How To Get Cheaper Electricity
Follow these steps to find cheaper electricity rates and avoiding overspending on your utility bills.
Enter your ZIP code
To see a personalized list of the electricity providers operating in your area, enter your ZIP code into our comparison engine. Select your current utility from a list so we know what you're currently paying.
Enter your current usage
Next, use our usage estimator to work out how much electricity you're using. If you have a recent bill to hand you can enter your actual usage.
Choose from a personalized list of deals
Based on your ZIP code and estimated usage, we’ll produce a personalized list of electricity plans available to you and how much you’ll pay for each. Compare rates, read about the providers and select a deal. Click on a deal to begin the sign-up process.
Electricity Deregulation
Historically, electricity supply was controlled by regional monopolies—one or two local companies which had a government-protected hold on every stage of the electricity supply chain, from generation to retail. Since the 1990s, deregulation has allowed challengers to enter the market. This means you can choose to switch to a different supplier, providing more choice for consumers, including cheaper rates and green electricity.
Is my state deregulated?
Today, 18 states have some degree of deregulation in the electricity market. No state is entirely deregulated, however, and your local market may not be yet. Texas is the most deregulated state, with 85% of residents able to select their electricity provider.
Residential Electricity: What is an electric utility?
If you live in a regulated energy market, you’ll purchase energy through an electric utility. Electric utilities are companies engaged in the generation and/or distribution of electricity. The term primarily applies to companies authorized by the government to operate in regulated markets. Firms generating and distributing electricity in deregulated markets are called retail energy companies.
Residential Electricity: Choosing a retail energy company
Retail energy companies are firms selling electricity or gas in deregulated energy markets. When you compare electricity deals for your home, you’ll be comparing services from retail energy companies. The presence of multiple companies on the market gives you a chance to choose the one that best suits you. And you shouldn’t just consider the price. Here’s what might sell you on a retail energy company:
Does the retail energy company generate or source electricity from a coal plant or from renewable resources like wind and solar power? Renewable energy sources account for around 17% of the US’s electricity generation, but some retail energy companies will provide a higher percentage of green power than others. Buying renewable electricity is a great way to reduce your family’s carbon footprint—and encourage companies to invest in more renewable energy infrastructure
How does an energy company treat its customers? Does it send clear and accurate bills? If you have a problem, how long does it take to get a hold of the company? You won’t have personal experience with all of the retail energy companies on the list, but other customers will—and have shared reviews of the firm. Compare them to find a responsive, courteous electricity supplier.
Of course you don’t want to overspend for your electricity. One of the benefits of a deregulated electricity market is that companies are forced to compete for your bills, in theory lowering your costs. Comparing electricity plans and switching to a new retail energy company could save you hundreds of dollars a year on your electricity.
Electricity rates: How much does electricity cost?
In 2018, the average US electricity bill was just under $118 a month. However, costs vary widely across the country, with Hawaiians paying the most for electricity and Utahns paying the least, on average.
Your electricity bill will have two components:
First, you’ll be charged for supply—a charge for each kilowatt-hour (kWh) of electricity you consume. In the US, the average cost per kilowatt-hour of electricity is around 13.3 cents, although this varies by state and season.
Your bill will also include delivery charges, the fixed costs set by the energy company to cover the transportation of electricity from the generation site to your home, including upkeep of the power lines. This charge will remain the same no matter how much electricity you consume.
The amount you pay for your energy will therefore be influenced by how much electricity you consume but also factors beyond your control, including where you live, what electricity generation technologies are active in the area, what the terrain is like, what retail energy companies operate in your area.
Frequently Asked Questions
Some residential customers have the option to select their electricity supplier. This is the case if you live in a deregulated electricity market. In other areas, you’ll have to use the local electricity utility which has a monopoly.
You can see which energy suppliers operate in your area by using our ZIP code checker and comparison engine.
When you’re selecting an electricity plan, you may have a choice between fixed-rate and variable rate plans. Fixed-rate means you lock in a per-kilowatt-hour price for electricity for the duration of your contract, ranging from three months to three years. Fixed-rate plans protect you from seasonal and yearly variations in the per-unit price of electricity.
Alternatively, with variable-rate plans, the per-unit cost of electricity fluctuates month to month. These plans may have a lower initial price but they can rise, sometimes sharply, in subsequent months. The good news is that variable-rate plans generally work on a month-to-month basis, so you won’t be locked into a contract.
Most electricity providers require a credit check for new customers. Depending on your credit history, you might be required to pay a deposit to the provider upfront. If you’re concerned about this, you can seek out a pre-paid plan or one that specifically says it doesn’t require a credit check. Additionally, some electricity providers will allow you to get around the deposit requirement by providing a letter of credit from your current electricity provider or a copy of your most recent electricity bill, with no past-due balance or late fees.