Questions You Should Ask Before Changing Your Energy Provider

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Category: Home Utilities
Posted on: 10/01/2020
Questions You Should Ask Before Changing Your Energy Provider

Changing energy providers can be a challenging task. With many retail providers, different energy plans, rate structures, and options to choose from, finding the right energy plan is not always easy. Often, you'll find terms and conditions or pricing that sounds confusing without a little research. To make sure there are no surprises when you receive your first gas or electric bill from a new provider, it is important to ask some essential questions. Here are the most important questions you should ask before changing your energy provider:

Am I Eligible to Change My Provider?

To change your provider, first you need to find out if you're eligible to switch. The answer may be obvious if you're living in a regulated state because you simply can't change your provider. However, residents of deregulated states are not always eligible to switch, depending on their geographic area, type of service they want to switch, or their overall energy demand. In some states, retail choice is available with local exceptions. For example, in Texas, municipal utilities and electric cooperatives could opt-out when the state's electricity market was deregulated. This is why residents in cities like San Antonio or El Paso are not eligible to change their providers. In other deregulated states, such as Virginia, electric choice is only available to large power consumers. Residential customers can only switch if they choose electricity generated from renewable energy sources and if their utility does not provide this option.

What Rate Structures Does Your Provider Offer?

The energy rate structure not only determines how much you pay for your energy, but it also establishes price stability, contract lengths, and more. Ask about your plan's rate structure to understand the exact price per kilowatt-hour (kWh) for electricity.

Typically, you can choose between fixed-rate energy plans and variable-rate plans. Your energy will cost the same price per kWh or therm if you select a fixed-rate plan. With a variable-rate plan, the price can change every month. You may also find tiered rate plans, where energy rates vary based on the total amount of kilowatt-hours you're using each month. Tiered rates are typically lowest if your usage stays within a specific band of kilowatt-hours used. Depending on the provider, tiered rates can increase or decrease if your energy usage goes up. Another form of variable rates are time-of-use rates, which offer lower rates or even free energy during certain times of the day or days of the week. It is helpful to look at your recent electricity bills and use the average amount of kilowatt-hours to determine the total price for your particular usage.

You may also want to ask if you can participate in special billing plans, such as budget billing, if you prefer to pay the same dollar amount every month. Some companies also offer plans and payment arrangements to help customers in need pay their bills.

What Happens After My Contract Expires?

The typical contract lengths range between three months and three years, and energy rates are based on your plan's length. It is important to know the contract term length but also what happens when it expires. At the end of the contract term, some energy providers automatically switch you to their default rate, which often is a more expensive variable-rate plan. Other providers contact you early enough to let you pick a new plan or switch to a different company. Knowing what happens when your contract expires can help you save money on your utility bill.

Are There Any Fees on Top of The Energy Price?

One of the most common fees for fixed-rate plans are early termination fees. This fee will be charged if you decide to cancel your contract before it expires. Another common fee is the base charge, which will be charged every month regardless of your energy usage. The base charge can increase the effective price per kWh or per therm considerably, especially when your energy usage is low. Other fees you may encounter are minimum usage fees, disconnection or switching fees, and fees related to administrative actions, such as document request fees, payment service charges, or other customer support fees.

Who Will Send My Energy Bill(s)?

When you switch to an alternate energy provider, you're basically buying the electricity or natural gas from that company, while your local utility company will still deliver the energy to your home. Many retail energy providers have agreements with the utilities to collect the supply bill with the utility's delivery bill. If this is the case, you only have to pay one bill to the utility, and they will handle the rest for you.

However, in some cases, you need to pay the utility for the energy delivery and the retail provider for the supply, essentially paying two bills for one service. If you're paying the retail provider and the utility separately, you should also ask about their billing cycles. Bills may be due on different days.

Are There Any Upfront Costs to Sign Up?

While many energy companies advertise the incentives they offer to new customers, there can also be some upfront costs involved when you change your energy provider. Besides the switching fees mentioned before, some utilities and retail providers do credit checks on new customers, and they may charge you for it. You should also ask if you have to pay a deposit for your service. Many companies charge you a deposit and pay it back after a while if you pay your bills on time. If there is a deposit, be sure to ask how much it is.

What Green Energy Plans Do You Offer?

Buying green energy is an important aspect of choosing the right energy provider for some energy customers. Renewable energy plans are a great tool to go green and fight climate change. Some energy providers even offer green electricity plans for free. Others charge extra for green power, and it may not even be as green as the advertisement suggests. If you want a renewable energy plan that is truly 100 percent green, ask about the generating source and if you have a choice of renewable energy sources. If the price increase for switching to 100 percent renewable energy is too much, consider a plan with a different share of renewable energy if the provider offers one.

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