days to up to a month. Many new providers will also run a soft credit check on new customers.
When is the best time to switch?
Deciding on the best time to change your energy provider starts with the specifics of your current contract: When does it expire? Will your utility charge you a penalty if you end the contract early? If you’re still in the thick of your current contract, weigh any cancellation fees against potential savings.
Some industry experts suggest switching up your provider every 12 to 18 months, or whenever your current contract ends and you can avoid getting dinged with early exit fees. If you have an open contract, consider changing your utility when energy is in low demand, such as before winter arrives. After October, consumers use more heat and electricity amid dropping temperatures and fewer daylight hours.
At this time, 29 states offer some form of energy deregulation — either for electricity, natural gas or both. To learn more about the deregulation status of your state or a state you may be moving to, check out our states category page.
Benefits of deregulation
The pros of a deregulated market are wide and varied. Consider some of the following.
The market sets the rate. Energy deregulation means state governments are removed from the responsibility of setting rates for electricity and natural gas. Instead, the market is open and competitive, giving consumers the power to choose their provider to get the best possible rate.
More plan choices become available. With high competition, you may find numerous plan options as suppliers try to outsell one another.
Eco-friendly options. A deregulated market also gives consumers access to alternative energy sources, such as solar, wind and other eco-friendly options.
As with any service, there are drawbacks to weigh against the benefits. Here are a few.
Consumers may not see a vast price difference. Results for deregulation are mixed — and don’t always lead to lower costs. Some evidence has even shown that energy costs can be higher in a deregulated market, particularly in states where regulated energy costs were already high.
Residents in remote areas may experience energy shortages. It’s more costly for utility providers to supply energy to rural areas, so suppliers may simply choose not to service those households. As a result, many isolated customers may find themselves underserviced and relying on other forms of energy, such as solar.
Too many providers to choose from. When searching for a new utility in an open market, consumers could be overwhelmed to find as many as 20 different suppliers to choose from. And many utilities offer plans full of details and fine print that are challenging for the everyday consumer to unpack. Sites like EnergyBot help you find the best supplier for your region, needs and budget using the ZIP code you enter on its site.
Melanie Huddart is a personal finance editor and updates writer who's proofed and polished thousands of articles to help people make more informed financial decisions. She specializes in issues around accessibility and equality, as well as removing biases in managing finances for people who are unbanked or marginally banked. Melanie is an ASL-English Interpreter with experience in writing and learning assistance in college and high school classrooms, teaching English and Indigenous studies both in-person and online. She holds a BA in honors English and a Bachelor of Education from York University in Toronto.
The deregulated energy market offers opportunities for consumers and businesses to purchase the energy that powers their homes directly from suppliers.
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